‘Either we kill it, or it will kill us’: The fight to dismantle a shadow court system threatening climate goals
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 SteinbergerEcological 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.
“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.
“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.
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.”
Tesla releases stealth update with new features
Tesla has released a new software update to its fleet and while the release notes remain unchanged, there are a few exciting features that were stealth updated.
The automaker has started to push its 2023.11.4.2 software update.
The update’s release notes are the same as the previous update, but Tesla often updates or adds features without discussing them.
That’s the case with this new update, according to Green, a well-known Tesla hacker who often discovers new features inside Tesla’s code.
He reported that the latest update includes several stealth changes:
Like most premium vehicles today, Tesla has an automatic wiper system that automatically matches the speed of the wipers to the intensity of the rain or snow.
However, unlike most other automakers, Tesla doesn’t use a rain sensor for its system.
Instead, the automaker is using its Autopilot cameras to feed its computer vision neural net to determine the speed for the wipers.
It has been deployed in Tesla vehicles since 2018, but many owners have been complaining that it is not as accurate as other systems using rain sensors.
Tesla’s solution was an update called ‘Deep Rain’ that used a new neural net to power the feature. It came out in 2019, but it was a marginal improvement.
Now Green reports that owners can shut it down if they don’t like it.
Another important stealth update for safety in this new software update is the ability for automatic emergency braking (AEB) to brake for vehicles cutting into your lane. Previously, it would try to avoid things with steering, but AEB was reserved to prevent or reduce the impact for something blocking your way.
For FSD Beta users, the update also now reduces suspensions, which occur after misuse, like not paying attention to the road when using, to one week instead to two weeks.
America’s first US-built electric mini-truck begins street-legal homologation
The AYRO Vanish has grabbed headlines over the past year as it rolls ever closer to production at AYRO’s Texas factory. Now the electric mini-truck’s final step ahead of manufacturing has begun as the Vanish starts street-legal homologation.
The AYRO Vanish is an electric utility vehicle that is designed to fit into the low-speed vehicle (LSV) federal designation. The mini-truck uses a lightweight architecture to limit the entire vehicle weight and maximize the allowable payload.
The Vanish boasts a payload of up to 1,200 lb (544 kg), which is fairly close to many standard-sized pickup trucks. For comparison, a 2023 Ford F-150’s payload capacity starts at 1,310 lb (594 kg). The company also indicated that it plans to produce a non-street legal variant that will have a higher payload capacity of 1,800 pounds (816 kg). That model would be applicable to work sites, campuses and other areas where use on public roads is not required.
Unlike standard pickup trucks, the Vanish offers highly adaptable configurations. Optional rear cargo configurations including food boxes, flat beds, utility beds with three-sided tailgates, and van boxes for secure storage all point to potential commercial applications for the vehicle.
And those future commercial customers could be getting their hands on the Vanish’s steering wheel sooner rather than later. Heading for homologation testing means that the company is now closer than ever to putting those various designs on the road.
As AYRO CEO Tom Wittenschlaeger explained:
“Now that we’ve completed our internal testing, it’s time to ensure that the award-winning Vanish meets requirements of our national governing bodies. Once we’ve completed this process and receive final approval, we can begin delivering vehicles to our customers and dealers.”
In order for any road-worthy vehicle to be considered for sale, the vehicle must go through homologation to ensure it is safe and complies with government regulations.
LSVs have reduced regulatory hurdles, but there are still many safety requirements and design considerations to be addressed. The vehicles must meet regulations for the construction, design, durability, and performance requirements as outlined by federal governing bodies. In the US, this process is governed by the National Highway Traffic Safety Administration (NHTSA).
This complex process of homologation allows for vehicles to be officially classified by date and category as well as have official and certifiable technical information and specifications. The Vanish is completing homologation for both the United States and Canada, for which testing includes the Federal Motor Vehicle Safety Standards (FMVSS) 500, Canada Motor Vehicle Safety Standards (CMVSS) 500 and California Air Resources Board (C.A.R.B.).
In parallel with its homologation phase, AYRO is now planning to begin Low Rate Initial Production (LRIP) by early June to begin building the first 50 Vanish units that will be used as demo models for signed dealers.
The company plans to enter full-scale production upon the successful completion of its first 50 units.
As AYRO’s senior vice president of programs added:
“Our team has worked diligently to prepare for this day. This is one of the final steps in our product development process. Concurrently with homologation, we plan to begin LRIP and immediately following begin delivering vehicles to our customers and dealers.”
The AYRO Vanish opened for orders earlier this month, launching at a starting price of $33,990. While that price is more expensive than several other imported electric mini-trucks, the Vanish’s modular design (and soon-to-be street legal status) is a key differentiator.
AYRO’s vice president of Dealer Sales, Terry Kahl, previously explained the advantages of a modular platform:
With swappable bed configurations, we believe dealers can find a use case for the Vanish with almost any of their existing clientele. We have indications of interest from a rapidly growing number of dealers and now incoming dealers can find added value in that AYRO is accepting their pre-orders even before they join our dealer network. It should be an absolute win-win for our existing and onboarding dealers as well as future dealers.
WAU Project Cyber teased as ‘revolutionary’ high performance electric bike
We see new e-bike launches practically every week here at Electrek, but we rarely seem something quite so… futuristic looking as the upcoming WAU model currently being teased. The UK-based electric bike company is dripping out imagines of its upcoming Project Cyber, which looks like something between a high performance electric bicycle and a light electric motorcycle.
It’s not uncommon for e-bike companies to expand into the moped or light motorbike space. We watched it happen with SONDORS when the company unveiled the Metacycle, SUPER73 with the C1X, and several other smaller e-bike companies.
And while we don’t yet know how the Project Cyber e-bike will be classified, it’s certainly looking like it could be headed in a similarly aggressive direction.
WAU is best known for its long range, urban-oriented electric bikes with enclosed frames and iconic seat stay tail lights that also serve as highly visible turn signals.
It’s a welcome, distinguished design that sets itself apart from many of the other cookie cutter e-bikes we’ve seen over the last few years.
And it appears that WAU may be sticking with some of the same design language for its upcoming Project Cyber, based on the first few teaser images.
The company has been dripping out images and information in a Facebook group set up for sharing details about the upcoming e-bike.
One of the more revealing pieces of information includes a set of design drawings from early in the project. Multiple concepts can be seen, including some with and without bicycle pedals.
The inclusion of bicycle pedals would lend credence to this being a high performance e-bike, while a lack of pedals would put the two-wheeler into light motorbike territority.
WAU seems to be investing heavily in the bike’s technology, though it isn’t quite clear yet what that could mean in terms of features. Many new e-bikes have started to feature advanced connectivity features closer to that of electric cars, including telemetrics and remote operations. A teaser on the company’s site seems to imply that built-in GPS tracking may be included on the WAU Cyber e-bike.
The company is still playing it close to the vest with most details, but suggests that the new model could “revolutionize the industry.”
As WAU explained in the Facebook group description, “Get ready to be blown away by the most stylish pedelec the world has ever seen. Our state-of-the-art technology and design are set to revolutionize the industry, and we are thrilled to have you join us on this journey.”
The company also released several images showing a prototype frame being welded together, seen below.
We don’t yet know what else the WAU Cyber will hold in store for us, but with the reveal expected to come soon, we shouldn’t have to wait for long.
What do you think WAU will unveil as part of Project Cyber? Share your thoughts and guesses in the comment section below.
We’ll be sure to update as soon as we have more information on the upcoming e-bike.
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