Trade deal gives polluters power to sue governments who try to implement the Paris agreement

The COP21 climate negotiations in Paris have culminated in an agreement that global warming must stay "well below" 2C and efforts must be made to limit warming to 1.5C. This is a significant development. It implies we have to move to a net zero carbon economy by around 2050.

This is an unprecedented global challenge, but it is achievable and could lead us to a healthier future. Authors in the Lancet medical journal have called it the "greatest global health opportunity of the 21st century". It will require bold policy changes and planning. Not only must extensive new infrastructure be established, but intrinsically high carbon industries must either reinvent themselves or disappear.

Trillions of dollars' worth of fossil fuel reserves must soon become "stranded assets". A transition of this scale, within the time frame required, cannot be achieved by tweaking current policy at the margins. Nor can we assume that a miraculous new technological fix will arrive in time. "Business as usual" is not an option. Major structural changes in policy are needed, and quickly.

All of this has now been acknowledged, at least implicitly, by world leaders in Paris. But even while our leaders publicly acknowledge these realities, many are also quietly locking us into investment agreements that would make the transition more difficult. The kind of major policy changes required for the transition to zero carbon are precisely what modern investment agreements are designed to prevent.


The core logic of these agreements is captured in the introductory text of the Trans-Pacific Partnership (TPP): "to establish a predictable legal and commercial framework for trade and investment ..." In these agreements, the right of investors to a light-handed, "business as usual" regulatory environment is paramount. Considerations like climate change, health and human rights are given either low priority or ignored altogether.

In more than 6000 pages of legal text in the TPP, climate change is not mentioned once. On the other hand, entire chapters are devoted to minimising "technical barriers to trade" and ensuring "regulatory coherence". These chapters consist of a range of rules that would turn the move to zero carbon into a legal minefield.

In addition, investors such as fossil fuel companies would be given broad powers to directly sue governments in off-shore tribunals for unfavourable changes in policy under investor-state dispute settlement provisions.

Awarding these powers to the fossil fuel industry is a direct affront to the Paris agreement. Given that trillions of dollars' worth of fossil fuel reserves must remain in the ground - investor-state dispute settlement clauses are a disaster waiting to happen.

Even now, their threat is very real. In Germany, changes to coal-fired power plant standards evoked a US$1.5 billion case initiated by an energy company claiming a violation of their right to "fair and equitable treatment".

Similarly, in Canada, a moratorium on hydraulic fracturing (fracking) under a major river brought a US$120 million case from a US oil and gas firm based on the claim that it violated their "legitimate expectation of a stable business and legal environment".

Despite New Zealanders being assured there would be safeguards against these provisions in the TPPA the final text reveals these are marginal at best. Ratifying the agreement would therefore spring-load the investor-state dispute settlement enforcement mechanism.

Powerful, polluting multinationals would become poised and ready to launch claims the moment we begin to get serious about reducing our emissions.


The NZ climate change ambassador has dismissed the idea that the TPPA would obstruct future action on climate change. However, this view is directly at odds with the European Union Parliament that recently proposed a specific legal "carve out" in a similar investment agreement, aiming to ensure that investors would not be able to sue governments for policies designed to reduce carbon emissions.

The Paris agreement carries symbolic power and is a small pivot towards a stable and health-sustaining climate, but its legal force must be interpreted alongside parallel international agreements that are expressly designed to lock the steering wheel on reforms. If ratified, agreements with strong enforcement mechanisms such as the TPPA could effectively trump the weakly binding Paris agreement. It should be the other way around.

Dr Joshua Freeman is a consultant clinical microbiologist and an executive member of OraTaiao, the NZ Climate and Health Council.

Dr Hayley Bennet is a public health medicine specialist and national co-ordinator for OraTaiao.