Italy was recently ordered to pay €190 million plus interests of about €50 million to UK oil company Rockhopper in a arbitration case based on the ECT. This case was initiated after Italy refused to issue the company an oil drilling permit in line with a domestic ban on such projets near its coastline. The company announced it would invest this compensation in its oil drilling activities in a project in the Falkland Islands, which means Italian taxpayers' money will be financing activities that run counter the objectives of the Paris Agreement on climate change.
An ad hoc plenary conference is held on 24 June after 14 rounds of negotiations to try to reach a political agreement on the modernisation of the treaty. This date corresponds to the deadline the EU has set itself to reform the agreement or get out of it. An agreement in principle is announced that will not end fossil fuel investment protection in 23 ECT countries and will end it at a far too slow pace in EU member states and the UK. The text of the agreement is not public. The signatory countries of the ECT will decide on November 22 on the formal adoption of this agreement.
Ahead of this conference, almost 80 leading climate scientists call EU countries and the French Presidency of the EU Council to withdraw from the ECT and to reject the "agreement in principle" that should be announced. This agreement will maintain the protection in EU countries of foreign investments in fossil fuels until 2030 and in gas power plants until 2040. It is likely that other countries parties to the ECT will maintain full protection of foreign investments in fossil fuels as they did non announce any plan to end it.
Five young climate victims have filed a lawsuit with the European court of Human Rights against 12 States for allowing the ECT to impede their transition away from fossil fuels.
Spanish Deputy Prime Minister, Teresa Ribera, said
“After 14 rounds of negotiations without substantive progress, it is clear that the modernisation of the Energy Charter Treaty will fail to ensure the alignment of the ECT with the Paris Agreement and the objectives of the European Green Deal.
At a time when accelerating a clean energy transition has become more urgent than ever, it is time that the EU and its Member States initiate a coordinated withdrawal from the ECT.”
Pascal Canfin, French Member of the European Parliament, Renew, and Chairman of thtc Environment Committee said: "We have reached the end of the negotiations (...) Now we have to organise the exit from the ECT and the Europeans have to agree not to apply the twenty-year clause any more"
The Dutch parliament adopted a resolution on the 22 June 2022 asking the government to exit from ECT.
On June 23, the European Parliament adopted by a large majority an own-initiative report in which it sets very clear criteria for the evaluation of a possible agreement on the modernization of the ECT and calls for a coordinated exit in case of absence of an ambitious agreement in June 2022.
The government coalition in Germany has also drawn its 5 red lines for a successful modernization of the ECT.
Bernd Lange, S&D MEP and chair of the Committee on International Trade, Pascal Canfin, RENEW MEP and chair of the Committee on Environnement in the European Parliament and Anna Cavazzini, Green MEP and chair of the Committee on the Internal Market in the European Parliament wrote to the European Commission in May 2022: "If we hope to demonstrate climate leadership, we cannot remain part of an agreement which would allow signatories to protect climate damaging investments indefinitely, whatever limited progress we may make at home."
In the report of the third working group, published on 4 April on climate change mitigation, the IPCC addresses for the first time the issue of investment protection provisions and the Energy Charter treaty and their incompatibility with the implementation of States’ commitments under the Paris Climate Agreement.
During a plenary debate in the European Parliament, representatives from EPP, Renew, S&D, the Greens and the Left all urged the European Commission and the French EU Presidency to prepare for a coordinated withdrawal from the Energy Charter Treaty.
Australia has announced that it has given notice of its withdrawal from its signatory status to the Energy Charter Treaty, on September 28, 2021
ETUC (European Trade Union Confederation) adopted a new position on the Energy Charter Treaty at the Executive Committee meeting of 5-6 October 2021 stating that : "ETUC believes that the scope of the negotiations does not answer some of the concerns highlighted above [Paris Agreement ; human rights ; international labour standards and corporate social responsibility] and that the mandate is too weak to resolve the different issues identified".
It called therefore for a "termination of the treaty or collective withdrawal of EU countries combined with inter se agreement if negotiations to modernise the ECT are blocked".
A ruling by the EU Court of Justice on 2 September 2021 in Case C-741/19 Republic of Moldova v Komstroy provided a long awaited and much needed clarification that the investor-state dispute settlement (ISDS) provision in the Energy Charter Treaty (ECT) is not applicable in intra-EU disputes. But this judgment may not stop EU investors and companies from pursuing billions in ‘compensation’ before arbitral tribunals for legitimate regulatory changes, like coal phase-outs, that are urgently needed to meet EU climate targets.
