The European Commission has told member countries that a joint EU exit from the controversial Energy Charter Treaty appears inevitable

A news item on the EURACTIV website says that it is now inevitable that the EU will leave the Energy Charter Treaty. The last related post on EiD was only two weeks ago.

Climate Home News writes that the United Kingdom’s government said it is “closely monitoring the situation”. The Swiss energy ministry’s Jean-Christophe Fueeg told Climate Home his country, which is not an EU member state, is not leaving.

Here is an article published by The Guardian, February 10th — https://www.theguardian.com/environment/2023/feb/10/uk-must-quit-climate-harming-energy-charter-treaty-experts-say

 

LEAK: Exit from Energy Charter Treaty ‘unavoidable’, EU Commission says

The European Commission has told member countries that a joint EU exit from a controversial international energy treaty appears inevitable, according to a document seen by EURACTIV, with some of them already leaving the accord on climate concerns.

The 1998 Energy Charter Treaty, which has more than 50 signatories including European Union countries, was designed to protect companies in the energy industry by allowing them to sue governments on policies affecting their investments.

But in recent years it has been used to challenge policies that require fossil fuel plants to shut – raising concerns that it is an obstacle to addressing climate change.

France, Germany, the Netherlands, Poland and Spain have already announced plans to quit the treaty, increasing pressure on Brussels to coordinate an EU-wide withdrawal. Italy left in 2016.

In an unofficial document shared with EU countries, the European Commission said the “most adequate” option would be for the EU and its 27 member states to leave.

The Commission does list alternative options, such as ratifying the modernised ECT and leaving afterwards, or leaving while granting a derogation for some EU countries to remain.

However, none of those are considered practical.

“A withdrawal of the EU and Euratom from the Energy Charter Treaty appears to be unavoidable,” said the so-called “non-paper”.

A spokesperson for the European Commission confirmed it would recommend an EU exit and present the suggestion to diplomats from member countries in a meeting on Tuesday (7 February).

The Commission paper said numerous factors had led to this assessment.

Treaty members agreed some reforms last year, but EU countries rejected them – meaning the unreformed treaty with stronger investment protections continues to apply.

Remaining part of this treaty would “clearly undermine” the EU’s climate targets, the Commission said.

Given the number of countries quitting individually, renegotiating the treaty does not seem feasible, it added.

“As a result, a withdrawal of the EU and Euratom from the Energy Charter Treaty appears to be unavoidable,” it said.

An EU exit would require support from at least 15 EU countries and the European Parliament, which has already backed a resolution calling for the idea.

Anna Cavazzini, the EU lawmaker who authored Parliament’s resolution, said the paper could herald the end of the EU’s involvement in the treaty.

“If the European Commission considers an exit ‘unavoidable’, the billion-euro question is now: How and when?” she said.

Killing the ‘sunset clause’

Even if countries leave, a “sunset clause” means the treaty would still protect existing fossil fuel investments for 20 years.

EU countries could therefore agree among themselves not to apply this clause – since most energy investments on their territories are made by EU companies.

But they would need to agree such a deal with other willing treaty members to avoid future lawsuits such as from Japan, Azerbaijan and former EU member country Britain.

“For the time being, no non-EU Contracting Party has indicated they would be open to such a solution,” said the paper.

In those circumstances, the paper argues in favour of seeking both an internal EU agreement and separate bilateral deals to neutralise the ECT’s sunset clause.

“The UK might just be willing to withdraw, and there might actually be more room for manoeuvre than one would think,” says Lukas Schaugg, an international law analyst at the International Institute for Sustainable Development (IISD).

Switzerland and Japan might be harder to convince, however. Indeed, Switzerland is often chosen as a seat in investor-state arbitrations and the country could become a “forum shopping destination of choice” for companies seeking redress from ECT tribunals, Schaugg said.

But Schaugg says the EU could simply declare that it no longer recognises these tribunals.

“EU Member States could also go further with a more principled refusal to enforce such awards under Public International Law,” Schaugg said.

“Without enforcement, the whole system would lose its teeth,” he told EURACTIV in an interview.

Read the full Commission non-paper here.

External link