Despite consensus on the ECT’s incompatibility with the global climate agenda, claims that it is well-suited for the clean energy transition persist

There is scientific consensus that in order to limit global warming as defined in the Paris Agreement states must swiftly phase out fossil fuels and transition to low-carbon energy systems.[1] However, given the continued dependency of economies on fossil fuels, such phase-outs and the pursuit of a clean energy transition at a global scale are complex tasks that demand that all institutions and levels of governance work in this direction.[2]

Due to its outdated investment protection provisions and the option for fossil fuel investors to challenge sovereign climate action, the ECT is widely recognized to be a key obstacle to the clean energy transition. In 2021 alone, energy giants RWE[3] and Uniper[4] have used the ECT to commence ISDS proceedings against the Dutch government’s decision to phase out coal power plants by 2030.[5] In light of these and other concerns inherent to the ECT’s investment and ISDS provisions, the 56 contracting states of the ECT unanimously decided in 2018 to “modernize” the treaty.[6] Currently, an agreement on how it should be modernized is far from agreed, and some states are considering withdrawing from the treaty altogether,[7] as Italy has already done.[8]

In an attempt to show the ECT’s continued relevance, supporters of the treaty—who can generally be grouped into four sets of actors (the ECT Secretariat [“Secretariat”]), law firms and arbitrators, energy companies, and the government bodies that have tight economic links with the energy industry)[9]—argue that the ECT is necessary for—and indeed has been successful in—protecting and promoting renewable energy investments (“RE investments”). This conclusion is frequently based on statistics from ECT-based ISDS claims brought by investors in renewable energies (“RE cases’’). The Secretariat, for instance, regularly highlights that a large percentage of ECT-based ISDS claims—approximately 60%—concern RE investments.[10]

These statistics have led the ECT’s supporters to draw a set of inferences that converge around certain central statements.[11] It is alleged that the number of initiated RE cases is a strong indicator of the capacity and effectiveness of the ECT to protect and promote RE investments among the 56 contracting parties of the treaty. Furthermore, it is stated that such ISDS proceedings act as an incentive for ECT contracting states to actively promote foreign investment in renewable energies. In this sense, they infer that the ECT’s ISDS provision acts as a deterrent for states to adversely interfere with such foreign RE investments. In addition, it is submitted, such investors would be left without an adequate legal remedy to challenge state interference with their investments.[12]

In sum, supporters see the ECT as an instrument that fosters a more stable regulatory framework for RE investments and therefore incentivizes them. Further, some commentators claim that the ECT promotes RE investments to a greater extent than investments in fossil fuels.[13]

On the basis of these arguments, supporters of the ECT conclude that the treaty is an instrument that is well-suited to protect foreign RE investments and to accompany signatories in the clean energy transition. But to what extent does the data on the number of RE cases cited by the ECT’s supporters indeed allow the drawing of such inferences?

To answer this question, this article assesses these inferences by analyzing data on ECT-based ISDS cases related to RE investments. We have based our analysis on case-related data gathered from UNCTAD’s Investment Dispute Settlement Navigator[14] and the ICSID database.[15] The sample comprises a total of 133[16] publicly known ECT-based investment arbitration cases, of which 76 are related to an RE investment. The data sample includes publicly known ECT-based cases initiated before July 31, 2020. For the purpose of the classification of an investment as investment in “renewable energies,” we applied the definition of the IEA, according to which, renewables “include … bioenergy, geothermal, hydropower, solar photovoltaic (PV), concentrating solar power (CSP), wind and marine (tide and wave) energy for electricity and heat generation.”[17] To gather the sample, all the ISDS cases initiated under the ECT were collected, and each case was classified as relating to either fossil fuel or RE investments. Of the 133 cases samples, 12 arbitrations could not be labelled since the energy source is unknown.[18]

Does the ECT effectively protect renewable energy investments?

At the outset, it is important to note that Article 1(6) of the ECT currently covers investments in renewable energies at several stages of the value chain According to Article 1(5) of the ECT, “‘Economic Activity in the Energy Sector’ means an economic activity concerning the exploration, extraction, refining, production, storage, land transport, transmission, distribution, trade, marketing, or sale of Energy Materials and Products.” These energy materials and products are set out in Annex EM I of the treaty and specifically include any energy investment aimed at the production of electrical energy, including RE investments. Therefore, subject to certain conditions, renewable energy investors indeed have the standing to commence ISDS proceedings against contracting states of the ECT.

