100 climate academics tell UK to quit Energy Charter Treaty

Thursday February 16, 2023: More than 100 academics have urged the UK government to leave the controversial 50-member Energy Charter Treaty (ECT), which includes Investor-State Dispute settlement (ISDS), a secret court system that enables fossil fuel companies to sue governments for huge sums over policies that could affect future profits. Their letter stated that “continued membership of the ECT will harm our prospects of limiting global warming to 1.5⁰C because it will prolong the UK’s dependence on fossil fuels and impede the transition to renewable energy.”

The academics’ letter was sent to Grant Shapps, the secretary of state for the new Department for Energy Security and Net Zero. “Investors have already brought cases against countries for phasing out coal-fired power stations, banning the exploitation of oil and gas near their coastline, and requiring environmental impact assessments,” the group said.

“There is also evidence that countries are shying away from introducing new legislation for fear of being challenged in claims under the ECT,” the academics said. “We urge you to take this opportunity to announce that the UK will withdraw.”

The European Commission said last week that remaining part of the treaty would “clearly undermine” climate targets and that an exit by EU countries appeared “inevitable”. Seven EU countries, including France, Germany, Spain and the Netherlands, have already said they will quit the ECT. Australia is not a member of the ECT.

The UK and Japan are the last large economies not to have said they will leave the ECT.

Oil, gas and coal firms have been awarded more than US$100 billion (A$145 billion) by ECT tribunals. The UK oil firm Rockhopper was recently awarded A$275 million in a case it brought against Italy, which is contesting the decision. ECT critics have estimated the final cost in compensation to fossil fuel companies could rise to more than A$1.448 trillion. Some renewable energy companies have also used the ECT to sue for compensation after subsidy changes.

The Guardian revealed in November that the ECT court system was accused of institutional bias, self-regulation issues and perceived conflicts of interest. “The Energy Charter Treaty is not consistent with the Paris climate agreement,” said Patrice Dreiski, a former ECT executive. “The main goal of the ECT is to promote and protect fossil fuel investment, which is not at all the goal of the Paris agreement.”