The ECT – The Energy Charter Treaty – is a little-known international trade deal that was signed in 1994 by 53 countries. The deal gives foreign investors in the energy sector the power to sue states over government actions that seem to damage or threaten their energy investments. But in practice, the ECT it increasingly being used by companies to block and profit from climate action, putting it at odds with our climate commitments.
What started as a trade deal to protect investments particularly in post-Soviet countries, has unfortunately turned into a tool for blocking and profiting from climate action. Over the last years, the number of arbitration cases has significantly increased, the majority of which involve fossil fuel corporations suing states over green transition policies. The claims often result in governments paying settlements to companies in amounts that often go beyond the actual value of the investments.