Reporting for The Lever in June 2022, Rishika Pardikar revealed how big oil investors are adopting new legal strategies to combat climate change policies. These fossil fuel shareholders are opening cases against state governments, claiming that climate change proposals are taking advantage of their profits–and therefore, investors must be compensated for their losses. These threats have had a chilling effect on future and current climate policies as governments fear potential lawsuits.
One case featuring Vermilion, a Canadian oil and gas company, demonstrates how investor threats are making it difficult for countries to act against climate change. According to Pardikar’s article, France’s environmental minister Nicolas Hulot drafted a law in 2017 to end fossil fuel extraction by 2040. As a result, the Canadian oil company threatened to use an “investor-state dispute settlement” (ISDS) to sue the French government. This provision takes advantage of a provision that allows investors to sue governments for treaty violations. Due to the ISDS, Hulot’s climate change bill was diluted, enabling oil and gas companies to continue extraction after the originally-approved 2040 deadline.
Other reports citing ISDS actions showed that these efforts consistently benefit fossil fuel companies and their investors. One recent inquiry into climate-related ISDS reports found that fossil fuel investors won their settlements 72 percent of the time. This resulted in investors earning over $600 million in compensation.
The problem continues to worsen after fifty countries, mostly European, enacted the Energy Charter Treaty (ECT). Pardikar cites a Science article that claims that the ECT demands “fair and equitable treatment” of investors and “payment of prompt, adequate and effective compensation.” Additionally, in instances where governments obtain investor assets, investors can invoke clauses in the ECT to threaten legal action against lawmakers for future climate proposals.
The European Union recently attempted to push back by “revising” the ECT to account for climate goals. However, European Parliament Chairman Pascal Canfin announced that mediation efforts failed and the ECT will likely continue to be “used by investors to sue states into taking climate action.” Consequently, the chairman is calling on all EU countries to exit the Energy Charter Treaty.
Many climate activists and lawmakers are concerned that the ISDS will prompt future actions against climate progress. Laura Létourneau-Tremblay, an international investment law researcher at the University of Oslo, explained that ISDS provisions requiring states to compensate fossil fuel companies could “prevent governments from taking ambitious climate actions… [There are] real concerns as to whether the ECT is compatible with the net-zero energy transition.”
Shortly after President Biden repealed the Keystone Pipeline permits last year, the Canadian company TC Energy took legal action against the US government. The company filed a lawsuit, citing a “responsibility to our shareholders to seek recovery of the losses incurred due to the permit revocation.” TC won and was awarded a whopping $15 billion in damages.
One of the most concerning aspects of the ISDS is that it offers foreign companies a loophole to avoid local courts––which frequently require them to operate under stricter regulations. Instead, these companies can sue international governments, allowing them to avoid the limitations of local laws and to pick and choose which jurisdictions likely to side with them. Additionally, under ISDS, governing bodies cannot file suits against foreign companies, they can only react against claims filed against them. As of October 2022, this story has not been covered by any corporate media outlets.
Source: Rishika Pardikar, “Big Oil Is Suing Countries to Block Climate Action,” The Lever, June 8, 2022.
Student Researcher: Reagan Haynie (Loyola Marymount University)
Faculty Evaluator: Mickey Huff (Diablo Valley College)
The post Fossil Fuel Investors Sue Governments to Block Climate Regulations appeared first on Project Censored.
This content originally appeared on Project Censored and was authored by Vins.
Vins | Radio Free (2022-12-01T22:00:50+00:00) Fossil Fuel Investors Sue Governments to Block Climate Regulations. Retrieved from https://www.radiofree.org/2022/12/01/fossil-fuel-investors-sue-governments-to-block-climate-regulations/
Please log in to upload a file.
There are no updates yet.
Click the Upload button above to add an update.