Overshadowed by the events of the last few weeks, a few days ago, the text of the Energy Charter Treaty (ECT) – a treaty that provides ISDS (investor state dispute settlement) for investors in the energy sector – was leaked.
The treaty, which has been in existence since the mid-1990’s, is under renegotiation, and member states (including the UK) are due to make a final decision on whether to re-join the new version of the Treaty by November 22nd. The leak of the text proves once and for all what we at War on Want and tens of thousands of our supporters have suspected about the so-called ‘modernisation’ of the treaty.
The proposed ‘modernisation’ would do nothing to change the fundamental problem with the ECT; that it empowers corporations to sue countries over policy measures (including climate policies) that affect their profits, through the ISDS mechanism. We are calling on the UK government to leave the treaty.
To illustrate the threat the ECT poses; the Netherlands currently faces a 1 billion euro claim under ECT rules over its plans to phase out coal, which energy giant RWE say will affect their profits. The claim over the coal phase-out had until recently been as high as 2.4 billion euro, until the German government, in part-nationalising energy giant Uniper, demanded Uniper drop their ECT case against the Netherlands – yet another argument, as if it were needed, for public ownership.
In another recent case, the Italian government has been ordered to pay out £210 million to a small UK oil and gas exploration company, Rockhopper, after Italy passed a ban on coastal oil drilling following mass public opposition to Rockhopper’s oil drilling project.
New and Unimproved
If the ‘modernised’ text is adopted it would see the UK signing up to at least another ten years of ISDS claims by fossil fuel companies – throughout the critical decade when we are supposed to be transitioning away from fossil fuels. The UK is already highly vulnerable to claims under the ECT, with financial risk of £11 billion in claims from the ECT, according to one study. Jacob Rees-Mogg’s intentions to extract “every last cubic inch” of fossil gas from the North Sea by issuing new licenses, only increases this risk, should a future government rethink and retract the licenses, corporations that hold them could sue the UK taxpayer for ‘lost profits’. All this while energy corporations are raking in record breaking profits.
ECT vs Climate Justice
Exiting, and ending the ECT would also have important implications for countries and communities in the global south. The vast majority of ISDS claims are taken against developing countries, and the “chilling effect” on climate policy threat of ISDS claims has been shown to be particularly acute in developing countries.If the ‘modernised’ text is approved, those at the helm of the treaty will seek to immediately expand its membership in the global south. The ECT Secretariat appears to have Nigeria, Bangladesh and Uganda immediately within its sights, aiming to sign these countries up to binding ISDS rules. These are rules that the IPCC has already warned have the “chilling effect” of delaying and blocking national climate legislation. Joining the ECT opens countries up to multi-million-dollar claims, locks in dependency on fossil fuels and undermines an energy transition. The push to expand the treaty should come as no real surprise. Corporate interests in the natural resources of the Global South are the DNA of the ISDS regime. The mechanism itself was designed by a group of men including executives from Shell and the forerunners of ExxonMobil, Total, Rio Tinto, and others in the 1950s, when national independence movements in the post-colonial era threatened to deprive Northern corporations of their access to the riches of South.
Not all current ECT member states are entirely happy with the new and unimproved version of the treaty, however. The Polish government has announced it intends to leave the ECT – citing the chilling effect of ISDS on climate policy and the significant cost of membership to the taxpayer amongst its justifications. Poland is the only country to formally announce its intentions to leave the treaty ahead of the ECT Conference in November. Spain is widely thought to be considering following suit, having earlier publicly called on the EU to leave the treaty. The Dutch parliament has also passed a motion to withdraw from the treaty.In the UK, 55,000 people have signed a petition calling on the UK government to leave, but so far, even the Labour Party have failed to agree on a position of withdrawal.
Trust in short supply
Recent polling showed 73% don’t trust the UK Government to take measures to improve their lives, and 76% didn’t trust MPs on the same measure. The approach of the government, and of the Labour Party to the Energy Charter Treaty bear out this mistrust – neither of the two biggest parties have been willing to put people first and call for the UK to withdraw from a destructive, public-finance-draining and pro-corporate treaty whose time has come. The leak is a call to action. It’s high time that our politicians show that they can put people and planet above lining the pockets of billionaire fossil fuel corporations and make the only decision on the ECT that the public can trust – to leave it.
Leah Sullivan is a trade justice campaigner at War on Want.