“If Europe does not leave the Energy Charter Treaty, it can say goodbye to carbon neutrality”

5:50 p.m., June 23, 2022

On Friday, an extraordinary meeting on the Energy Charter Treaty (ECT) is being held in Brussels. Unknown to the general public, this text is the subject of growing opposition from scientists, NGOs, but also elected officials and political leaders, such as Macronist MEP Pascal Canfin or the Spanish Minister for the Environment. and Energy. On Tuesday, 78 scientists including French climatologists Valérie Masson-Delmotte and Christophe Cassou signed an open letter calling on European leaders to leave this treaty. On the same day, five young people from the continent lodged a complaint with the European Court of Human Rights.

Entering into force in 1998, this agreement, which has 53 members, aimed to secure energy supplies in developing countries, particularly those of the former Eastern bloc. It allows companies to claim compensation in the event of new legislation affecting their activity. Now, the ECT is seen as the gravedigger of the Paris Climate Agreement. Engineer specializing in energy policies and author of the Intergovernmental Panel on Climate (IPCC), Yamina Saheb, alert on the reform which could be adopted on Friday.

Read also – Franck Lecocq, co-author of the IPCC climate report: “It’s never too late to act”

How did you come to raise the alarm about the Energy Charter Treaty?
In 2018, I joined the Energy Charter Secretariat, as head of the “energy efficiency” unit. My mission was to study whether the treaty could be made compatible with the Paris Climate Agreement. But by analyzing the treaty in all directions, I realized that it was impossible to align it with the Paris Agreement. I first alerted internally, which didn’t work anymore. When I left the Secretariat, I was able to speak freely.

Every time European states try to stop a fossil facility, they will be attacked

How is it incompatible with climate objectives?
This treaty offers foreign investors the possibility of attacking governments which, by changing their energy policy, will have an impact on their income. In the event of a dispute, companies can turn to a national court of justice, try to settle amicably or turn to a private arbitration tribunal. In practice, they almost all choose private arbitration because it allows them to obtain enormous compensation. Or, to respect the Paris Agreement, we must absolutely stop investing in fossil fuels. Consequently, we cannot continue to protect investments that must be eliminated! The problem is that reforming this treaty presupposes unanimous agreement: States that live off fossil fuels, such as Kazakhstan, could never accept it.

How does it slow down the ecological transition of States?
In 2018, when I warned that it would be a barrier to the exit of fossils, I warned that each time European states tried to stop a fossil installation, they would be attacked. At the time, I was told that I was speculating. But four years later, it happens. For example, the German company Uniper attacked the Netherlands after the premature shutdown of a coal-fired power station. She is not only asking to recover the amount invested, but also all the money she could have earned during the life of the plant, that is to say 30 to 50 years! Germany has been attacked twice by the Swedish company Vattenfall, notably after choosing to phase out nuclear power. The company claimed more than 10 billion euros from the German credit.

When a contract is broken, doesn’t a company have the right to demand compensation?
These compensations are already provided for in the contracts. The treaty goes further and makes it possible to claim exorbitant sums.

When you are a signatory to this treaty, you lose sovereignty over your energy and climate policies

Amounts that can dissuade a State from initiating the energy transition…
In practice, when you are a signatory to this treaty, you lose sovereignty over your energy and climate policies. The billions of euros that will have to be invested in the ecological transition and the Green Deal will also have to be spent to defend ourselves against these attacks. If Europe remains in this treaty, it can say goodbye to carbon neutrality.

Do we know the number of disputes and the sums at stake?
On June 1, there were 150 disputes, for a claim of 110 billion euros. But there is no obligation to make disputes public. The defenders of this treaty point out that it also protects renewable energies, which represent half of the disputes. In reality, it only protects foreign investors.

If there is an agreement, the Paris Agreement is over

What was the reform that should be approved on Friday?
The Charter Secretariat has proposed a “flexibility mechanism”. This consists of allowing each country to decide when to relaunch the “phase-out”, the exit from fossil fuels. The unanimous vote will be easy to obtain since each country retains its freedom. Within the European Union, the Commission proposes to no longer protect new investments in fossil fuels, and to maintain the protection of existing investments until 2030, and even until 2040 in gas-fired power plants. However, it is during this period that we must put an end to fossil installations! Do you see the contradiction?

In other words, if this reform is adopted, will the Paris Agreement be compromised?
If there is an agreement, the Paris Agreement is over.

Why not get out of this treaty?
Going out is very easy: just send a letter. But this triggers the survival clause, which implies that all investments made in the country before its exit are still protected for 20 years! Countries are therefore stuck. This is what happened to Italy, which denounced the treaty in 2015 but was attacked after leaving.

A European front is created

More and more European states are pleading for a concerted exit.
This would be ideal: if the European states all go out together, they can decide to cancel these clauses between themselves. European companies – representing 70% of energy investments in the EU – could no longer attack States. What could happen is that European investors relocate. But how many would dare? A European front is created. It was France that declared it when it saw a letter to the European Commission in 2020. Since then, to my knowledge, Paris has done nothing and has not included it among the priorities of the French Presidency of the European Union. In the meantime, Spain has taken the lead, seeing a letter in early 2021. Other countries have been asked by the Commission to prepare an exit [l’Allemagne, les Pays-Bas et la Pologne, ndlr]. On Wednesday, the Dutch Parliament also voted in this direction. This is historic, because it is a country at the origin of this treaty and which hosts a large number of investors.

So are the Europeans trapped by the treaty they designed?
No one arguing that this treaty could be used against the Europeans. It had been imagined as a neocolonial tool, to guarantee supply in developing countries. But to their surprise, it backfired.

Leave a Comment