German energy company RWE is today sparking outrage, after claiming €1.4 billion euros in compensation from the Netherlands for banning the use of coal in electricity generation from 2030.
The claim is being made using a controversial energy investment treaty, the Energy Charter Treaty, in reaction to the Netherlands’ climate action law passed in 2019. Friends of the Earth Europe and Milieudefensie / Friends of the Earth Netherlands, together with the Dutch “Handel Anders!” coalition are calling on the EU and the Netherlands to end the ISDS (investor state dispute settlement) claim system in the obscure Energy Charter Treaty that makes this possible.
RWE had already stated that it is set to lose 2 billion euros because of the Netherlands’ so-called ‘coal law’ to combat climate change. The claim follows a threat by German energy company Uniper seeking 1 billion euros in compensation against the Netherlands using the Energy Charter Treaty.
Climate action killer
Freek Bersch, climate campaigner for Milieudefensie / Friends of the Earth Netherlands said:
“RWE could have foreseen years ago that measures would be taken to reduce emissions, but it still went ahead with its new coal plant in 2015. Fossil companies have made billions from climate inaction, but now that the Netherlands finally wants to phase out coal, these companies want even more money. These eye-watering claims make action on the climate crisis more expensive, more difficult, and slower – that’s just unacceptable.”
Audrey Changoe, trade campaigner for Friends of the Earth Europe said:
“It’s outrageous – once again we see a dirty energy company using this obscure investment treaty to undermine the energy transition and force citizens to bailout its reckless investments in dirty fossil fuels.”
End protection for fossil fuels
The Energy Charter Treaty is a controversial treaty which gives investors the right to challenge governments through parallel private courts, or ISDS (investor state dispute settlement) mechanisms. This allows investors, even climate-wrecking fossil fuel companies, the option to ask for billions of euros of public money in compensation from governments even if states pass or enforce legitimate and much-needed environmental protection laws.
The Energy Charter Treaty is being renegotiated to ‘modernise’ it, due to climate concerns, with the next negotiation round between its 50 member states set for March. However EU proposals to reform the treaty do not challenge the ISDS mechanism and continue to offer protection for fossil fuels for at least another 20 years. MEPs are demanding the Treaty must be reformed or ditched.
Audrey Changoe continued:
“Ultimately it’s the Energy Charter Treaty that is facilitating these climate-damaging claims – and the EU and member states either need to finish reforming it now to prevent these handouts to all fossil fuel companies, or quit. The half-hearted measures the EU is proposing so far would not prevent taxpayers from bailing out more stranded fossil fuel assets.”
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Stop the Energy Charter Treaty
The Energy Charter Treaty (ECT) is a major obstacle to fast and effective action on the climate and environmental crisis. Our transformation to a green and fair society will become harder, slower and more expensive if we don’t stop it.