Green solutions won't come online in time to counter Russian energy crunch
Next week, the town of Stephenville, N.L., will be the stage for a mirage. Justin Trudeau will be there, as will German Chancellor Olaf Scholz, ministers from both countries, local mayors and plenty of well-financed corporate types. They’ll be marvelling at the wind power whipping past the deep-sea port, talking about hydrogen replacing natural gas and freeing Europe from the dependence of Russia, turning Canada into a clean-energy powerhouse and cutting emissions all at the same time.
Report dumps cold water on Canadian LNG exports to Europe ahead of German chancellor's visit
A visit to Canada by German Chancellor Olaf Scholz next week has stoked speculation about the possibility of LNG exports from the East Coast, despite a new report that suggests Canadian natural gas is not the answer to Europe’s current energy woes.
Uniper drops coal case as tensions rise over treaty on fossil fuel projects
German energy company Uniper has been forced by its government to drop a lawsuit against the Netherlands over the proposed closure of coal power plants, highlighting the tensions over a treaty protecting fossil fuel projects.
Deal for Modernized Energy Charter Treaty Insufficient for Ambitious Climate Action
June 27, 2022
The new "agreement in principle" for a modernized Energy Charter Treaty (ECT) falls short of pledges to make the trade and investment deal better suited to achieving international climate goals, IISD experts say.
The Energy Charter Treaty's contracting parties announced the deal on Friday, June 24, capping years of talks that were launched after mounting concerns over the ECT’s excessive use by investors in disputes and record-breaking financial awards against governments. The treaty has long been used to challenge climate action measures. IISD research shows that the ECT is the international investment agreement most commonly used by fossil fuel investors for filing legal claims under international law.
Yet despite pledges by many ECT contracting parties that this modernization process would lead to a more climate-friendly deal, the Energy Charter Conference’s public communication on Friday indicates that the revised treaty will still leave fossil fuel investments protected for at least a decade or longer.
For instance, the European Union and the United Kingdom have agreed that fossil fuel investments that already exist in their territories will only stop benefitting from investment protections starting 10 years after the new treaty enters into force. That means that fossil fuel investors can still file investor–state dispute settlement (ISDS) claims well into the coming decade—even as new research shows that phasing out oil and gas production and consumption must happen on a much faster timetable and that no new oil and gas fields should be developed if we are to limit global warming to 1.5°C.
"Allowing fossil fuel investors to continue to sue governments using ISDS for over 10 years from when the new agreement enters into force undermines governments' ability to address our climate crisis," said Nathalie Bernasconi-Osterwalder, Executive Director of IISD Europe and Senior Director of IISD's Economic Law and Policy program.
To date, other ECT contracting parties have not publicly indicated that they will end investor protections and ISDS for fossil fuel investments in their territories.
"We don't know yet if other ECT contracting parties will set some limits for fossil fuel investments, but even if they do, the modernized treaty will still make it hard for governments to undertake environmental measures to tackle other sustainability challenges," said Lukas Schaugg, International Law Analyst at IISD.
Over the coming months, the deal will undergo "editorial and legal review" and, if no contracting party objects, it will be forwarded for adoption in November. Entry into force then requires at least three quarters of contracting parties to ratify, which could take months or years.
"Until then, the existing treaty remains in place. Yet both versions will make it difficult for governments to take the steps necessary for putting the objectives of the Paris Agreement into practice," said Suzy Nikièma, IISD’s Lead, Sustainable Investment.
Contracting parties need to acknowledge that the outcome as it stands is not fit for purpose in undertaking ambitious climate action. The modernized treaty will also continue to hamper governments' ability to adopt crucial environmental measures in other areas, such as in tackling biodiversity loss or pollution. Unless contracting parties still have the possibility and will to address these major concerns, they will have to consider withdrawal from the treaty, rather than replacing one problematic agreement with another.
Oil Companies Are Suing to Block Climate Action – With 72% Success
Fossil fuel investors are adopting a bold new legal tactic in response to efforts to limit global warming: they are going to private international tribunals to argue that climate change policies are illegally cutting into their profits and they must therefore be compensated. Now governments are scrambling to figure out how to not get sued for billions when enacting climate policies.
Investor-state disputes threaten the global green energy transition
To limit global warming to below 1.5°C, governments will have to simultaneously curb demand for fossil fuels and limit supply. However, efforts to limit supply will affect asset holders, particularly in the upstream (exploration and production) and midstream (transportation and storage) portions of the supply chain. Demands for compensation will ensue, and when the companies involved are foreign, legal claims may be brought to international arbitration in a process known as investor-state dispute settlement (ISDS) (see the first figure). The Intergovernmental Panel on Climate Change (IPCC) has recently acknowledged that ISDS cases could lead to states refraining from, or delaying, measures to phase out fossil fuels.
