The Luxembourg government has decided to exit the Energy Charter Treaty (ECT), an international trade and investment agreement concluded in the early 1990s to protect investments in the energy sector, Luxembourg’s Minister of Energy and Spatial Planning, Claude Turmes, announced on Friday 18 November. Frédéric Simon discusses latest developments in an article on the Euractiv website.
Another blow for Energy Charter Treaty as Luxembourg announces exit
Luxembourg has decided to withdraw from the Energy Charter Treaty following in the footsteps of Germany, France, the Netherlands and others who have recently announced their exit from the controversial 1990s charter.
In force since 1998, the treaty, which has 53 signatories including the European Union, allows investors to sue governments over policies that jeopardise their investments and expected profits.
But a growing number of EU countries have decried the ECT for violating the goals of the Paris Agreement by offering legal protection to climate-wrecking fossil fuels.
Germany, preceded by France, the Netherlands, Poland and Spain, have recently announced their intention to withdraw from the treaty, citing the charter’s incompatibility with EU climate goals.
Luxembourg has now come to the same conclusion.
“Today, Luxembourg is exiting the Energy Charter Treaty. This is what the government council has decided today, based on my proposition,” the country’s Energy Minister Claude Turmes said in comments posted on Twitter.
“Even if the modernisation of the Energy Charter Treaty leads to some progress, the treaty is still not compatible with the goals of the Paris Climate Agreement, as it continues to protect investments in fossil and nuclear energies,” Turmes explained.
The ECT was conceived after the collapse of the USSR, at a time when investors were wary of putting their money in the former Soviet bloc. It was designed to promote energy security by fostering open markets and investments in the newly independent states.
However, the European Commission acknowledged that the treaty had been rendered “obsolete” by the Paris Agreement to curb climate change and needed to be reformed.
In June, the EU executive announced a breakthrough in talks to reform the ECT, which will be submitted for approval to the treaty’s 53 signatories during a conference of the parties due to take place on 22 November.
Unanimity is needed to pass a new text. But with a growing number of countries planning to withdraw, it is uncertain if the EU will be in a position to back the reformed text at the ECT conference next week.
Blow for reformists
The announcement by Luxembourg is a severe blow for those supporting the treaty’s modernisation process.
Turmes used to be among the most vocal critics of the treaty but backtracked in February last year, shortly before a Luxembourg official, Guy Lentz, was appointed to lead the ECT secretariat in Brussels.
Since then, he had made the case for reforming the treaty, saying EU countries were “a major force” among the signatories, making 65% of the secretariat’s budget.
“An EU withdrawal would be seen as a major diplomatic failure and a step back in the climate ambition” of the EU, Turmes argued at the time.
5 thoughts on “The latest EU state to leave the Energy Charter Treaty: Luxembourg”
Over the years, I have looked on as UN bodies such as the IMO and others such as ICAO have shown themselves (mostly due to vested interests) to be functionally incapable of reform. Indeed, arguably, their main function was to keep the travel industry in business as they held lots of nice meeting, in lots of nice places to produce ZERO RESULT. The ECT falls into the same class: a talking shop, with plenty in it that are happy to keep talking & talking to produce: ZERO RESULT.
Thus, given the EU is the largest trading block on the planet, given much of the semiconductor manufacturing equipment needed to keep the planet’s ICT-based “life-style” going is produced in the EU, given ditto for, for example PV, wind – global leader, then perhaps it is time for the Eu to play hard-ball. Instead of being permanently “nice” to those that are not, tear up the treaties, tell the idiots in the IMO the way it is going to be, ditto ICAO and the other parasitical & useless multi-national orgs and get things done vis a vis the climate emergency (the clue is in the second word – emergency).
Turmes has been around for too long – time for fresh faces & fresh view points. He is, after all, only a politico, I have not noticed a shortage of them.
Turmes’ invoking nuclear (besides fossil as others do) has the benefit of demonstrating the ineptness of blaming the ECT to be a climate killer. The ECT protects only FOREIGN investment, not domestic or from non-Parties such as US etc. The modernized ECT prohibits intra-EU ISDS. This reduces the ECT in fact to a heptalateral treaty between EU, Japan, Kazakhstan, Switzerland, Turkey, UK, Ukraine. Applied to nuclear, it protects only EDF in the UK, as US, Russian or Korean investors will not benefit. The same holds true for fossil, where over 95% of investment in oil and gas exploration, refineries, transport and retail in the EU and UK are domestic or from outside the ECT. This allows Cyprus, Romania, Greece,
Netherlands, Croatia, UK (33rd round) and others (including ECT drop-out Italy) to offer new exploration acreage, of course in a “climate-compatible” way. For sure: the climate will never be saved by such gesticulations.
The Energy Charter Treaty has long since ceased to be more than an embarrassing encumbrance. Each week another founding member government quits. As should every single remaining signatory. Time for the last rites of the ECT to be read.
You are absolutely right. Concerning the two other comments, I am trying to get someone who knows the context to submit a comment later today or tomorrow morning. It may be worth coming back to check.