Electricity transmission pylons beside the gas-fired power plant, operated by Uniper SE, in Irsching, Germany, on Wednesday, July 7, 2021.
Michaela Handrek-Rehle | Bloomberg | Getty Images
LONDON — The Energy Charter Treaty is not widely known, yet it’s feared the influence of this international agreement could be enough by itself to derail hopes of capping global heating to 1.5 degrees Celsius.
The ECT contains a highly contentious legal mechanism that allows foreign energy companies to sue governments over climate action that could hurt future profits.
These “corporate court” cases, sometimes referred to as investor-state dispute settlements, are highly secretive, take place outside of the national legal system and can often lead to far larger financial awards than companies might otherwise expect.
Five fossil fuel companies are already known to be seeking over $18 billion in compensation from governments over energy policy changes and most of these have been brought via the ECT.
For example, Germany’s RWE and Uniper are suing the Netherlands over coal phase-out plans and the U.K.’s Rockhopper is suing Italy over a ban on offshore drilling.
Not only do countries have to get out of that treaty, they have to torpedo it on the way out.
Julia Steinberger
Ecological economist and professor from the University of Lausanne
A spokesperson for Uniper told CNBC: “The Dutch government has announced its intention to shut down the last coal-fired power plants by 2030 without compensation.
“Uniper is convinced that shutting down our power plant in Maasvlakte after only 15 years of operation would be unlawful without adequate compensation.”
RWE said it “expressly supports the energy transition in The Netherlands. In principle, it also supports the measures to reduce CO2 associated with the law, but believes compensation is necessary.”
Rockhopper did not respond to a request for comment.
The number of these corporate court tribunals is expected to skyrocket in the coming years, a trend that campaigners fear will act as a handbrake on plans to transition away from fossil fuels.
Governments that are prepared to implement measures to tackle the climate crisis, meanwhile, could be hit with enormous fines.
“The Energy Charter Treaty is a real trap for countries,” Yamina Saheb, an energy expert and former ECT Secretariat employee turned whistleblower, told CNBC via telephone.
Saheb quit her role with the Secretariat in June 2019 after concluding it would be impossible to align the ECT with the goals of the landmark Paris Agreement. She said any attempt to reform or modernize the treaty would ultimately be vetoed since many member states are heavily reliant on fossil fuel revenues.
Thick smoke, cloud of water vapour comes out of the cooling towers of the lignite-fired power plant Weisweiler of RWE Power AG in Germany.
Horst Galuschka | picture alliance | Getty Images
“If we withdraw, we can protect ourselves, we can start implementing the climate neutrality targets and we can end the promotion of the expansion of this treaty to other developing countries,” Saheb said.
“I think the only way forward is to kill this treaty,” she added. “Either we kill this treaty, or the treaty will kill us.”
The ECT Secretariat was not immediately available to respond when contacted by CNBC.
The treaty has said its fundamental aim is “to strengthen the rule of law on energy issues by creating a level playing field of rules” that help to mitigate the risks associated with energy-related investment and trade.
Who’s involved and how does it work?
The ECT is a unique multilateral framework that applies to more than 50 countries — mostly in Europe and central Asia — and includes the European Union, the U.K. and Japan among its signatories. It is currently looking to expand to new signatory states, particularly in Africa, Asia and Latin America.
Signed in 1994, the ECT was primarily intended to help protect western companies investing in former Soviet Union countries in the post-Cold War era. It was also designed to help overcome economic divisions by ensuring a flow of western finance in the east through binding investment protection.
It has since been sharply criticized by more than 200 climate leaders and scientists as a “major obstacle” to averting climate catastrophe.
Dozens of people walk through water due to heavy rains causing flooding in Dhaka, Bangladesh on October 7, 2021.
Sumit Ahmed | Eyepix Group | Barcroft Media | Getty Images
“I think the treaty is probably by itself enough to kill 1.5 [degrees Celsius],” Julia Steinberger, ecological economist and professor from the University of Lausanne, told CNBC.
