EU’s exit from Energy Charter Treaty ‘inevitable’ – Commission

“A withdrawal of the EU and Euratom from the Energy Charter Treaty appears to be unavoidable,” read a document by the EU Commission as seen by Reuters.

The 1998 Energy Charter Treaty, signed by around 50 countries, was designed to protect energy companies by giving them the ability to sue Governments if their policies affected their investments. This version of the treaty entered into force in Malta on 21st January 2010.

Recently, this treaty was used by fossil fuel companies across Europe when Governments moved to shut down their power plants to combat climate change.

This led countries such as Germany and France to announce their intention to leave the treaty, although, Malta has not signalled any intention to do so. Meanwhile, Italy, home of Eni, the second-largest oil company in the EU, left the treaty in 2016.

“The courts established by the treaty lack transparency, are riddled with conflicts of interest, and lack respect for human rights. They claim that human rights are the jurisdiction of national courts, even though national governments are bound by the decision of the ECT courts. Fundamentally, modernisation is not an option because the raison d’être of the treaty is to protect foreign investors, not people,” explained Miguel Azzopardi, a consultant on alternative and wellbeing economy approaches, sustainable food systems, climate change mitigation and adaptation.

The document said that leaving the treaty was the “most adequate” option for the EU and its member states and that the European Commission will present suggestions in an upcoming meeting.

One of the reasons was that remaining in the treaty would “clearly undermine” the EU’s climate goals. Past attempts to reform the treaty have failed, meaning fossil fuel companies are still protected to this day.

For the EU to exit, at least 15 countries and the European Parliament would be required to support the decision. Thus far the European Parliament has already backed a resolution in support of this.

“Should the European leaders accept the Commission’s recommendation, withdrawal of the remaining 26 parties of the treaty and agreements to nullify the effect of the sunset clause will be needed. This would finally remove the grave threat the treaty currently poses to climate mitigation,” concluded Mr Azzopardi.

The “sunset clause” protects existing fossil fuel investments for the next 20 years even after a country leaves the treaty. Fortunately, this clause could be bypassed by EU countries agreeing not to apply it, since most energy investments were made by EU-based companies.

Choosing to ignore the sunset clause would also require backing from other treaty members such as Japan, Azerbaijan, and the UK, to avoid future lawsuits, however they are reluctant to do so.