5 Reasons why ECT 'modernisation' is corporate greenwashing

1. The claim: The modernised ECT is “aligned with common climate objectives” 

The truth: The ECT is a serious obstacle to the phase-out of coal, oil and gas, putting the transition to a low-carbon economy further away 

The UK should be taking a fairshare of responsibility for the climate crisis, which would mean cancelling and phasing out fossil fuel projects immediately, rather than approving new oil fields. The ‘modernised’ ECT, however, would give oil, coal and gas corporations the power to sue us, and other countries, for at least another 10 years. It would also give fossil fuel corporations the power to demand massive compensation schemes if governments try to phase out fossil fuels in return for not suing under the ECT, as happened recently in Germany. 

A ‘modernised’ ECT would also give the green light to the ECT Secretariat to plough ahead with its extensive plans to expand the reach of the treaty to countries in Africa, Asia, and Latin America, putting these countries at more risk of extortionate claims and severely hampering their energy transitions. 

2. The claim: The ECT would “[advance] the global energy transition” by encouraging investment in renewable energies 

The truth: There is no evidence that the ECT encourages investment in renewable energy.

Studies have shown that most investors are not even aware of the existence of investment treaties when they decide to invest in a country or not, and even when they do know, it isn’t an important factor in their decision.^[1] Countries like India and Brazil, that have terminated or never signed up to investment treaties like the ECT, rank highly on lists of attractiveness for renewable energy investment.^[2] While the ISDS claims against Spain are often cited as an example of how the ECT can support the energy transition, recent research revealed just how much those cases benefitted law firms, financial corporations and investment funds who took the majority of cases against taxpayers, while discriminating against the small, domestic investors and communities, who are the real drivers of the energy transition. 

3. The claim: Expanding the ECT to new technologies will make it “valuable in supporting clean energy investment in the future”  

The truth: Expanding the ECT to new technologies will embed a colonial approach to energy production, and the UK taxpayer may be forced to pay billions for failed technologies

In negotiations over the modernisation of the ECT, the UK government has lobbied hard to include carbon capture and storage (CCS) and infrastructure for hydrogen in the list of things governments can be taken to corporate courts over. The logic of expanding the treaty to cover these ‘green’ projects is flawed. CCS, and hydrogen energy technologies have not been proven to work at scale and protect the interests of the fossil fuel industry as they rely on tradition fossil fuels for production.  

In 2021, global operational CCS capacity was at 0.1% of annual global emissions from fossil fuels and 81% of carbon captured to date has been used to extract more oil.^[3] Friends of the Earth has called CCS “a risky, unproven, costly, and dangerous distraction from the urgent and drastic emissions cuts needed to prevent catastrophic climate change”. ^[4] Similarly, in the EU, “green hydrogen” makes up less than 0.1% of hydrogen, which means that demand for hydrogen is filled with blue hydrogen — made from burning gas.  

‘Green hydrogen’ is also being used to justify the construction of mega renewable electricity and hydrogen projects in North Africa. These projects are built to provide energy to people in the global North. For those in the global South they mean land grabs, the depletion of critical water resources and environmental devastation. These projects are climate-colonialism not climate justice — replicating the neo-colonial relationships of the fossil fuel economy.  

These techno-fixes are being used as a smokescreen by fossil fuel lobbyists to avoid real change. Climate justice demands real reductions in emissions, not hypothetical future offsets, premised on sacrificing lives and livelihoods in the global South.  

The UK government is currently throwing funding and incentive schemes at CCS and hydrogen projects as part of its Net Zero Strategy. If the UK joins the modernised ECT, these unproven technologies fail to deliver, and the UK scraps its incentive schemes — taxpayers could be forced to pay out huge sums to investors. Signing up to the modernised ECT ultimately risks further arming the fossil fuel industry with the means to extract even more money from the public purse.

4. The claim: ISDS is okay so long as the treaty includes the “right for states to regulate” on legitimate public policy decisions 

The truth: This language is meaningless window dressing

The inclusion of this language does not change the fundamental nature of corporate courts. In an ISDS case three privately appointed arbitrators, working outside of any national justice system, have total power to decide what is and isn’t ‘legitimate’ and in the public interest, and governments waive all rights to appeal the court’s decision. 

5. The claim: Modernisation is “in the interests of all” 

The truth: Modernisation is in the interests of the private sector and corporate profits.

Rhetoric positioning the ECT as a part of an energy transition, is greenwashing. Failing to take the opportunity to leave the ECT now means that we lose the momentum to advance a critical step in the fight for a fairer, climate-just future. We must leave the ECT.