Subsidizing Fossil Fuels in Times of High Energy Prices: Fossil fuel subsidy reform in trade and climate discussions
May 16, 2022 1:30 pm - 3:00 pm CEST
In-person at International Environment House II, Geneva and online via Webex
(Open to public)
Effectively addressing fossil fuel subsidies is key to reducing greenhouse gas emissions and limiting climate change, thus allowing member states to achieve global goals. Fossil fuel subsidy reform (FFSR) will deliver trade, economic, social, and environmental benefits and release government funds to support green and climate-resilient investments. This event was co-organized by the Friends of Fossil Fuel Subsidy Reform (FFFSR), the International Institute for Sustainable Development (IISD), and the Geneva Environment Network (GEN) ahead of pivotal Stockholm+50, United Nations Framework Convention on Climate Change (UNFCCC), and World Trade Organization (WTO) meetings this June.
About Fossil Fuel Subsidy Reform
Formed in June 2010, the FFFSR is an informal group of non-G20 countries aiming to build political consensus on the importance of fossil fuel subsidy reform. Current members of the “Friends” group are Costa Rica, Denmark, Ethiopia, Finland, New Zealand, Norway, Sweden, Switzerland, and Uruguay.
At the WTO Eleventh Ministerial Conference (MC11) in 2017, a coalition of 12 WTO members signed the FFFSR’s first Ministerial Statement, calling on the WTO to “achieve ambitious and effective disciplines on inefficient fossil fuel subsidies that encourage wasteful consumption including through enhanced WTO transparency and reporting that will enable the evaluation of the trade and resource effects of fossil fuel subsidies programmes.” The Ministerial Statement also noted that any efforts to phase out fossil fuels must consider the needs of the poor.
Building on that effort, the initiative renewed its statement in December 2021 and is now supported by 45 WTO members. The renewed statement seeks the rationalization and phase-out, along a clear timeline, of inefficient fossil fuel subsidies that encourage wasteful consumption and calls on WTO members to join those efforts. The statement recognizes that reforming fossil fuel subsidies must consider the specific needs and circumstances of developing countries and minimize the possible adverse impacts it may have on their development. The statement also identifies the WTO as a forum to advance discussions for ambitious and effective disciplines on fossil fuel subsidies, in part by using enhanced transparency and reporting to enable the evaluation of the trade and resource effects of fossil fuel subsidy programs.
About this Session
With strong momentum on FFSR in both climate and trade negotiations in 2021, negotiators looked ahead to 2022 with a lot of promise for progress. This included expectations of progress within the WTO after delays of in-person meetings due to COVID-19 in 2020 and 2021. Additionally, the inclusion of fossil fuel subsidy reform as a key part of the Glasgow Climate Pact symbolized a turning point where countries could use FFSR with increased focus as a tool to assist in achieving the Paris Agreement goals.
This was, of course, turned on its head in February with the invasion of Ukraine and the associated crises and instability in global energy markets. Within their energy sectors, many countries are facing pressure to diversify their energy supply. In the short and medium terms, this includes increasing the production and consumption of clean energy sources while also managing immediate pressure to mitigate the impacts of high energy prices on consumers. The pressure and allure of subsidizing fuel prices has been very high; in some cases, we have already seen governments agreeing to price relief, for example, instating "holidays" for the collection of motor vehicle fuel taxes while oil prices are high.
In 1972, the United Nations Conference on the Human Environment made the link between environment and poverty and placed it at the forefront of the international agenda. Now, five decades later, with the international community gathering for the “Stockholm+50: A healthy planet for the prosperity of all – our responsibility, our opportunity” conference, and pivotal meetings of both the UNFCCC and WTO also looming in June, this hybrid in-person and virtual event comes at a timely moment. The event brings together trade and climate experts to outline how they look to address the energy pricing crisis strategically through various forums and collectively work to avoid the pressure to subsidize fossil fuels in the immediate term, while still maintaining momentum on FFSR and the clean energy transition in the longer term.
Speakers
Clare Kelly, Permanent Representative to the World Trade Organization, New Zealand Ministry of Foreign Affairs and Trade
Joy Kim, Senior Economic Affairs Officer, United Nations Environment Programme
Aik Hoe Lim, Director, Trade and Environment Division, World Trade Organization
Ana Laura Lizano, Counsellor, Permanent Mission of Costa Rica to the World Trade Organization
Laurie van der Burg, Global Public Finance Campaign Co-Manager, Oil Change International
How a little-known energy treaty could thwart global climate action
As many publicly traded companies around the world hold their annual general meetings, climate-conscious shareholders are upping pressure on financial giants to slash their investments in coal, oil and gas - fast.