EU tries to stop fossil fuel companies suing states over climate action

Brussels’ proposed green reforms to the Energy Charter Treaty face resistance from Japan, yet do not go far enough for environmental campaigners.

The EU is trying to remove fossil fuels from the list of investments protected by the Energy Charter Treaty (ECT) in order to stop its member states from being sued over climate action.

Recently, fossil fuel companies have used the ECT to sue the Slovenian government over environmental protections and challenge the Dutch government‘s coal phaseout plan. The firms have argued that green government policies unfairly damage the value of their assets.

Similar cases could cost taxpayers across the world up to €1.3 trillion ($1.5tn) by 2050, according to the Open Exp think tank, based on the value of fossil fuel assets protected by the treaty. Just under half of these costs would fall on the EU.

The EU has been pushing for green reform of the treaty but all 53 ECT countries need to be on board for changes to be made and Japan and Central Asian countries have blocked reforms.

A leaked European Comission proposal for ECT reform proposes removing coal, oil and gas from the energy investments protected by the treaty. If approved, this rule change would come into force in ten years time and investments made in the meantime would not be protected.

To read the full article, refer to the Climate Home News website.