“I know that 1.5 is a very tight target and there are a lot of things that can blow it, but it is because it basically saves fossil fuel industries … from the financial collapse that they should face for their risky — and honestly criminal — investments in a harmful technology.”
Corporate court hearings brought via the ECT take place in private and investors are not obliged to acknowledge the existence of a case, let alone reveal the compensation they are seeking.
The average cost of investor-state dispute settlement cases is estimated at roughly 110 million euros ($123.9 million), according to an analysis of 130 known claims by think tank OpenExp, and the average cost of arbitration and legal fees is thought to be around 4.5 million euros.
International environmental law experts say that even the threat of legal action is thought to be highly effective in chilling domestic climate action — and fossil fuel companies are acutely aware of this.
That’s because governments may struggle to allocate resources to a single issue when accounting for other priorities. The threat of legal action becomes progressively more powerful as the budget of the country involved becomes smaller.
Notably, a ruling in favor of the state does not lead to zero cost for taxpayers because the defendant state must pay for legal and arbitration fees.
“Not only do countries have to get out of that treaty, they have to torpedo it on the way out,” Steinberger said. “And that’s something a unit the size of the European Union could do.”
A spokesperson for the EU was not immediately available to comment when contacted by CNBC.
The EU completed its eighth round of negotiations to modernize the ECT earlier this month, with the ninth round of talks scheduled for Dec. 13.
France, Spain and Luxembourg have all raised the option of withdrawing if the EU’s modernization efforts fail to conform to the Paris accord.
What happens if countries withdraw?
Italy withdrew from the ECT in 2016, but it is currently being sued because of a 20-year “sunset clause” which means it is subject to the treaty through to 2036.
Around 60% of cases based on the treaty are intra-EU, with Spain and Italy thought to be the most sued countries. Saheb said that given most of these cases are within the bloc itself, a coordinated withdrawal would likely kickstart a domino effect, with states such as Switzerland, Norway and Liechtenstein seen as likely to follow suit.
And if the bloc were to withdraw from the treaty collectively, member states could agree to remove the legal effects of the sunset clause themselves.
“That sunset clause is much longer than many sunset clauses in other treaties but is also completely incompatible with the notion that regulations need to evolve with the changing reality of climate change, to the changing demands of safeguarding the environment and human rights,” Nikki Reisch, director of the Climate & Energy Program at the Center for International Environmental Law, told CNBC.
“There’s a really strong case to make that the application or enforcement of that sunset clause is contrary to other principles of international law,” she added.
A view of open freight wagons full of coal under smog during a day that the level of PM2.5 dust concentration amounted to 198 ug/m3 on February 22, 2021 in Czechowice Dziedzice, Poland. The central eastern European country has the EU’s worst air, according to a report published by the European Environment Agency (EEA).
Omar Marques | Getty Images News | Getty Images
The European Court of Justice ruled in early September that EU energy companies could no longer use the treaty to sue EU governments. The verdict significantly limits the scope of future intra-EU cases and has thrown the legitimacy of a number of ongoing multi-billion-euro lawsuits into question.
“We are not out of the woods yet,” Reisch said. The ruling was an important step to blunting an instrument designed to protect fossil fuel investors, she said, but it does not take arbitration cases by investors domiciled outside of the EU off the table.
“We can’t let our ability to confront the greatest crisis that we have ever faced as humankind, arguably, be held hostage to the interests of investors,” Reisch said.
“I think it is just another reminder of the need to eliminate those legal structures and fictions that we’ve created that really do lock us into a bygone era of fossil fuel dependence.”
Is it an electric van or a truck? The Kia PV5 might be in a class of its own. Kia’s electric van was recently spotted charging in public with an open bed, and it looks like a real truck.
Kia’s electric van morphs into a truck with an open bed
The PV5 is the first of a series of electric vans as part of Kia’s new Platform Beyond Vehicle business (PBV). Kia claims the PBVs are more than vans, they are “total mobility solutions,” equipped with Hyundai’s advanced software.
