Oil and gas investors are using a little-known legal tool to successfully argue that climate policies are cutting into their profits.
By Rishika Pardikar, The Lever
Fossil fuel investors are adopting a bold new legal tactic in response to efforts to limit global warming: They are going to private international tribunals to argue that climate change policies are illegally cutting into their profits, and they must therefore be compensated. Now governments are scrambling to figure out how to not get sued for billions when enacting climate policies.
Termed “investor-state dispute settlement” legal actions, such moves could have a chilling effect on countries’ ability to take climate action. Consider this case from 2017: Nicolas Hulot, France’s environment minister at the time, drafted a law that sought to end fossil fuel extraction in the country by 2040. In response, Vermilion, a Canadian oil and gas company, threatened to use such a settlement provision to sue the French government. In the end, the French law was watered down to allow new oil and gas exploration even after 2040.
When these legal actions move forward, the results tend to benefit oil and gas interests. A recent report on investor-state dispute settlement (ISDS) actions found that when such cases were decided on by their merits, fossil fuel investors emerged victorious 72 percent of the time — earning, on average, $600 million in compensation.
According to a paper published in Science last month, more ISDS claims could soon be coming. That is because of the Energy Charter Treaty (ECT), a 30-year-old international energy agreement that has been ratified by 50 countries, mostly in Europe. The treaty calls for “fair and equitable treatment” of investors and “payment of prompt, adequate and effective compensation” in case governments take over their assets — clauses that fossil fuel investors could use to threaten ISDS legal action against new climate regulations.
Recent Posts
The Theft of Bodily Autonomy is Central to the Authoritarian Playbook, and Texas Has Been Its Proving Ground
Take Action Now Texas houses the country’s only family detention centers and has one of the highest maternal mortality rates in the U.S., but it is…
Humanity Owes Cuba: Unilateral Coercive Measures and the Politics of Punishment
Take Action Now “There can be no clearer example of a violation of human rights than the economic embargo imposed by the United States against……
Israel Didn’t ‘Drag’ the U.S. Into War—American Hawks Have Wanted This for Decades
Take Action Now Blaming Israel alone for this catastrophe lets U.S. leaders off the hook for their actions.By Khury Petersen-Smith, Institute for…
The Supreme Court Looks Likely to Cave On Mail-in Ballots
Take Action Now The GOP shouldn’t win this case, but the fact that Trump has been throwing a tantrum about it for years means they likely will.By…