The Energy Charter Treaty Lets Oil, Coal & Gas Firms Sue Govs Over Environmental & Climate Laws
A secretive investor court system poses a real threat to the Paris climate agreement, activists have said, as governments taking action to phase out fossil fuels face a slew of multimillion-dollar lawsuits for lost profits. New data seen by the Guardian shows a surge in cases under the energy charter treaty (ECT), an obscure international agreement that allows energy corporations to sue governments over policies that could hurt their profits.
Coal and oil investors are already suing governments for several billions in compensation for lost profits over energy policy changes. For example, the German energy company RWE is suing the Netherlands for €1.4bn (£1.2bn) over its plans to phase out coal, while Rockhopper Exploration, based in the UK, is suing the Italian government after it banned new drilling near the coast. “It’s a real threat [to the Paris agreement]. It’s the biggest threat I am aware of,” said Yamina Saheb, a former employee of the ECT secretariat who quit in 2018 to raise the alarm.
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Signed in 1994, the treaty was intended to protect western companies investing in the oil- and gas-rich countries of the former Soviet Union. Only foreign investors, rather than domestic ones, can use the system, prompting longstanding complaints of privileged access. Campaigners now fear it could stymie the green transition. “We obviously have to get out of the fossil field quite quickly and the energy charter treaty is in the way because it protects fossil fuels,” said Cornelia Maarfield, a senior trade and investment policy coordinator at the Climate Action Network Europe. “Our main concern is that once governments start taking decisions to phase out coal, gas and oil, they will run into difficulties with the investment protection chapter of this agreement.”
Germany’s RWE is suing the Netherlands for €1.4bn after the Dutch government decided to close all coal-fired power plants by 2030, including RWE’s Eemshaven plant, which began operating in 2015 with an expected life-span of 40 years. RWE said it supported the energy transition in the Netherlands, and “the only issue is therefore the fact that the coal ban law does not provide for adequate compensation”. Another German utility, Uniper, is reported to be seeking between €850m and €1bn for the early closure of its Maasvlakte coal-fired power plant near Rotterdam, which opened in 2016. The company declined to confirm the damages it was seeking, saying: “Uniper is convinced that shutting down our power plant in Maasvlakte after only 15 years of operation would be unlawful without adequate compensation.”
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https://www.theguardian.com/environment/2021/nov/03/secretive-court-system-poses-threat-to-climate-deal-says-whistleblower