Based on the flexible new EV platform, E-GMP.S, Kia has several new variants in the pipeline, including camper vans, refrigerated trucks, luxury “Prime” models for passenger use, and an open bed model.
Kia launched the PV5 Passenger and Cargo in the UK earlier this year for business and personal use. We knew more were coming, but now we are getting a look at a new variant in public.
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Although we got a brief glimpse of it earlier this month driving by in Korea, Kia’s electric van was spotted charging in public with an open bed.
Kia PV5 electric van open bed variant (Source: HealerTV)
The folks at HealerTV found the PV5 variant with an open bed parked in Korea, offering us a good look from all angles.
From the front, it resembles the Passenger and Cargo variants, featuring slim vertical LED headlights. However, from the side, it’s an entirely different vehicle. The truck sits low to the ground, similar to the one captured driving earlier this month.
Kia PV5 open bed teaser (Source: Kia)
When you look at it from the back, you can’t even tell it’s the PV5. It looks like any other cargo truck with an open bed.
The PV5 open bed measures 5,000 mm in length, 1,900 mm in width, and 2,000 mm in height, with a wheelbase of 3,000 mm. Although Kia has yet to say how big the bed will be, the reporter mentions it doesn’t look that deep, but it’s wide enough to carry a good load.
Kia PV5 Cargo electric van (Source: Kia)
The open bed will be one of several PV5 variants that Kia plans to launch in Europe and Korea later this year, alongside the Passenger, Cargo, and Chassis Cab configurations.
In Europe, the PV5 Passenger is available with two battery pack options: 51.5 kWh or 71.2 kWh, providing WLTP ranges of 179 miles and 249 miles, respectively. The Cargo variant is rated with a WLTP range of 181 miles or 247 miles.
Kia PBV models (Source: Kia)
Kia will reveal battery specs closer to launch for the open bed variant, but claims it “has the longest driving range among compact commercial EVs in its class.”
In 2027, Kia will launch the larger PV7, followed by an even bigger PV9 in 2029. There’s also a smaller PV1 in the works, which is expected to arrive sometime next year or in 2027.
What do you think of Kia’s electric van? Will it be a game changer? With plenty of variants on the way, it has a good chance. Let us know your thoughts in the comments below.
Senate Republicans are threatening to hike taxes on clean energy projects and abruptly phase out credits that have supported the industry’s expansion in the latest version of President Donald Trump‘s big spending bill.
The measures, if enacted, would jeopardize hundreds of thousands of construction jobs, hurt the electric grid, and potentially raise electricity prices for consumers, trade groups warn.
The Senate GOP released a draft of the massive domestic spending bill over the weekend that imposes a new tax on renewable energy projects if they source components from foreign entities of concern, which basically means China. The bill also phases out the two most important tax credits for wind and solar power projects that enter service after 2027.
Republicans are racing to pass Trump’s domestic spending legislation by a self-imposed Friday deadline. The Senate is voting Monday on amendments to the latest version of the bill.
The tax on wind and solar projects surprised the renewable energy industry and feels punitive, said John Hensley, senior vice president for market analysis at the American Clean Power Association. It would increase the industry’s burden by an estimated $4 billion to $7 billion, he said.
“At the end of the day, it’s a new tax in a package that is designed to reduce the tax burden of companies across the American economy,” Hensley said. The tax hits any wind and solar project that enters service after 2027 and exceeds certain thresholds for how many components are sourced from China.
This combined with the abrupt elimination of the investment tax credit and electricity production tax credit after 2027 threatens to eliminate 300 gigawatts of wind and solar projects over the next 10 years, which is equivalent to about $450 billion worth of infrastructure investment, Hensley said.
“It is going to take a huge chunk of the development pipeline and either eliminate it completely or certainly push it down the road,” Hensley said. This will increase electricity prices for consumers and potentially strain the electric grid, he said.