However, the mere option to bring such a claim can hardly be considered a decisive factor for the promotion and protection of RE investments. Such a conclusion requires additional proof of actual recourse to ISDS, as well as effectiveness of this use for the promotion and protection of such investments. While 76 out of 133 (60%) of ECT-based ISDS are indeed related to RE investments, our research shows that out of these 76 cases, 46 were brought against Spain to challenge the same legislative measures, i.e., the Spanish government’s decision to alter its feed-in tariffs for renewable energy producers in the wake of the financial crisis in 2008. The remaining 30 proceedings were brought against only nine different respondent states: Albania (1), Bosnia and Herzegovina (1), Bulgaria (3), Croatia (1), Czech Republic (6), Germany (2), Italy (12), Romania (3), and Slovenia (1). No RE case has been brought against the 46 remaining contracting parties of the ECT, which include both economies with significant investment in renewable energy capacity—such as the Netherlands, the United Kingdom, France and Sweden[19]—and economies with virtual absence of such investment, such as Kazakhstan and Azerbaijan.[20]

By contrast, there are 41 ECT-based ISDS cases relating to investments in fossil fuels, involving a far greater geographic variety of 22 different respondent states, with cases spread relatively evenly. The Russian Federation has been the most frequent respondent state, defending six ECT-based ISDS cases brought by fossil fuel investors. In contrast to the 46 RE cases brought against Spain, this number again emphasizes the much greater diversity of respondents in ECT-based fossil fuel ISDS cases when compared to RE cases.

It is hence difficult to conclude that the ECT effectively protects RE investments relative to fossil fuel investments. Not only have there been fewer measures brought to arbitration than in the fossil fuels industry, but these have been very concentrated in just a few countries.

Furthermore, any consideration of the effectiveness of this regime in protecting RE should be based on the decisions awarded. Nonetheless, at the time of publication, 49 of the 76 (65%) RE cases are still pending. Since more than half of the cases have yet to be decided, it would be hasty to conclude that the ECT indeed protects RE investments.

Lastly, research shows that there is no clear evidence of the protection granted by existing investment treaties.[21] The numbers are in line with this outcome. Of the RE cases that have been concluded (27), arbitral tribunals rejected investor claims in 12 cases, and one case was discontinued. In addition, cases in which investors prevailed were geographically concentrated, further eroding the assumption of broad, widespread protection: Of the remaining 14 cases in which investors prevailed, 12 were brought against Spain alone, reaffirming the existence of the interference of specific measures with RE investments in the country, rather than a widespread protection. In fact, considering the non-Spanish cases, nine cases were decided in favour of the state while only two were decided in favour of the investor.

Is the ECT the right instrument to foster the energy transition?

A related question concerns the effectiveness of the ECT in promoting RE investments. In this context, supporters of the ECT claim that the treaty is well-suited to promote RE investments, especially in developing countries.[22] These claims heavily rely on the assumption that by signing IIAs, states attract a greater amount of FDI. However, several recent studies on this topic have been inconclusive, finding little or no evidence on the correlation between investment agreements and investment flows.[23]

In the specific case of the ECT, no tailored empirical research aimed at understanding the motivation of RE investors’ choices has been conducted and, so far, there is no evidence of a link between the existence of the ECT and an increase in FDI among its contracting states.

Furthermore, in the period from 2013 to 2018, an average of 75% of global investment in renewable energy was domestic rather than foreign.[24] As the ECT applies exclusively to foreign investments among its contracting states, it cannot be said to promote such domestic investment.

Moreover, supporters of the ECT claim that without ISDS, RE investors would often be left without an adequate legal remedy to hold host states accountable for the breach of promises made.[25] This interpretation disregards the availability of domestic remedies such as the option to challenge regulatory measures in the national courts of the host states. Indeed, as a reaction to the Spanish government’s measures altering the country’s feed-in tariff system, many investors commenced litigation in the Spanish courts.[26]

There are two further weaknesses in the assumption that the availability of ECT-based ISDS as a legal remedy is a key factor in promoting RE investment: Firstly, it is based on the erroneous notion that access to ISDS is equal for any type of investor, and secondly, it fails to explain why the majority of RE investment actually stems from domestic sources.

