Fossil Fuel Projects Safeguarded by International Treaties
Countries taking steps away from oil and gas could face legal blowback from fossil fuel companies that, like all companies, are protected by international investment agreements (IIAs) and bilateral investment treaties (BITs). These agreements allow investors (in the fossil fuel companies) to file claims against countries when they believe their agreements are being violated and investments endangered. It could potentially implicate countries trying to taper off and end fossil fuel use through actions such as canceling pipeline projects.
A study published last week by Science estimates that countries would face up to $340 billion in legal and financial claims, more than current global spending on climate adaptation and mitigation in 2019. This isn’t hypothetical; it’s exactly what Canadian company TC Energy did after President Biden nixed the Keystone XL Pipeline, canceling its permit. TC Energy is seeking more than $15 billion in its lawsuit.
IISD: What Is the Energy Charter Treaty and What Does it Mean for Sustainable Development?, April 26, 2022.
IISD: Cutting Emissions Through Fossil Fuel Subsidy Reform and Taxation, April 22, 2022.
Why This Matters
At least 19% of oil and gas projects currently in the early stages of development are protected by this kind of treaty, the study found. The number could be higher, and the farther along a project is at the time of cancellation, the higher the risk and amount of penalties. Given that the IEA argues that rich countries need to stop all new fossil fuel extraction by 2034, getting caught up in litigation and fines over these projects is the last thing needed.
"It means that money countries might otherwise spend to build a low-carbon future could instead go to the very industries that have knowingly been fueling climate change, severely jeopardizing countries’ capacity to propel the green energy transition forward,” the authors write for The Conversation.
PBS Amanpour and Company: How Big Oil Has Misled the Public on Climate Change Since the 1970s, November 1, 2021.
350 Silicon Valley: Exxon Exposed | A Conversation with Geoffrey Supran and Ben Franta, August 5, 2021.
Denial, Doubt, Delay
A new docuseries The Power of Big Oil on PBS digs into the industry and its strategy to promote denial and progress its agenda. Viewers are offered a close examination of all sides of the campaigns and intentional manipulation of oil giants. Watch Part I: Denial here, Part II: Doubt here, and Part III: Delay here.
NYU Environmental Studies: The Long Game | How Big Oil Delayed Climate Action For Four Decades (with Ben Franta), November 11, 2021.
CBS: Huge carbon emissions cuts needed, UN climate report finds, April 4, 2022.
IEA: A 10-Point Plan to Cut Oil Use, March 18, 2022.