278 community organisations release open letter on the Energy Charter Treaty

December 10, 2019: 278 community organisations and trade unions, including AFTINET, have released an open letter demanding reform of the Energy Charter Treaty (ECT) so that it does not undermine action to address climate change.

The ECT includes Investor-state dispute resolution (ISDS) provisions that give foreign investors in the energy sector sweeping rights to directly sue states in international tribunals for policy decisions that impact on their investments. Out of all the international agreements that include ISDS, the ECT has brought the most ISDS cases.

These cases could undermine action on climate change, as governments risk facing huge lawsuits if they strengthen environmental protections or implement policies to transition away from fossil fuels. For example, the German coal company Uniper is threatening to use the ECT to bring an ISDS case against a law to burn the burning of coal in the Netherlands. See short video here.

Australia has signed but not ratified the ECT. However, there have been at least three ISDS cases brought by Australian companies.

The open letter coincides with the annual Energy Charter Conference meeting, which is taking place in Brussels on 10-11 December. The first round of negotiations to reform the ECT will take place on 11 December. The letter identifies six key concerns with the ECT:

  1. The ECT protects fossil fuel investments and infrastructure, and is used to challenge and undermine necessary climate action.
  2. The ECT puts public budgets and taxpayers’ money at incalculable risk.
  3. The ECT could threaten the promotion of renewable energy.
  4. The ECT can undermine environmental protection.
  5. The ECT can be used to attack measures to make energy affordable and put it under public control.
  6. Investor-state arbitration under the ECT is at odds with the rule of law and undermines domestic legal systems.

The letter calls on ECT member governments to:

  • Include as a condition for entering negotiations to modernise the ECT the removal of provisions that protect fossil fuels;
  • Request the removal of investor-state dispute settlement provisions from the agreement;
  • Withdraw from or jointly terminate the ECT, if the modernisation process fails to promptly make the agreement climate-and environment-proof by removing investor-state dispute settlement and protections for fossil fuels;
  • Immediately put a brake on the process to expand the ECT geographically to ever new states and to not allow any treaty accessions as long as the ECT is in its current state.