How big oil companies can slow the green transition by suing governments that ban fossil fuels |
The UN’s climate summit in Brazil did not produce a fossil fuel roadmap last November, as had been expected. Now the closure of the Strait of Hormuz has exposed the fragility of global dependence on fossil fuels.
The push and pull of nations with respect to coal, oil and gas was once again in the limelight during the first Conference for the Just Transition Away from Fossil Fuels in Santa Marta, Colombia. Representatives from more than 50 countries gathered to explore possible ways to accelerate the fossil fuel phaseout.
In Santa Marta, one solution stood out — the need to eliminate a process known as the investor-state dispute settlement (ISDS).
Read more: ‘Much-needed fresh air’: 5 outcomes from the world’s first summit on ending fossil fuels
Simply put, this rule lets big oil companies sue sovereign states and demand exorbitant amounts of money if they are prohibited from digging up fossil fuels. In 2022, the UN’s climate science advisory group, the Intergovernmental Panel on Climate Change, documented ISDS as one major challenge for fossil fuel phaseout.
In 2025, the International Court of Justice’s advisory opinion clarified that states must phase out fossil fuels. Yet thousands of investment treaties still contain ISDS provisions that let fossil fuel industries sue governments for doing exactly that. For instance, one fossil fuel company sued the Dutch government for committing to phasing........