The Energy Charter Treaty: how we won!
By: James O'Nions
Date: 1 March 2024
Campaigns: Climate, Trade
On 22 February, the UK government announced it had started the process of withdrawing from the Energy Charter Treaty (ECT). For us it was the culmination of a three-year campaign, and much longer of talking about the Investor-State Dispute Settlement (ISDS) mechanism at the heart of what makes the Energy Charter Treaty such a threat.
The win didn’t come out of the blue, but when you’re campaigning on corporate power in the global economy, out-and-out wins like this aren’t guaranteed – although they do happen more often than you might think. Nevertheless, we’re being asked how we did it, so here are my thoughts:
1. Bring it into the light
Nothing about trade and investment agreements is likely to be even partially in the public consciousness unless we put it there. Building on education work around ISDS, which we’ve been referring to by the more digestible name ‘corporate courts’, we spent a lot of time just telling people that the Energy Charter Treaty exists and how it threatens effective climate action. We ran workshops, produced a photo booklet, and worked to get the issue in the media. When Sky News covered our statistic about just how much money five fossil fuel firms were suing governments for over public policy decisions related to climate change, it also gave us the basis for a popular leaflet which helped get names on our petition.
2. Movement working
We weren’t the only UK organisation campaigning against the Energy Charter Treaty by any means, but we did do quite a lot of work to get others on board. We brought the ECT higher up the agenda of climate NGOs and thinktanks who operate a bit closer to parliamentary politics than we often do, getting MPs from different parties to speak out against it, while keeping this loose UK coalition united behind a strong perspective on the unreformability of the ECT. By the end we had something approaching a civil society consensus on leaving the treaty which the government found it increasingly difficult to ignore.
Global Justice Now local groups threw themselves into the campaign of course, but we also sought out climate movement allies to broaden the grassroots opposition to the ECT. In Salisbury for instance, the home of Rockhopper which won a corporate court case against Italy over its ban on oil drilling near the Adriatic coast, we worked with the local Extinction Rebellion group as well as individual Global Justice Now members to pull off a lively demonstration.
3. Climate matters
With the government handing out new drilling licences for North Sea oil, it would be easy to think that it just doesn’t care about climate change. But that would be an over-simplification. It may not take it seriously enough, or be prepared to really put the lives of people in the global south above the profitability of multinational corporations, but it does understand the need to act on some level. Climate imperatives can cut through – which meant we were able to get people from across the political spectrum on board, such as former Conservative energy minister Chris Skidmore. He probably doesn’t share our opposition to corporate power per se, but he understood that the Energy Charter Treaty was becoming a major impediment to essential climate action. He secured a Westminster Hall debate on the issue and got amendments tabled to high-profile bills such as the Energy Bill.
Climate politics also explicitly pushed other European countries to leave the ECT, with France, Germany and others talking about its incompatibility with the goals of the Paris Agreement of the UNFCCC. These exits paved the way for the UK to leave.
Drawing on the climate narrative and the ‘moments’ of European countries announcing their exits, we were able to increasingly get the ECT into the media: for instance, in quotes reacting to developments in Europe, an exclusive piece on new ECT cases launched by a UK oil company against the EU’s windfall tax, and comment pieces including on the implications of the ECT on the new Offshore Petroleum Licensing Bill.
4. International alliances
There was no guarantee that the UK would leave the ECT once various EU countries had, but it is very unlikely that it would have gone first. That’s why this was always an international campaign, co-ordinated especially with our allies in the European Trade Justice Coalition. Once a few countries with better climate policy, or who had been particularly affected by egregious ISDS cases, had gone our allies were able to leverage this push the European Commission to recommend a co-ordinated exit.
Did a cost-benefit analysis of climate financial risk inevitably force countries to leave the ECT? Not necessarily: people power and civil society coordination has been instrumental in simply getting ISDS known and scandalised. In fact, an ISDS arbitrator recently pointed out that his side had been “politically defeated… we have lost the battle of public opinion”. He also spoke of the “high level of coordination” between the diverse NGOs that oppose ISDS, saying his industry has been forced to engage with “an amorphous and fast evolving constellation of inter-connected organisations”, whose “number… determination and… enormous capacity to organise” means governments can no longer ignore them.
5. Stick to your guns
Until recently the UK government acknowledged some problems with the ECT, but was pinning its hopes on a ‘modernisation’ process that was weak and insufficient, leaving fossil fuel projects protected for another 10 years (countries like Germany and France cited its inability to align the ECT with mandated climate goals as their reason for exiting). Accepting the limits to change and falling back on just trying to get a reform passed could have been seen as a ‘realistic’ position by those used to working within the system. Instead, we recognised that this was our chance to knock the whole thing out, and continued to build pressure to scrap the deal entirely. The fact that our pressure built faster than the bureaucratic creep of ‘reform’ was part of what gave us the edge: the division amongst EU countries on whether the modernisation was acceptable clogged up the process to vote it through, and it was this impasse that eventually pushed the UK government to say it was time to leave.
What’s next?
The Energy Charter Treaty is on its last legs – as more countries leave, there is less funding for its secretariat and it will be less able to pursue its plan to expand its membership into Africa and elsewhere. Eventually it will simply not be viable. The trend is visible for ISDS as a whole, with some countries starting to exit bilateral investment deals which contain them or refusing ISDS in future deals. However, there are still a lot of these deals and there’s nothing to stop any of them being used by fossil fuel firms to sue governments just as the ECT has been.
Undoubtedly the ECT provided a clearer enemy to campaign against than a string of investment treaties, which are onerous and less high profile to tackle one by one, but hopefully we’re getting close to the stage where the whole edifice is beginning to shake.
This is particularly important in the global south, where countries can face cripplingly high costs when corporations win these cases – and significant legal costs even when they don’t. Honduras is currently facing seven such cases, the biggest of which is claiming US$11 billion – a third of the country’s annual budget. It’s fighting back, just this week announcing it was exiting the World Bank’s ISDS arbitration body.
The ISDS regime doesn’t just threaten climate action, but any kind of progressive policy which has been won in the teeth of corporate colonialism. Defeating it fully continues to be a matter of urgency, but one that now seems more possible after our ECT win.
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