The UK must keep its promise to leave the Energy Charter Treaty
The Energy Charter Treaty (ECT) is one of thousands of international agreements that permit companies to pursue these kinds of cases through something called the ‘Investor-to-State Dispute Settlement’ (ISDS) mechanism. The ECT is responsible for about one in five of all such known cases. These cases are heard in international tribunals whose proceedings are closed to the public. Awards are then decided by arbitrators whose backgrounds are often in commercial, not public law. The amounts awarded are generally in the range of hundreds of millions of pounds and can include compensation for ‘loss of future profits’.
This is what happened in the Rockhopper vs. Italy case: Rockhopper had only invested £30 million in the project. Their outsized £210 million award was to compensate for profits they never made.
Concern is growing that the ECT and other agreements impede the introduction of good government policies. This is particularly the case for climate change, where oil, gas and mining companies are filing huge claims to block actions intended to curb carbon emissions. Fossil fuel companies have won US$80 billion in compensation under the international investment system so far. That could pay for more than 20,000 wind turbines – almost twice as many as the total number in the UK today.
UN climate scientists warned in 2022 that ISDS was blocking the phase out of fossil fuels, and the UN Special Rapporteur on human rights and the environment recently called ISDS a “major obstacle to the urgent actions needed to address the planetary environmental and human rights crises” and called for countries to terminate all agreements that contain ISDS.
Transform Trade has long been part of a global movement to put an end to this unjust and damaging system. And we’re starting to win. Eight countries including France, Germany, and the Netherlands have decided to quit the ECT. The European Union looks likely to do the same, specifically stating that membership of the ECT is incompatible with their climate commitments.
We need to push the UK government to do the same. They have already acknowledged that the ECT does not support the transition to renewable energy that is so urgently needed and they will quit if the treaty is not modernized. Their own deadline for modernization passed at the end of last year; there is no more excuse for continued membership.
Email your MP to demand that the UK follow other countries and leave the ECT. You don’t need to be an expert to take action. We’ve written a template letter for you to send, so it only takes a few minutes. Exiting the ECT is an imperative next step to meet our emissions goals and do our part to prevent the climate crisis from escalating further.