UN World Investment Report 2010 - Office of Trade Negotiations

CHAPTER IV Leveraging Foreign Investment For A Low-Carbon Economy 119
For each type of motive there are climatechange
specifities which affect the pattern of
low-carbon foreign investment (table IV.6).
For market-seeking foreign investment, host
country policies can play a significant role,
e.g. for renewable energy, where the connection
to the electricity grid and pressure to
move from carbon-intensive technology frequently
requires legislation. Another example
concerns producers of low-carbon consumer
goods, which seek markets with consumers
particularly aware of (and responsive to)
the company’s “green” credentials. Natural
resource-seeking low-carbon investors may
seek a windy location, a tidal bay or precious
metals for solar batteries. However,
because of the definitions of low-carbon
and business-as-usual, even natural gas may
for instance be eligible if its use replaces a
higher emission source, such as coal. The
efficiency-seeking motive can induce TNCs
to shift large shares of their operations to
the most advantageous site, which for some
technologies – as in the case of renewable
electricity generation – is linked to natural
resources. However, capturing comparative
advantages might also involve seeking jurisdictions
with laxer environmental standards
(section D.6). Strategic-asset-seeking 42
foreign investors can either acquire or gain
access to existing created assets such as
low-carbon technologies or expertise held
by companies in the host country: As with
any dynamic developing technology, consolidation
by M&A activity occurs in the
low-carbon arena; and investors may also
seek to participate in industry or technology
clusters to gain from agglomeration and
related effects.
Business facilitation (section D.2) policies
favouring low-carbon investments
can contribute to creating viable markets
(table IV.6). These business-facilitation determinants
may largely involve refocusing
practices already in general use in the field,
e.g. investment promotion activities such as
providing one-stop shop services to better
inform prospective investors about environmental
and related investment policies;
facilitating clearance procedures to reduce
hassle costs; and providing better social
amenities and aftercare services. Incentives
will also play a major role in inducing lowcarbon
investments. In this context support
for potential JI and CDM investors can be
seen as facilitating access to an incentive
provided by external sources.