EXPRESS #3 - June 19, 2018
Is the Energy Charter Treaty the Dark Lord of the energy sector?
Corporate Europe Observatory (CEO), a Brussels-based non-profit research and campaign group whose declared aim is to “expose any effects of corporate lobbying on EU policy making” has written an extremely critical report on the Energy Charter Treaty.
It is also, I have to say, extremely one-sided (and note that Energy Post has no relationship at all with the Energy Charter Treaty!).
The new report “exposes how the little-known but expanding Energy Charter Treaty gives corporations unprecedented influence over energy policies in already nearly 50 countries”, says CEO in a press release.
“Energy investors are currently suing governments for more than $35 billion in taxpayer money – more than the estimated amount Africa needs to adapt to climate change each year – under a little-known international treaty that also makes it harder for countries to transition away from dirty energy sources”, says CEO.
“The ECT lets foreign investors sue states over a huge range of government actions which they could argue negatively impact their profits. Companies have used this treaty to demand eye-watering sums in compensation even for potential ‘lost future profits’.”
The 96-page report, One Treaty to rule them all: The ever-expanding Energy Charter Treaty and the power it gives corporations to halt the energy transition, “reveals how big oil, gas and coal companies have already used the ECT and similar international investment agreements to challenge clean energy policies, oil drilling bans, taxes on fossil fuels, and environmental regulations.”
Co-author of the report, Pia Eberhardt from Corporate Europe Observatory, said: “The ECT grants even more power to corporations which are destroying the planet and have committed serious human rights violations. It would be sheer madness for more countries to sign this agreement when instead they should force corporations to clean up their ecological disasters and yield benefits to local communities.”
Cecilia Olivet from TNI, another of the report’s authors, added: “This treaty is a fundamental obstacle to dealing with the key challenge of our times: global warming. At a time when all attention should be focused on averting a climate catastrophe, there is no space for an agreement that penalises many of the solutions to this problem. Now is the moment for countries to leave this treaty.”
States “have already been sued 114 times under the ECT – with most of these claims filed in the last five years alone, primarily against western European states. In 16 suits, investors demanded US$1 billion or more from governments. In 61% of resolved cases, the outcome has favoured the investor.”
“Emblematic cases”, writes CEO, “include Swedish energy giant Vattenfall seeking €4.3 bn from Germany over the country’s decision to phase out nuclear energy; UK oil company Rockhopper suing Italy over a ban on new offshore oil drilling projects; and multi-million dollar claims against Bulgaria and Hungary after they curbed big energy’s profits and pushed for lower electricity prices. Investment lawyers are considering similar action against the UK, where the government has announced a cap on prices to end rip-off bills.”
“Many more ECT cases could follow if governments enact necessary further and stronger measures to respond to climate change and energy poverty”, the report warns.
The report paints the ECT in the darkest possible colours. For example, about the Secretariat, it has a chapter with the headline: “Welcome to the ‘family: the Energy Charter Treaty profiteers”.
It says: “What do you think of when you hear the word ‘family’? Whatever makes a family for you, the word is intended to evoke ideals of mutual love and care, which is why those who benefit from the Energy Charter Treaty (ECT) like to use a family image to promote it. But the ECT family is no loving home. It’s a place of corporate power and greed, of conflicts of interest and abuse. And some family members profit handsomely when investors sue governments.”
Apparently working for an energy company is enough to be an Orc in the view of the activists. (Sorry – I just hate it when people misuse the great work of Tolkien.)
What CEO fails to note is that cases brought under the ECT against governments are neutral from a climate perspective. Indeed, Spanish and Italian investors sued their governments because they suddenly pulled the plug on renewables support! Vattenfall, as CEO mentions, sued the German government over the nuclear exit – arguably a disaster for the climate.
The fact that governments have to pay damages to energy companies in itself proves nothing. The charge that the $35 billion over which governments are being sued “is more than the estimated amount Africa needs to adapt to climate change each year” is ridiculous propaganda. Why not take the amount people spend on fireworks, or candy, or boat trips and compare that to “the estimated amount Africa needs to adapt to climate change”? What about all the grants and subsidies that are being given to NGO’s?
The Energy Charter Treaty is not an instrument “to kill the energy transition”, as the CEO claims. It is an instrument that enables energy companies to sue governments if they expropriate assets unfairly.
For all I know, there may be a lot of things wrong with the Energy Charter Treaty, but it should be investigated fairly, not with blinders on, as Corporate Europe Observatory has done.