Dr. Yamina Saheb:

Yes. The €2.15 trillion figure is an estimate of the investment in fossil fuels that has already been made and is already protected by the ECT, and the investment that will be protected until 2050 if we do not phase out the protection of fossil fuels in all the ECT contracting parties. These are stranded assets. The €1.3 trillion figure is the estimate of potential ISDS cases that may occur because of the implementation of the Paris Agreement in ECT contracting parties. This means that we have to stop these fossil fuel installations earlier as these will trigger ISDS cases.

On the question of a few cases that are well known, Germany has been sued three times so far and there are two cases that are very well known. One case was related to the phase-out of nuclear power. Germany has been sued twice by the Swedish Vattenfall company. One of these cases was related to the phase-out of nuclear power plants. The company asked for €1.4 billion. The arbitration on this case was done in the US. As the Deputy will see, the tribunal was not in the EU. The other German case, involving Vattenfall again, related to coal-powered plants and they asked for €4.3 billion. This case relates to the pollution of a river next to Hamburg, if I remember correctly, and to the impact of using coal-powered plants.

The last case I will mention in Germany, which is a new one, relates to the changes in subsidies for wind-powered plants. One can see what happened in Spain and then in Italy because of the Spanish and Italian cases. All of the Spanish cases are related to changes in subsidies in renewables. In the Italian cases, there is one that is related to the ending of the licence for exploring fossil fuels in the sea around Italy with a British company.

In the estimate I provided, I did not include at that time the phase-out of subsidies because it was not actually on the table. If one, however, includes the phase-out of fossil fuel subsidies as called for by COP26, this figure will increase to a much higher one.

The Deputy concluded by asking if it is possible to make the ECT compatible with the Paris Agreement. I do not think that it is possible because to amend the treaty, one needs a unanimous vote. That is why I consider it a waste of time to discuss this treaty. The countries, parties and the current constituency of the treaty include countries making income out of fossil fuels. In some countries like Azerbaijan and Uzbekistan, fossil fuels account for more than 10% of GDP. If more than 10% of your country’s GDP came from fossil fuels, would you phase out fossil fuel investment protection? The answer is obviously “No”. If you have the right to vote to phase out fossil fuel protection, would you vote to phase out fossil fuel protection? The answer again is obviously “No”. I do not think the current constituency of the ECT allows it to become compatible with the Paris Agreement. In any event, the EU proposal is not compatible with the Paris Agreement because it is about not protecting new fossil fuel investment but keeping the protection of the existing investment which is not compatible with the Paris Agreement. The International Energy Agency report, Net Zero by 2050, says that by 2025 we should stop investment in fossil fuels. One can see, therefore, that it is not compatible.

What is the solution then? The ideal solution from the climate and justice perspective for areas of the south would be that all contracting parties come together to end the ECT. They could sincerely do this, but it is not on the negotiation table because of the differences in the implementation of the Paris Agreement between different countries and the position of Japan, which is very bad from a climate perspective because its position is very negative and conservative.

The only hope is that the Europeans, the EU countries, withdraw collectively. Why do we need a collective withdrawal? If we have a collective withdrawal, we could decide between ourselves to end the sunset clause between ourselves. By doing this, we would end the protection of more than 60% of the foreign investments in the EU. This would be one outcome of the collective withdrawal. The other outcome is that if we withdraw collectively, there will be no one to finance the expansion of the ECT to the global south because this expansion is financed with our money.