As the 6th round of negotiations on the modernisation of the Energy Charter Treaty takes place from 6 to 9 July, leaked diplomatic cables revealed the impasse in the process and the rejection of European proposals to phase out protection for fossil fuels investments.
And Greece joined the ranks of EU governments "requesting the Commission draw up a plan to leave the deal", according to Politico
71 Members of the european parliament called the EU to leave the Energy Charter Treaty after 4 unsuccessfull negotiation rounds, a proposal from the European Commission that falls short for what is needed to stay in line with the Paris Agreement, and a risk of prolonging those discussions without satisfactory results.
And Poland to consider exit from ECT if modernisation process fails : “Poland, like France and Spain, requests the EU Commission to prepare all the possible options for the and its member states (including withdrawal from the ECT) in case of the failure of the ECT modernization process", reported Politico.
Answering a question in the French Assembly, Barbara Pompili, French minister for the Ecological Transition, reaffirmed the ambition of a collective withdrawal of the Energy Charter Treaty, with the possibility to neutralize the survival clause with an agreement at the EU level.
The IPCC member François Gemenne publishes an op-ed in Le Soir in Belgium, asking the EU to leave the ECT by COP26.
Bernd Lange, S&D MEP and Chairman of the International Trade Committee, said : "It is high time that Germany once again sides with progressive countries like Spain or France. These countries demand an honest assessment of the possibilities for reform and withdrawal if reform is not possible. We should seek a common agreement with all countries that want to withdraw to no longer allow trials between them".
The German Company RWE has filed a lawsuit against the Netherlands, seeking compensation for over 1.4 billion €. This follows the Dutch 'coal-law' from 2019 and the decision to phase-out electricity production from coal by 2030. The company invokes the Energy Charter Treaty.
Citizen's mobilization is growing: a petition asking the EU to pull out from the ECT collected over 1 million signatures in just a few weeks.
The independent journalist group Investigate Europe has revealed how the Energy Charter Treaty is undermining the achievement of climate goals and the energy transition as a whole. The fossil fuel infrastructure protected by the ECT in the European Union, the UK and Switzerland amounts to €344.6 billion, more than twice the EU's total annual budget. And three quarters of the protected investment is in gas and oil, and pipelines.
Pascal Canfin, Renew MEP and Chair of the European Parliament's Environment Committee and Anna Cavazzini, Green MEP and Chair of the European Parliament's Internal Market and Consumer Protection Committee wrote: "We call on the EU negotiators to present different scenarios for exiting this treaty. The attempt to modernise may only delay the inevitable, namely that the EU as a whole would have to exit in order to be consistent with its climate goals."
Teresa Ribera, Minister for the Ecological Transition of Spain, took a bold move by asking to make the Energy Charter Treaty compatible with the Paris Agreement, or for the EU to collectively withdraw. A letter to the Commission followed this declaration later in February.
A few days later, the French Minister for the Ecological Transition Barbara Pompili, alongside the Minister of the Economy and Finance, Bruno Le Maire, the State Secretary for European Affairs Clément Beaune, and the Minister Delegate for Foreign Trade Franck Riester, joined their voices in a letter addressed to the European Commission, asking to either modernize the ECT by making it compatible with the Paris Agreement, or to withdraw in a coordinated manner. This letter has been published in the media in January 2021.
Ahead of the Energy Charter Conference, Dr. Yamina Saheb, a senior climate and energy policy analyst at OpenExp, a Paris-based think tank, and a former head of the Energy Efficiency Unit at the Energy Charter Secretariat, calls on to EU leaders to be up to the task and to work on the collective withdrawal of the Energy Charter Treaty.
Today, more than 200 climate leaders and scientists signed an open letter calling governments to withdraw from the Energy Charter Treaty (ECT), which protects foreign investments in fossil fuels and obstructs the transition to clean energy.
This open letter has been reported in the european media (EUObserver, Politico, Le Monde, Die Press, Klimareporter, Nueva Tribuna, L'Opinion, Alternatives Economiques, Bizz Energy., Climatica la Marea, Tercera informacion, Agence Europe, AEF's Daily wrap-up, etc.)
For the first time ever, the European Commission publicly stated that withdrawal from the ECT is an option, if the reform fails.
This means consensus is gaining and we need to strengthen these voices by building public pressure from the outside.
In October 2020, the European Parliament adopted an amendment in the European climate law which states "The Union shall end protection of investments in fossil fuels in the context of the modernisation of the Energy Charter Treaty..."