ExxonMobil threatens to sue EU over climate protection requirements

By: Leila van Rinsum

ExxonMobil Challenges EU Climate Rules

The US oil company ExxonMobil is reportedly preparing to sue the European Union before a private arbitration court, according to IAReporters, a media outlet specializing in investor-state arbitration.

The dispute stems from climate protection requirements under the EU's Net-Zero Industry Act, which mandates that oil and gas producers in Europe invest in underground CO2 storage as part of the bloc's climate goals.

Legal Steps Taken

ExxonMobil's two subsidiaries—ExxonMobil Producing Netherlands and Mobil Erdgas-Erdöl in Germany—have already filed a lawsuit before the Court of the European Union. Now, the company appears to be escalating pressure by submitting a "notice of dispute," the first step toward arbitration.

Lukas Schaugg, an expert on investments and energy at the International Institute for Sustainable Development (IISD), explained that the European Commission has three months to respond. If no resolution is reached, ExxonMobil could initiate investor-state arbitration proceedings.

Industry Criticism and Response

Schaugg described ExxonMobil's action as a "message to governments that no climate obligation for this industry can withstand confrontation with investment arbitration proceedings." He noted that ExxonMobil has long promoted CO2 storage as a key climate measure, yet the new regulations would require its two subsidiaries to store less than 1.5 percent of the annual target—just 730,000 tons out of 50 million tons.

Neither the European Commission nor ExxonMobil confirmed the proceedings to taz by the editorial deadline. However, IAReporters quoted an ExxonMobil spokesman who complained that compliance with the CO2 storage rules is "extremely costly," disadvantages companies, and "drives up the cost of living for all Europeans."

"This dispute is as much about saving Europe from itself as it is about the oil and gas industry fighting another irrational law from Brussels," the spokesman said, adding that the Commission now has "the chance to correct this."

Treaty Background

According to IAReporters, ExxonMobil is basing its claim on the Energy Charter Treaty (ECT), an investment protection agreement for the energy sector that oil companies have frequently used to challenge climate regulations.

The EU left the treaty in 2024, but a clause allows companies to sue for up to 20 years after the treaty's termination. It remains unclear which Exxon entity filed the notice, as the United States is not a party to the ECT, and EU subsidiaries are not permitted to sue the EU.

Call for Reform

Schaugg urged the EU to eliminate the "procedural privileges of the oil companies," arguing that such protections undermine climate policy.

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