Don’t let fossil fuel companies block climate action
When the world’s governments meet in Glasgow in November to discuss the climate crisis, the threat of legal action from big polluters in ‘corporate courts’ will lurk in the shadows.
In the year of the last major UN climate summit, in Paris in 2015, the Netherlands seemed to be heading in the wrong direction. Despite the lofty goals of the global summit, the Dutch government had just allowed energy company RWE to open a new coal-fired power station in the country. Climate activist group Urgenda had resorted to taking the government to court over its failure to set more ambitious carbon emission targets, winning an initial ruling.
It seemed to sum up all the frustrations of climate campaigning over recent decades. The need for action to tackle the climate emergency had never been clearer, but governments were dragging their feet and the fossil fuel industry was taking advantage. The following year, a further new coal-fired plant was opened by another company, Uniper.
But the pressure from climate activists did not let up. There were many demonstrations and protests in the Netherlands in those years, and the Urgenda court ruling was confirmed by the supreme court in 2019. At the end of that year, a law was passed by the Dutch parliament to phase out the use of coal altogether, requiring the shutdown of coal power stations.
Enter corporate courts
So people power won, right? Unfortunately, the fossil fuel companies are not only immensely rich and powerful, they also have a privileged legal system they can turn to: corporate courts, formally known as investor-state dispute settlement or ISDS.
These are rules written into trade and investment deals that allow corporations to sue governments outside of the national legal system for huge amounts. They use tribunals that only look at the investor’s interests, and don’t have to balance them against the public interest or the needs of the planet.
Uniper started threatening a corporate court case while the coal phase-out law was still being debated. This bullying put in jeopardy for a while whether the law would actually be passed, but in the end the parliament did the right thing.
Now both Uniper and RWE are suing the Dutch government in the hopes of getting a massive payout. These companies profited first from the government’s inaction. Now they’re trying their luck to see if they can profit twice over through corporate court cases. RWE wants €1.4bn (£1.2bn), while Uniper has not yet said exactly how much it is after.
On the face of it they shouldn’t get a penny. Both companies were well aware of both the scientific case and the public pressure for climate action at the time that they built their power stations. They knew they were taking a risk – not only financially but with the future of the planet. And in reality both plants are uncompetitive and expected to make a loss anyway.
Notoriously, when laws were passed against the slave trade in Britain, it was slaveowners who were compensated, not the people who had been enslaved. Today fossil fuel companies are effectively asking for something similar – reparations for climate action, when instead, as polluters, they should be paying to help fix the problems they have caused. And it is corporate courts that tip the scales in their favour.
Sending a warning
The implications are wider and more dangerous than just the cost for the public purse in the Netherlands. Corporate courts have long been used to oppose environmental protections, but the last few years have seen an ominous turn in the use of them to challenge climate action directly.
Ascent Resources, a UK fossil fuel company, is about to sue Slovenia for requiring an environmental impact assessment on fracking plans. In Canada, a fossil fuel company calling Lone Pine is suing the government over the introduction of a fracking moratorium in Quebec. And Westmoreland, a mining company, is also suing Canada over the phase-out of coal-fired power stations in Alberta.
Corporate court cases can often be secretive and hard to find out about, but Uniper and RWE have been public and vocal in their threats. So much so that it would seem the target is not just the Netherlands, but to send a warning to any other country that might be considering passing similar laws. Especially to developing countries, for whom the amounts at stake are a far higher proportion of their budgets.
That’s why, as the UN climate conference reconvenes in Glasgow this November for COP26, we need to turn our attention to the legal threats lurking in the shadows. Corporate courts will make climate action harder, slower and more expensive at a point when we are already running out of time. In some cases they may deter climate action altogether. If we want Glasgow to mark a turning point, we have to raise the temperature on corporate courts.
This article first appeared in the June 2021 issue of Ninety-Nine, the magazine for Global Justice Now members.
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Photo: Supporters of Urgenda prior to the Supreme Court ruling in the Urgenda case in The Hague, The Netherlands, 20 December 2019. Credit: Sem van der Wal/EPA-EFE/Shutterstock