European Commission aims to end secret system protecting fossil fuel holdings
The use of secret corporate panels to protect multi-billion-pound fossil fuel investments within Europe could come to an end after a move by the European Commission.
Windfall payouts such as a recent £210m award to the British oil firm Rockhopper would no longer be possible between EU states under a new proposal to reform the energy charter treaty (ECT).
The 52-nation ECT began as a bid to defend the revenues of European energy firms that invested in former Soviet economies after the iron curtain fell. It allows them to sue states in a secret court system when they believe their profit expectations have been hurt by policy decisions. But this could leave states open to action for shuttering oil, coal or gas projects in order to meet the EU’s net zero emissions goal for 2050.
More than two-thirds of EU energy investments protected by the treaty are thought to come from investors also based within the bloc, and overall disbursements under the ECT could reach as high as $1.3tn by 2050, by some estimates.
Cornelia Maarfield, the senior trade and climate policy officer for Climate Action Network Europe, said: “This proposal would dramatically reduce the risk of fossil fuel firms attacking climate policies – at least within the EU. But it would be even better to open the possibility for non-EU countries to join this agreement in combination with a coordinated withdrawal. Why not give other countries the option to free themselves from the claws of this monster of a treaty?”
The commission proposal notes a danger that differences between EU law and the energy treaty “would de facto turn into a legal conflict because arbitration awards violating EU law would circulate in the legal orders of third [non-EU] countries”.
“The risk of legal
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