Europe: the Energy Charter Treaty in the hot seat

Will the European Union (EU) break with the Energy Charter Treaty (ECT)? After four years of intense discussions, a 14th and final round of negotiations is being held this Friday in Brussels between representatives of the 27 Member States to agree on an ambitious reform scenario for this international agreement. Failing that, “the only option that remains on the table is a coordinated exit,” explains Pascal Canfin, MEP and chairman of the environment committee.

In force since 1994, and by 53 countries in order to secure investments in energy in the countries of the former communist bloc, the ECT authorizes companies – foreign and not only local – to claim financial compensation if a legislative modification comes to hinder them. These “reparations” can be applied through an arbitral tribunal and lead to staggering amounts. In 2021, the cases judged so far or in the process of being judged increase by an amount of 85 billion dollars at the expense of the States.

Thursday in the European Parliament, the deputies adopted by a very large majority a report which sets “red lines” for this reform. Their objective is to prevent recourse to this charter from continuing to hamper the efforts of States in the fight against global warming, as accused by NGOs and IPCC scientists in their 6th and last report. Starting with the commitments of the European Union, which intends, in particular, to reduce its greenhouse gas (GHG) emissions by at least 55% by 2030.

food for thought

Germany, when it decided to phase out nuclear power in 2011, had to compensate manufacturers. The Netherlands, since it announced the closure of coal mines in 2019, has run the same risk. The formidable weapon of the arbitration tribunal gives governments food for thought. In 2018, France, feeling the lightning coming, took care to dismiss the projects in progress in the law putting an end to the exploitation of hydrocarbons.

Gradually, the States fought back. In 2016, Italy left the ECT. Spain and the Netherlands have just announced their intention to withdraw. France, very upbeat at the end of last year to bow out, has not yet decided. Other countries could follow because they are under pressure from civil society. On Tuesday, five young activists filed a complaint before the European Court of Human Rights (ECHR) against twelve European states signatories to this treaty.

Warning to the Commission

The vote of the European Parliament on Thursday goes in the direction of the opponents to the reform of the Charter, considered unnecessary and unachievable. They are for a pure and simple abandonment of this text. “It sends a warning to the European Commission on the fact that failing to reach an ambitious agreement, it will be necessary to leave the treaty”, estimates Mathilde Dupré, co-director of the Veblen Institute, a center for studies and reflection on sustainable development.

The compromise which will be examined by the Commission this Friday pleads little in favor of the reform. It plans to exclude new investments in fossil fuels, while protecting those made in oil and coal until 2030 and in gas until 2040. A provision denounced by 78 scientists and climatologists who, in a recent open letter, see it as a “danger” [des] EU carbon neutrality targets and [du] New green deal”. “What will be, I hope, acted on Friday is the impossibility of modernizing the CTE and the fact that there is only one option left on the table: to get out of it,” said Pascal Canfin.

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