CO2-emitting cars

Energy Charter Treaty undermines EU climate goals, so the EU must withdraw

The European Commission has informed its members that a collective EU withdrawal from a contentious international energy deal – Energy Charter Treaty – seems likely. Several EU countries have already done so due to environmental concerns.

Aiming to safeguard energy firms by granting them the right to challenge governments over investment-related regulations, the 1998 Energy Charter Treaty includes about 50 signatories, including nations that are members of the European Union.

Some recently used the Energy Charter Treaty as background for keeping fossil fuels

However, it has been used in recent years to contest laws that call for the closure of fossil fuel plants, raising fears that this is a barrier to combating climate change.

With preparations to withdraw from the treaty already declared by France, Germany, the Netherlands, Poland, and Spain, pressure is mounting on Brussels to organize an EU-wide withdrawal. In 2016, Italy departed.

The European Commission in a document distributed to EU nations stated that leaving the EU and its 27 member states would be the best course of action.

Withdrawal from the Energy Charter Treaty seems unavoidable…

The study stated that the EU and Euratom’s exit from the Energy Charter Treaty seemed inevitable.

According to the text, this is not the Commission’s official position but rather reflects its early opinions and is meant to help countries explore their future moves.

The Commission claimed that a number of factors contributed to its conclusion.

Last year, treaty members agreed to some revisions, but EU nations rejected them. So the unreformed treaty with its enhanced investor protections is still in effect.

The Commission stated that continuing to abide by this pact would obviously undercut the EU’s climate ambitions.

…And negotiations won’t help

Renegotiating the pact does not appear to be conceivable given the number of countries exiting individually, it said.

At least 15 EU nations would have to agree to support an EU exit. The European Parliament has already approved the concept.

Due to a “sunset clause,” the pact would continue to protect current investments in fossil fuels for 20 years. This will continue even if countries left.

Since EU enterprises make the majority of the energy investments on their own territory, EU countries may therefore decide to agree among themselves not to enforce this paragraph.

To avoid future litigation from nations like Japan, Azerbaijan, and the former EU member country Britain, they must reach an agreement on such a pact with other treaty members who would do so.

According to the paper, EU country ambassadors should debate on Tuesday. None Non-EU Contracting Party has indicated that they would be receptive to such a solution.

What are the main points of the Energy Charter Treaty?

The Energy Charter Treaty (ECT) is an international agreement that promotes cooperation and investment in the energy sector. The main points of the ECT include:

  • Encouragement of cross-border energy trade and investment
  • Protection and promotion of foreign energy investments
  • Promotion of fair competition in the energy sector
  • Provision of dispute resolution mechanisms for energy-related disputes between states and foreign investors
  • Promotion of energy efficiency and environmental protection.

The ECT covers a wide range of energy-related activities. It includes oil, gas, electricity, and renewable energy. Currently, it has 54 participating states.