A little-known legal system in trade treaties is costing governments billions as fossil fuel companies sue for lost profits when climate policies shut down projects.
Fossil fuel companies use trade agreements to sue governments over climate policies, seeking compensation for future profits.
The U.S. narrowly avoided a $15 billion claim over Keystone XL due to a change in trade treaties under Trump.
Other countries like Australia, Canada and Colombia face similar multi-billion dollar claims.
Key quote:
“I cannot overstate just how perverse this is.”
— Mary Robinson, former president of Ireland
Why this matters:
Governments face immense financial and political challenges in phasing out fossil fuels. This legal system discourages climate action and can lead to costly settlements.
In a bipartisan vote, lawmakers voted to join an international agreement to phase out the hydrofluorocarbons commonly found in refrigerators and air-conditioners.
Countries have signed thousands of treaties that protect foreign investors from government actions. Some treaties protect fossil fuel projects—and they jeopardize global efforts to save the climate.
A joint declaration between the United States and China, in which the two superpowers said they would work together on a number of climate-related actions, has taken many by surprise.
