Friday

29th Sep 2023

EU readies to exit 'ecocide' treaty after failed reform

  • Under the Energy Charter Treaty, existing investments still would remain protected for 20 years — even if there is a coordinated EU withdrawal (Photo: Tobias Scheck)
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The European Commission is expected to present a proposal for the EU's withdrawal from the controversial Energy Carter Treaty — following a call from member states earlier this month.

"In the coming weeks, we will present concrete legal proposals for a coordinated withdrawal of the EU and Euratom from the Energy Charter Treaty," a commission spokesperson told EUobserver.

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The news comes after two-years of attempts to modernise the treaty, with many EU countries refusing last November to give the green light to the updated text given, concerns over its incompatibility with the EU's green agenda and the 2015 Paris Agreement.

The EU executive has also confirmed that the treaty, as it stands, is not in line with the EU's investment policy and EU's energy and climate goals.

This obscure international agreement, which deals with cross-border investments in the energy industry, was signed by 50 countries back in the 1990s, including all EU member states.

All EU states are signatories to the treaty, except for Italy which withdrew in 2016. But Italy is still involved in an arbitration case over banning oil and gas project exploration in the Adriatic Sea since the treaty protects investments for decades despite countries' withdrawal.

France, Germany and Poland have announced their intention to withdraw from the ECT, which will take effect in December.

Luxembourg last week also decided to exit the treaty, effective from June 2024.

Other countries including the Netherlands, Denmark, Slovenia, France, and Spain also said they will leave the ECT.

In 2021, the Netherlands was sued by the German companies RWE and Uniper over the Dutch coal phase-out law, seeking billions in compensation under this treaty.

Spain, which has one of the biggest numbers of lawsuits related to ECT, is currently facing more than 50 arbitration claims, exceeding $9.5bn.

Under the Energy Charter Treaty, existing investments still would remain protected for 20 years — even if there is a coordinated EU withdrawal.

But advocacy groups, which have been long calling for an urgent ECT withdrawal, have welcomed the commission's announcement for a "coordinated" exit.

"The quickest and simplest way to free the EU from the regulatory chilling effect of the Energy Charter Treaty is for all member states to quit it together," said Amandine Van Den Berghe, a lawyer at NGO ClientEarth.

In June, the Swedish presidency presented a compromise proposal to member states for the withdrawal of the EU from the ECT while allowing member states to remain parties and approve the modernisation of the treaty.

EU member states reaffirmed their support for this approach, calling on the commission to put forward a proposal without delay.

The commission proposal will be discussed by EU member states during the new Spanish presidency, but it remains to be seen when discussions will be launched.

So far, the topic has not been included on the agenda of the informal meeting of the energy minister that will take place on 12 July in the Spanish city of Valladolid, a source close to the matter told EUobserver.

In November 2022, a European Parliament resolution also called on the commission to prepare the withdrawal from this treaty.

Meanwhile, the issue of belonging to this so-called 'ecocide treaty' is also hanging on other non-EU countries.

The UK's public advisory body on climate change has also urged the withdrawal from the ECT "given the insufficient reach of the reforms secured in 2022, the risks associated with remaining in the treaty and the bargaining power that could be associated with a critical mass of exiting parties."

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As the EU Commission announces its proposal to withdraw from the Energy Charter Treaty, EUobserver dives deeper into the core questions surrounding what critics dub the 'ecocide treaty' — and the reasons behind the withdrawal.

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