Obscure energy treaty threatens huge state losses over climate action

(EurActiv, 29 Aug 2022) Italy's multi-million-dollar payout to a UK oil and gas company has sparked renewed calls for the EU to quit a treaty critics say could hinder efforts to phase out fossil fuels.

British oil and gas company Rockhopper has won more than £210 million ($245 million) in a lawsuit over Italy’s ban on offshore drilling, fuelling concern among climate experts about the impact of a controversial energy treaty used to bring the claim.

Since the late 1990s, the Energy Charter Treaty (ECT) has allowed energy firms and investors to sue governments whose plans to cut emissions from fossil fuels hurt their bottom line.

The Rockhopper verdict is the latest ruling in a growing number of legal claims from the fossil fuel industry.

Critics are concerned that the threat of legal action could deter governments from enacting clean energy policies vital to achieving international climate goals.

At a conference in June, member countries concluded a four-year process of modernising the treaty, intended to reflect evolving policy agendas to tackle global warming.

But climate groups branded the reforms "greenwashing", saying they do not align the ECT with the Paris Agreement to curb climate change - not least because they allow investment protection for fossil fuel firms for at least another decade.

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EurActiv, 2 Sep 2022: Obscure energy treaty threatens huge state losses over climate action