Publication / 31 December 2020

Busting the myths around the Energy Charter Treaty

Five years after the Paris Agreement was signed, concern is mounting over another, lesser-known international treaty: the Energy Charter Treaty (ECT). The ECT is an antithesis to the Paris Agreement, allowing fossil fuel companies to sue countries over their climate policies rather than strengthening the global response to climate change.

The ECT was signed over two decades ago without much public debate. It protects all investments in the energy sector, including coal mines, oil fields and gas pipelines. Any state action that harms a company's profits from these investments can be challenged outside of existing courts, in international tribunals consisting of three private lawyers. Governments can be forced to pay huge sums in compensation if they lose an ECT case. Oil and gas company Rockhopper, for example, is suing Italy over a ban on new offshore oil drilling. Coal company Uniper/Fortum is threatening to sue the Netherlands for its coal phaseout. Several Eastern European countries have been sued because they took steps to lower electricity prices and cut into the profits of energy companies. The lawsuits demonstrate how the ECT can also be used against government action to reduce energy poverty.

As a result of the ECT's threats to ambitious climate action, the European Commission has called it "outdated" and "no longer sustainable". Parliamentarians from across Europe have called on EU member states to jointly withdraw from the ECT if it continues to protect dirty energy sources. In the wake of its first ECT-lawsuits, Italy
has already left the agreement.

But powerful interests are gearing up to defend the treaty – and even expand it to new signatory states, particularly in Africa, Asia and Latin America. These interests include the fossil fuels lobby, which is keen to keep its powerful legal privileges; lawyers, who make millions arguing ECT cases; the ECT Secretariat, which has close ties to both industries and whose survival depends on continuation of the treaty – and the list goes on.

In light of the growing controversy, this guide aims to help activists, concerned citizens, journalists and policymakers confront pro-ECT propaganda. It identifies the ECT's defenders and their arguments, and offers deeply researched counter-evidence.

At a time when all eyes should be focused on averting a climate catastrophe and safeguarding opportunities to regulate in the public interest, an outdated agreement that undermines climate action as well as governments' rights to act in the interests of their citizens must be scrapped. The ECT has to go – and it requires political and collective action as well as intelligent arguments to make that happen.

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