When assessing the equality of investor access to ISDS, it is crucial to take into account the particular nature of RE investments that, in light of the recent drop in RE costs,[27] can be much smaller and scattered than fossil fuel investments.[28] The average cost for investors to bring an ISDS claim is USD 6.4 million, and the average arbitral tribunal’s fees are USD 1 million. Access to ISDS therefore depends on the financial means of the investor in question, and the procedure is often unavailable to the small investors that are increasingly investing in RE projects.[29]

Lastly, if the availability of ISDS were such an important factor in the promotion of RE investment, how can the importance of domestic RE investments be explained? Indeed, while domestic investors have no standing to bring an ISDS claim based on the ECT, this does not seem to have been an obstacle for the willingness to invest. A recent scientific analysis of ECT-based cases brought by RE investors against Spain stated that “the only domestic firms that have been able to pursue cases are large multinationals, such as Abengoa and Isolux, who have used their foreign affiliates to gain access to the ECT.”[30]


Upon closer analysis, it becomes clear that no inferences on the ECT’s capacity to protect and promote RE investments can be drawn from the number of ECT-based ISDS cases concerning renewable energies. The mere option of commencing ISDS proceedings is not a factor in protecting or promoting RE investment in ECT contracting parties.

While the treaty’s capacity to protect and promote RE investment in a way that is sufficient to meet the Paris objectives is uncertain at best, ECT-based ISDS cases relating to fossil fuel investments continue to emerge. These cases serve as a stark reminder that the treaty serves as a key obstacle for its contracting parties’ efforts to address the climate crisis.

Instead of trying to pursue reform of the ECT, states may wish to adopt more suitable tools in line with their obligations under the Paris Agreement. ECT contracting parties may, for instance, commit to a definitive schedule for the phasing out of fossil fuels and explore more viable incentives to increase investment in renewable energies.


Lea Di Salvatore is a PhD researcher at the School of Law of the University of Nottingham and a visiting scholar at the Center for Environmental and Sustainability Research at the Nova University of Lisbon.

Nathalie Bernasconi-Osterwalder is executive director of IISD Europe and Senior Director, Economic Law and Policy, IISD.

Lukas Schaugg is an International Economic Law Fellow at IISD and a PhD researcher in investment law at Osgoode Hall Law School, Toronto, Canada.


[1] See Masson-Delmotte, V., Zhai, P., Pörtner, H.O., Roberts, D., Skea, J., Shukla, P.R., Pirani, A., Moufouma-Okia, W., Péan, C., Pidcock, R. & Connors, S. (2018). Global warming of 1.5 C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, pp. 1-9.; International Energy Agency (IEA) (2021). Net zero by 2050: A roadmap for the global energy sector.; see Allen, M. R., Frame, D., Frieler, K., Hare, W., Huntingford, C., Jones, C., Knutti, R., Lowe, J., Meinshausen, M., Meinshausen, N., & Raper, S. (2009). The Exit Strategy. Nature Reports Climate Change 56.; see Allen, M., Frame, D. J., Huntingford, C., Jones, C. D., Lowe, J. A., Meinshausen, M., & Meinshausen, N. (2009). Warming caused by cumulative carbon emissions towards the trillionth tonne. Nature 458, 1163.

[2] See Driesen D.M. (2014). Phasing out fossil fuels. Nova Law Review 38(3), 523; Pirani, S. (2018). Burning up: A global history of fossil fuel consumption. Pluto Press.

[3] See RWE v. The Netherlands (ICSID Case No. ARB/21/4).

[4] See Uniper SE, Uniper Benelux Holding B.V. and Uniper Benelux N.V. v. Kingdom of the Netherlands (ICSID Case No. ARB/21/22).

[5] See Braun, S. (2021). Multi-billion euro lawsuits derail climate action. Deutsche Welle.

[6] See Energy Charter Secretariat. (2018). Decision of the Energy Charter Conference.

[7] See Simon, F. (2021). France puts EU withdrawal from Energy Charter Treaty on the table. Euractiv,; Aarup, S. A., & Mathiesen, K. (2021). Energy pact divides EU as Spain threatens walkout. Politico.

[8] See ECT country page on Italy at

[9] See Flues, F., Eberhardt, P. & Olivet, C. (2020). Busting the Myths around the Energy Charter Treaty: A Guide for Concerned Citizens, Activists, Journalists and Policymakers. p. 7.

[10]  See Energy Charter. (2020). Even more renewable energy investors rely on treaty protection: updated statistics of investment arbitration cases under the Energy Charter Treaty; Vail, T. (2021). The Energy Charter Treaty supports investment in renewables. Euractiv.

[11] See, for example, Thomas, W., Davies, E., & Brennan, A. (2021). The Energy Charter Treaty: First rounds of negotiations to modernize the ECT take place. Freshfields Bruckhaus Deringer.; Vail, supra, note 10; See Rusnák, U.  (2021, February 28).  The Energy Charter Treaty supports investment in renewables [Tweet].; Umbach, F. (2021). The Energy Charter Treaty makes the transition easier. Don’t scrap it, reform it.; Rack, Y. (2021). Energy treaty reform could see investors in fossil fuels, renewables lose cover.

