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Countries Are Abandoning a Secretive Energy Treaty

Many will be horrified that such an agreement even exists. But the UK has become the latest country to announce its withdrawal from the controversial Energy Charter Treaty (ECT), which allows fossil fuel companies to sue governments for profits lost due to climate policies.


Oil rig at sea

The treaty allows fossil fuel investors to sue states for lost profit expectations in an opaque corporate arbitration system set up to protect fossil fuel investors in the former Soviet economies in the 1990s, says The Guardian.


The ECT uses an opaque system of secret courts to facilitate legal action, and is the most litigated investment treaty in the world. For example, in November last year, an oil firm used it to sue the EU, Germany and Denmark over a windfall tax.


The Energy Charter Treaty has been criticized for being a significant obstacle to enacting national policies to combat climate change, and for actively disincentivizing national governments from compliance with recent international climate treaties such as the Paris Agreement due to the threat of significant financial loss.


No wonder, therefore, reports EuroNews, one after another signatories to the treaty have decided to quit unilaterally. France, Germany and Poland are already out, with Luxembourg due to follow by the summer, while the Netherlands, Slovenia, Spain, Denmark, Ireland and Portugal have all announced their intention to quit. Italy withdrew in 2016.


The UK joined the exodus last week, citing a “failure of efforts to align [the treaty] with net zero”.


Campaigners welcomed the news, with Global Justice Now saying it “untied a straitjacket” to a just transition. “The ECT is now a dead man walking, and only those profiting from the destruction of our planet will mourn its passing,” said the group’s trade campaigns manager Cleodie Rickard.


 
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