European lawmakers have voted to escape a treaty that lets investors sue governments in private courts for pursuing policies that stop the planet from heating.
Fossil fuel companies have used the energy charter treaty (ECT), an international trade agreement from the 1990s, to demand billions of euros of taxpayers’ money in opaque tribunals set up to protect investors.
Several European countries have already announced their exit from the treaty but efforts to coordinate an EU-wide withdrawal had met resistance from member states.
Anna Cavazzini, a German MEP from the Green group who was in charge of the proposal, said the “absurd” treaty had slowed down climate protection and cost billions in taxpayers’ money.
“International fossil fuel investors no longer have the option of bypassing ordinary courts and attacking climate policy with extrajudicial lawsuits,” she said.
Energy companies have sued governments for profits that they expect to have lost through decisions such as phasing out coal and banning offshore oil exploration.
Even as scientists have warned that the supply of fossil fuels must drop sharply to prevent extreme weather from growing more violent, governments seeking to curb the industry’s expansion have found themselves under attack from investors.
Lukas Schaugg, a lawyer at the International Institute for Sustainable Development, a thinktank, said: “Fossil fuel investors have used the ECT to challenge government climate measures through investor-state dispute settlement (ISDS) more frequently than any other investment treaty.
“With its vote for the EU to leave the ECT, the European parliament underlines that granting fossil fuel companies privileged access to ISDS is fundamentally incompatible with climate mitigation.”
In recent years a dozen countries including France, Germany, Italy, Poland and Spain have announced their exit from the treaty as efforts to modernise it have failed. The UK announced it would leave in February.
Audrey Changoe, a trade and investment coordinator at the European branch of the campaign group Climate Action Network, said the landmark vote was an important step in getting the EU out of a “hazardous” treaty that hindered ambitious climate action.