The construction industry has warned that nearly 2 million jobs in the building trades are at risk if the energy tax credits are terminated and other measures in budget bill are implemented. Those credits have supported a boom in clean power installations and clean technology manufacturing.
“If enacted, this stands to be the biggest job-killing bill in the history of this country,” said Sean McGarvey, president of North America’s Building Trades Unions, in a statement. “Simply put, it is the equivalent of terminating more than 1,000 Keystone XL pipeline projects.”
The Senate legislation is moving toward a “worst case outcome for solar and wind,” Morgan Stanley analyst Andrew Percoco told clients in a Sunday note.
Trump’s former advisor Elon Musk slammed the Senate legislation over the weekend.
“The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country,” The Tesla CEO posted on X. “Utterly insane and destructive. It gives handouts to industries of the past while severely damaging industries of the future.”
Is Nissan raising the red flag? Nissan is cutting about 15% of its workforce and is now asking suppliers for more time to make payments.
Nissan starts job cuts, asks supplier to delay payments
As part of its recovery plan, Nissan announced in May that it plans to cut 20,000 jobs, or around 15% of its global workforce. It’s also closing several factories to free up cash and reduce costs.
Nissan said it will begin talks with employees at its Sunderland plant in the UK this week about voluntary retirement opportunities. The company is aiming to lay off around 250 workers.
The Sunderland plant is the largest employer in the city with around 6,000 workers and is critical piece to Nissan’s comeback. Nissan will build its next-gen electric vehicles at the facility, including the new LEAF, Juke, and Qashqai.
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According to several emails and company documents (via Reuters), Nissan is also working with its suppliers to for more time to make payments.
The new Nissan LEAF (Source: Nissan)
“They could choose to be paid immediately or opt for a later payment,” Nissan said. The company explained in a statement to Reuters that it had incentivized some of its suppliers in Europe and the UK to accept more flexible payment terms, at no extra cost.
The emails show that the move would free up cash for the first quarter (April to June), similar to its request before the end of the financial year.
Nissan N7 electric sedan (Source: Dongfeng Nissan)
One employee said in an email to co-workers that Nissan was asking suppliers “again” to delay payments. The emails, viewed by Reuters, were exchanged between Nissan workers in Europe and the United Kingdom.
Nissan is taking immediate action as part of its recovery plan, aiming to turn things around, the company said in a statement.
The new Nissan Micra EV (Source: Nissan)
“While we are taking these actions, we aim for sufficient liquidity to weather the costs of the turnaround actions and redeem bond maturities,” the company said.
Nissan didn’t comment on the internal discussions, but the emails did reveal it gave suppliers two options. They could either delay payments at a higher interest rate, or HSBC would make the payment, and Nissan would repay the bank with interest.
Nissan’s upcoming lineup for the US, including the new LEAF EV and “Adventure Focused” SUV (Source: Nissan)
The company had 2.2 trillion yen ($15.2 billion) in cash and equivalents at the end of March, but it has around 700 billion yen ($4.9 billion) in debt that’s due later this year.
As part of Re:Nissan, the Japanese automaker’s recovery plan, Nissan looks to cut costs by 250 billion yen. By fiscal year 2026, it plans to return to profitability.
Electrek’s Take
With an aging vehicle lineup and a wave of new low-cost rivals from China, like BYD, Nissan is quickly falling behind.
Nissan is launching several new electric and hybrid vehicles over the next few years, including the next-gen LEAF, which is expected to help boost sales.
In China, the world’s largest EV market, Nissan’s first dedicated electric sedan, the N7, is off to a hot start with over 20,000 orders in 50 days.
The N7 will play a role in Nissan’s recovery efforts as it plans to export it to overseas markets. It will be one of nine new energy vehicles, including EVs and PHEVs, that Nissan plans to launch in China.
Can Nissan turn things around? Or will it continue falling behind the pack? Let us know your thoughts in the comments below.
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