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Climate Goals Potentially Still at Risk of Litigation under ETC

The Energy Charter Treaty has been updated and approved by signatories, but concessions won by the EU and UK have not assuaged concerns that it could leave countries open to litigation risk. European nations including Spain have urged the EU to leave the treaty, on grounds it allows for oil and gas firms to sue countries pursuing decarbonisation policies. Such action is possible because the original agreement contains an investor-state dispute settlement mechanism that allows for fossil fuel corporations to sue governments over potential economic losses arising from legislation to move a national energy mix from coal, oil, and gas to renewables. German energy firms RWE and Uniper are currently suing the Netherlands for €1.4 billion and €1 billion euros respectively as compensation for the Dutch government’s plan to phase out coal by 2030. According to climate change think tank E3G, EU talks have already failed at aligning the ECT with the Paris Agreement goals.

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