Modernise the Energy Charter Treaty

March 1, 2023 Georgia Newton

By Georgia Newton

March 1, 2023

As discussed in one of our previous articles, [1] The Energy Charter Treaty is an international agreement establishing cross-border cooperation in the energy industry – principally the fossil fuel industry. The treaty covers all aspects of commercial energy activities including:

Trade
Transit
Investments
Energy efficiency

Its principles are very outdated, recently however, there was a vote with EU member states on whether the EU should accept or reject a new version of the notorious Energy Charter Treaty. The modernised treaty would ensure that investments in new fossil fuel projects do not get legal protection and will instead have a much stronger focus on promoting renewable and affordable energy.

Figure 1: Climate change protest. [4]

Under a “flexibility mechanism” approved by members of the energy investment treaty, the EU and UK will end protection for new fossil fuel investments from August 2023. However, most existing fossil fuel investments will continue to be protected for 10 years from the date the modernised treaty is officially ratified.

EU Rejection of Modernised ECT

The modernised Energy Charter Treaty (ECT) was widely rejected by several EU member states. Germany, The Netherlands, France, and Spain – have already said they want to exit the treaty because the so-called “modernised” ECT text is not compatible with the Paris climate agreement. But unless the EU as a bloc rejects the modernised text, they will remain bound by the treaty.

Ideally, the modernised ECT would stop protecting existing fossil fuel investments and focus less on the profit side of things. Instead, the ECT would start to focus more on protecting the planet before we do anymore irreversible damage to the environment and ecosystems.

UK Under Pressure to Quit ECT

It now seems that the UK is also being urged to quit the climate-harming energy treaty. It is believed that the modernised ECT would clearly undermine climate targets such as the Paris climate agreement and will prolong the UK’s dependence on fossil fuels and impede the transition to renewable energy.

Agreement on modernising the Energy Charter Treaty was due in November 2022 but has now been delayed until at least April 2023. The UK government said the modernised agreement would support the UK’s right to introduce measures for legitimate public policy objectives, such as to back climate action. The European Commission stated that given the number of countries quitting individually, renegotiating the treaty did not seem feasible. It appears that to make a stand and create change, countries will need to work together to reach a mutually agreeable decision that is best for our climate and not best for fossil fuel investors bank accounts. [2]

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

Unfortunately, without changes to the way we do things such as modernising the Energy Charter Treaty, climate change and the consequences of climate change will continue to get worse until it is irreversible. We need to stop fossil fuel companies obstructing climate action through things such as the ECT, which provides them with unfair protection for polluters profits.

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