- Treaty allows fossil fuel companies to sue governments for environmental action
- Leaked diplomatic cables show negotiations to reform treaty are failing
More than 400 environmental groups, charities, NGOs, and trade campaigners have called for the UK and EU to withdraw from the Energy Charter Treaty (ECT), an international agreement that allows energy companies to sue states through corporate courts for taking climate action.
Signatories including Global Justice Now, Friends of the Earth, WWF, Greenpeace, and Climate Action Network Europe warn that governments “cannot have their hands tied” going into this year’s COP26 climate conference in Glasgow, setting the summit as a deadline to withdraw from the treaty.
Treaty members have been engaged in a “modernisation process” since 2009, but leaked diplomatic cables revealed today show that EU attempts to phase down protections for fossil fuel investments have been rejected.
The leaked official insider accounts of the latest round of negotiations in June show that the European Commission will look for “flexibility” in its position on fossil fuel investments, enraging environmental groups already dissatisfied with the EU’s “limp” proposals.
Under the treaty, companies can sue governments through investor-state-dispute settlement (ISDS), a system of corporate courts that sit outside of a country’s national legal system, allowing companies to sue governments for perceived “unfair treatment”.
The Energy Charter Treaty blocks action to transform the fossil-fuelled energy system by allowing foreign coal, oil and gas companies to sue governments for actions that would harm their profits - including climate actions. Earlier this year, energy companies RWE and Uniper filed claims for billions of euros from the Dutch government for its decision to phase out coal power.
Jean Blaylock, policy and campaigns manager at Global Justice Now, said:
“The Energy Charter Treaty was designed by and for big polluters to protect their dirty investments. It makes a mockery of international climate commitments in a year when the UK hosts a crucial climate summit. Boris Johnson and Alok Sharma need to break free of the shackles of this treaty before November if they want to make any serious progress in Glasgow towards tackling the climate crisis.”
Earlier this year the German energy companies RWE and Uniper both sued the Dutch government for adopting a law for phasing out coal-fired power plants by 2030; RWE is known to be claiming €1.4 billion compensation. Another fossil fuel company, Ascent Resources, which has a letterbox registration in the UK, is using the ECT to sue Slovenia for requiring an environmental impact assessment on fracking plans.
Italy was sued under the treaty when the country banned a new offshore oil exploration permit.
Paul de Clerck, Economic justice coordinator for Friends of the Earth Europe said:
“It’s been clear from day one that this polluter protection treaty is incapable of change. A number of countries refuse to make the treaty fit for a fossil free energy system - and reject even the EU’s limp proposals. We’re in a climate crisis that allows no time to wait for negotiations that go nowhere – so the EU and European governments have no option but to pack up and exit this harmful treaty by November’s UN climate summit.”
Ratified in 1994, the European Charter Treaty is locking in billions of euros worth of investments in oil, coal and gas. In Europe alone, the fossil infrastructure protected by the Treaty amounts to 344.6 billion euros – more than twice the EU annual budget.
Cornelia Maarfield, Trade and Climate Project Manager at Climate Action Network (CAN) Europe said:
“This toxic treaty is a sword of Damocles threatening to come down with multi-billion euro compensation claims when countries enact climate policies. The power and influence of fossil fuel firms must drastically reduce to make the energy transition a success, and quitting the Energy Charter Treaty is a vital step.”
Amongst the letter’s 400 signatories from 40 countries are unions including the European Federation of Public Service Unions (EPSU) and Public Services International, humanitarian organisations including Action Aid, Trocaire, and Global Witness, and environmental groups including the Global Forest Coalition (GFC) and the Campaign against Climate Change
