A secretive investor court system poses a real threat to the Paris climate agreement, activists have said, as governments taking action to phase out fossil fuels face a slew of multimillion-dollar lawsuits for lost profits.
New data seen by the Guardian shows a surge in cases under the energy charter treaty (ECT), an obscure international agreement that allows energy corporations to sue governments over policies that could hurt their profits.
Coal and oil investors are already suing governments for several billions in compensation for lost profits over energy policy changes. For example, the German energy company RWE is suing the Netherlands for 1.4bn (1.2bn) over its plans to phase out coal, while Rockhopper Exploration, based in the UK, is suing the Italian government after it banned new drilling near the coast.
“It’s a real threat [to the Paris agreement]. It’s the biggest threat I am aware of,” said Yamina Saheb, a former employee of the ECT secretariat who quit in 2018 to raise the alarm.
“The Paris agreement … means that we need to decarbonise in the current decade before 2030,” said Saheb, also a co-author of the Intergovernmental Panel on Climate Change’s report on mitigation. She has estimated that foreign investors could sue governments for 1.3tn until 2050 in compensation for early closure of coal, oil and gas plants – a sum that exceeds what the EU hopes to spend on its green deal in the next decade.
As compensation to companies is paid by public funds,...
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