[12] Anatole Boute suggests that “Investment arbitration has the potential to considerably limit the instability that currently affects the implementation of climate change mitigation policies” by limiting regulatory risks. He also analyzes how the current regime (including specifically the ECT) is not apt to effectively protect RE investments and suggests the integration of “a specific low-carbon investment regime in a future international agreement on climate change.” p. 657.  Boute, A. (2021). Combating climate change through investment arbitration. Fordham International Law Journal, 35(3), 613.

[13] See Mete, G.M., & Pei-Ru, J. G. (2021). The role of the Energy Charter Process in accelerating the energy transition and ensuring energy security in South East Europe in line with the Energy Union. In M. Mathioulakis (Ed.), Aspects of the Energy Union: Application and effects of European energy policies in SE Europe and Eastern Mediterranean. Springer International Publishing; Rivkin, D. W., Lamb, S. J. & Leslie, N.K. (2015). The future of investor-state dispute settlement in the energy sector: Engaging with climate change, human rights and the rule of law. The Journal of World Energy Law & Business 8(2), 130.

[14] See UNCTAD. (2020). Investment dispute settlement navigator: Full data release as of 31/07/2020 (Excel Format).

[15] Available at

[16] The dataset does not include the following cases: Prairie Mining Limited v. Poland, Mitsui & Co., Ltd. v. Kingdom of Spain (ICSID Case No. ARB/20/47), Uniper SE, Uniper Benelux Holding B.V. and Uniper Benelux N.V. v. Kingdom of the Netherlands (ICSID Case No. ARB/21/22) and These arbitrations were not included in the dataset collected for this research because they are too recent.

[17] Since the ECT neither differentiates between low- and high-carbon investments nor gives a precise definition of RE investment, we adopted the IEA definition, according to which, renewable energy “includes bioenergy, geothermal, hydropower, solar photovoltaic (PV), concentrating solar power (CSP), wind and marine (tide and wave) energy for electricity and heat generation.” IEA. (2020). World Energy Outlook, p. 436.

[18] For example, in the case Libananco Holdings Co. Limited v. Republic of Turkey (ICSID Case No. ARB/06/8), it is not possible to assess the energy source of this project since the dispute is related to a distribution company, which is hardly classifiable as either low- or high-carbon sector.

[19] See Frankfurt School FS-UNEP Collaborating Centre. (2020). Global trends in renewable energy investment.

[20] See Index Mundi. (n.d.). Countries ranked by fossil fuel consumption.

[21] Selivanova, Y. S. (2018). Changes in renewables support policy and investment protection under the Energy Charter Treaty: Analysis of jurisprudence and outlook for the current arbitration cases. ICSID Review 33(2), 433–455, p. 452; Boute, supra note 12, p. 656

[22] Mete & Pei-Ru, supra note 13.

[23] Tienhaara, K., & Downie, C, (2018). Risky business? The Energy Charter Treaty, renewable energy, and investor-state disputes. Global Governance 24(3), 451; Jacobs, M. (2017). Do bilateral investment treaties attract foreign direct investment to developing countries? A review of the empirical literature. International Relations and Diplomacy 5, p. 583; Yackee, J. W. (2011). Do bilateral investment treaties promote foreign direct investment? Some hints from alternative evidence. Virginia Journal of International Law, 51, p. 397

[24] See IRENA. (2020). Global landscape of renewable energy finance 2020., p. 32.

[25] see Vail, supra note 10.

[26] See Schmidl, M. (2021). The renewable energy saga. From Charanne v. Spain to The PV Investors v. Spain: Trying to see the wood for the trees. Kluwer Arbitration Blog.

[27] IEA. (2020). World energy investment 2020; UNCTAD. (2020). World investment report 2020.

[28] Daintith, T. (2017). Against “Lex Petrolea.” Journal of World Energy Law and Business, 10(1), p. 1.

[29] In a forthcoming IISD report, Lea Di Salvatore explores the degree of entanglement of the fossil fuel industry with the ISDS. The results show that global oil corporations, including several carbon majors, have the monetary power to recur easily to ISDS. Di Salvatore, L. (forthcoming). Global trends in fossil fuel arbitrations. International Institute for Sustainable Development.

[30] Tienhaara & Downie, supra note 23.