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Why we are going to mine, drill and burn every last chunk of coal, cubic foot of gas and drop of oil [1]
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Date: 2025-03-07
www.theguardian.com/…
Short answer: The ISDS.
What is the ISDS, you ask…?
ISDS stands for Investor-State Dispute Settlement. It was created in the 1960’s by the World Bank in order to help companies protect investments abroad by giving corporations confidence to invest in poorer countries with weak political systems where they might not get a fair hearing in domestic courts. It allows companies to sue countries for lost profits caused by government action including corruption, seizure of assets or the introduction of health and environmental policies or even the adoption of labor laws, designed to protect workers.
It “works” by allowing corporations put forward a case showing that a nation has damaged its profits. Most international treaties and free trade deals include ISDS provisions. Cases are heard by a private arbitration tribunal, typically decided by a panel of three arbitrators – one chosen by the company, one chosen by the state and the third selected jointly.
Who makes use of the ISDS?
Most of the cases brought before the ISDS are brought by corporations based in developed countries (81% according to UN data) generally against developing countries (62% of the time). The fossil fuel and mining industries are the most litigious, bringing 30% of the cases.
What are the stakes involved?
Awards regularly amount to hundreds of millions of dollars, and some are in the billions. In 2024 the average amount awarded was $385m (£304m). The average sum awarded is increasing and these payouts can make up a sizable chunk of poorer countries' annual budgets.
How many cases are brought to the ISDS?
In the early years of the ISDS, the number of cases brought before the tribunal averaged about one per year for its first decade. Nowadays, dozens of cases are brought each year. A Guardian analysis found more than 900 cases filed since 2013.
Some examples of cases brought before the ISDS
In Transylvania, a Canadian mining corporation plans a massive gold and silver mine that requires flattening four mountain tops, displacing hundreds of families and leaving behind a waste lake containing cyanide, a toxic chemical used in the process of gold extraction, sparking a national outcry leading the Romanian government to pull its support of the project.
In the Gulf of Mexico, off the Mexican coast, an underwater exploration corporation gets a permit to survey a massive phosphate deposit. Before it can begin, Mexico withdraws the permit, saying the ecosystem is “a natural treasure” that could be threatened by mining.
After a years long battle, Romania was able to prevail in its case, at great expense, while Mexico was forced to pay for the ‘lost profits’ of a project that was never started.
What are the effects of having the ISDS system in place?
The worst effect of the ISDS is to chill the desire of governments to defend against the loss of nature and the the fight against climate change by legal risks. Now, government ministers from a range of countries have confirmed to the Guardian that this “chilling” is already in effect – and that fear of ISDS suits is actively shaping environmental laws and regulations.
For example, in 2018 New Zealand wanted to ban new offshore drilling projects but stopped short, due to fears of being sued under the ISDS by foreign oil and gas corporations. James Shaw, the climate minister at the time said, “We could see what was happening around the world”, he said. “We’d keep track of the number of ISDS cases that were being taken and what percentage of those were essentially hostile to environmental regulation.”
In 2021, the International Energy Agency released a report saying the 1.5C pathway requires no new oil, gas or coal. But the issue of regulatory chill has been acknowledged by a number of international bodies, including the 2022 IPPC report on climate change. “Numerous scholars have pointed to ISDS being able to be used by fossil fuel companies to block national legislation aimed at phasing out the use of their assets,” the authors wrote. The UN, Council of Europe and European parliament have all raised similar concerns about climate action being delayed or watered down by ISDS.
Basically, what we have here are two conflicting regimes. The 1960’s ISDS regime, designed to protect corporate profits, and the 2015 Paris Accords, designed to mitigate the worst effects of climate change.
A 2023 UN report by David Boyd, the special rapporteur on human rights and the environment, found Denmark, New Zealand and France had limited their climate policies because of the threat of ISDS, with the Spanish government saying it has slowed its transition away from fossil fuels over “fear of being sued by a foreign investor”. The report stated that this threat has become a “major obstacle” for countries addressing the climate crisis.
The ISDS tilts the playing field in favor of potential profits over the dangers of climate change, environmental destruction and worker protections.
Another example of the ISDS run amok.
Fearing toxic waste, Greenland ended uranium mining. Now, they could be forced to restart - or pay $11bn…
Someday, maybe, the fossil fuel and mining companies could be forced to, at least, clean up after themselves.
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