The G7 countries together, thus protect half of the fossil emissions protected by these treaties, which in all are worth 5 times the emissions generated in a year by Italy
ISDS protects 12% of global fossil assets
Almost 2,500 international treaties are in force worldwide that are incompatible with the energy transition. The reason? “Blind” fossil emissions. They make it very risky for states to approve policies that reduce greenhouse gases by touching coal, oil and gas, which are the main contributors to the climate crisis. Through a mechanism included in the treaties, the Investor-state dispute settlement (ISDS).
How the ISDS mechanism works
The ISDS stipulates that disputes between a State and an investor entity are decided by a supranational court and not by national courts. Companies can use the mechanism if they believe national legislation harms their interests. Even if such legislation is in the public interest.
A fossil fuel company, for example, can sue a state if the latter approves transitional policies that provide a pathway to phasing out fossil fuels.
And it is precisely the fossil industry that has benefited most from the ISDS mechanism. In cases where details have been made public, these companies have won at least $82.8 billion. “ISDS poses a risk to the global energy transition by delaying ambitious climate measures, increasing the costs of climate action, reducing the tax space to respond to climate change, and encouraging further investment in fossil fuels,” E3G’s recently published report emphasizes.
Fossil emissions “blinded” in international treaties
The incompatibility between this type of international treaty and transitional policies is even more evident after COP28. Last year’s climate summit decided that all countries should commit themselves to a path of transition from fossil fuels. What is the level of exposure of the countries that want to maintain the commitment? How many assets and emissions associated with these assets are on the table?
E3G estimates that the ISDS mechanism will protect at least 2 billion tons of CO2 (GtCO2), 5 times more than those generated in one year by Italy. And the fossils have a protected location: ISDS protects 62% of fossil assets held by foreign companies, equivalent to 12% of global fossil resources. In detail, more than 8 thousand oil and gas deposits, over 1,300 fossil power plants, and almost 700 coal and mining plants are “armoured”.
Approximately half of the fossil emissions thus protected are located in the G7 countries, that is, it is in these countries where fossil companies have their legal headquarters that you can appeal to the ISDS to protect their assets abroad. Britain leads with 255 million tonnes of CO2 (MtCO2), followed by Japan (215), France (188), USA (171). Italy is 5th in the ranking with 92 MtCO2 protected by international treaties that provide for ISDS.
