Josh Freeman: Trade rules allow fossil fuel industry to block the path to a healthy climate

Consumption of fossil fuels must decline rapidly. Photo / Getty Images

Opinion

• Josh Freeman is a consultant clinical microbiologist in Auckland.

Imperial Tobacco's recent threat of legal action against New Zealand's plain packaging law is a reminder of how powerful industries respond when core interests are threatened. The core interests of the fossil fuel industry are also under threat.

Consumption of fossil fuels must decline rapidly. The world agrees: to preserve a health-sustaining climate we must rapidly transition from fossil fuel energy. As we begin this transition it makes no sense therefore, to actively provide the fossil fuel industry with new legal weaponry. Yet by ratifying the various trade and investment agreements in the pipeline, that's exactly what we'd be doing.

Let's get real. Despite the nice-sounding public statements, the fossil fuel industry isn't about to roll over and accept policies threatening its core business model. With trillions of dollars at stake, it will fight every step of the way. It will use the tobacco industry's playbook to systematically delay reforms.

This is happening already. Like the tobacco industry-funded campaigns of misinformation about smoking, the fossil fuel industry has funded systematic campaigns to create doubt about climate change. Now the realities of climate change are undeniable, legal challenges are on the rise, including claims using investor-state dispute settlement procedures like those in the TPP.

Investor-state dispute settlement provisions gives multinational corporations broad grounds to claim compensation in response to policy changes that undermine profits.

For tobacco, TPP negotiators recognised that generic legal safeguards against claims under these provisions were inadequate, so they added a specific "carve-out" for tobacco products, but failed to include an equivalent clause for fossil fuels.

This approach contrasts with the European Parliament, which recommended a carve-out for fossil fuels in the European version of the TPP (TTIP). Their concern is well founded.

The danger of dispute provisions in the hands of the fossil fuel industry is shown by a case initiated a few months back by TransCanada Corp for US$15 billion ($20b). This claim was made in response to the US Government's decision to reject the Keystone Pipeline, a massive project to extract vast reserves of high-carbon oil in the Alberta tar sands. Who ultimately wins the case is only partly relevant. Just the threat of risky legal battles can delay reforms, particularly in lower-income countries.

Other trade rules are also creating obstacles for the transition to renewable energy. Just months ago the World Trade Organisation upheld a US claim that India's thriving domestic solar energy programme was unlawful because it favoured the purchase of local products. For lower-income countries navigating the combined challenge of raising people out of poverty while simultaneously shifting to renewable energy, such rigid rules are unreasonable.

Simplistic economic arguments about "level playing fields" lack credibility given how grossly distorted the playing field is already. Laser-like focus on subsidies to India's solar programme seem ridiculous, when considering that according to the International Monetary Fund, the fossil fuel industry receives ongoing public subsidies of more than US$5 trillion a year.

Even more surreal is the recently leaked "Energy Related Services" proposal for the Trade in Services Agreement (TISA), currently being negotiated under the radar between New Zealand and 22 other parties. The chapter contains explicit rules forbidding policies that discriminate between energy services generated by fossil fuels and services generated by renewable energy.

The incoherence of this proposal with international climate commitments is difficult to overstate. Given what we now know about climate science and the behaviour of powerful industries under threat, we can only urge our politicians to reject this proposal outright.

The science is clear: we must rapidly transition from fossil fuel energy. But industry won't let this happen without a fight. All draft trade agreements should therefore undergo independent assessments of their potential impacts on the energy transition process, before they are a done deal. Is this too much to ask?

Given all the information now available, ongoing failure by the New Zealand Government to address this question would be grossly negligent.