'The Energy Charter Treaty has not aged well', 13 July 2022

"Over a year ago, the International Energy Agency (IEA) called for an immediate end to fossil fuel expansion if the world is to decarbonise by 2050 and limit warming to 1.5°C. Along with many other organisations, including the Intergovernmental Panel on Climate Change, the IEA has set out comprehensive pathways to meet those goals. However, countries that impose laws to curb fossil fuel production are liable to be sued for compensation by affected investors via a system called investor-state dispute settlement (ISDS).

ISDS, which is embedded in a network of 2,600 investment treaties, empowers investors to transcend domestic courts and sue their host nations for policy changes that threaten their investments via special international tribunals, supposedly a fairer setting than the domestic courts.

The Energy Charter Treaty (ECT) is the largest agreement of its kind. Among its 54 signatories are the UK and EU, with major players such as the US and Saudi Arabia on board as observers. The incentive for countries signing ISDS treaties has typically been to attract foreign direct investment (FDI). Most of these treaties were signed in the 1990s after the Cold War to capitalise on improved international relations and the fresh allure of free trade (and to protect new western investments in the east)...

... Legal claims by oil and gas investors against states imposing laws to limit fossil fuel activities could reach a total cost of $340bn for governments – more than the $321bn spent globally on public climate finance in 2020 – found new research published in Science in May 2022. This named the ECT as the agreement protecting the most oil and gas production worldwide and noted that its termination could reduce the global cost of oil and gas project cancellations by more than $5–20bn...."