EU makes milestone progress exiting the climate-wrecking Energy Charter Treaty

Europe in transition| Global transition

Brussels, 7 March – Yesterday’s decision by the Representatives from the EU Member States, COREPER I, marks a milestone step to advance the European Union’s withdrawal from the Energy Charter Treaty (ECT) – an international investment agreement from the 1990s used by fossil fuel companies and investors to challenge governments on their climate-related regulations. 

Audrey Changoe, Trade and Investment Policy Coordinator at Climate Action Network Europe, says:

“This milestone shows that working across EU-wide movements and placing collective pressure on European leaders pays off. We have been warning policy-makers for years on the treaty’s dangers and managed to derail this polluters-protecting treaty. In a time of global climate catastrophe, there should be no room for a dangerous treaty that allows fossil fuel companies to sue governments for their climate action and disrupt a just energy transition. The EU now needs to move fast to secure its withdrawal from this dinosaur treaty before the European elections in June”.

The COREPER I decision removes a major stumbling block in negotiations for the EU to exit the Energy Charter Treaty. Since July last year, EU discussions around the Energy Charter Treaty have been in a deadlock. The Commission initially proposed a coordinated withdrawal of the EU and all Member States, stating this was legally and politically the most consistent approach. However, some Member States advocated for the modernisation of the Treaty and remaining in it, with no qualified Council majority in sight. Last Friday, the Belgian EU Presidency finally broke the silence and announced a historic deal with the EU Commission’s compromised proposal which offers Member States the option to approve the modernisation of the treaty at the upcoming ECT Conference in November while allowing the EU itself and Euratom to leave the treaty. 

11 European countries have already announced their intention to leave the ECT, including Spain, France, Germany, Netherlands, Slovenia, Poland, Luxembourg, Denmark, Ireland and Portugal, with the UK announcing its ECT exit most recently.

What’s Next 

After the COREPER I, the next steps for the withdrawal will be the national ministers confirming the decision today, votes in the two Committees in charge and the European Parliament plenary vote. After the vote in the European Parliament, the proposal will go to the Council’s ministerial meeting for final decision in April. 

Fossil-fuel treaty 

The Energy Charter Treaty gives companies sweeping rights to sue governments through parallel private courts or ISDS (investor-state dispute settlement) mechanisms. This allows companies, even climate-wrecking fossil fuel companies, to claim billions of taxpayers’ money if governments pass or enforce legitimate and much-needed climate and environmental laws. 

Some case point examples:

  • In 2021, German coal firms RWE and Uniper sought €2.4bn in damages from the Dutch government over its 2030 coal phase-out deadline. 
  • In 2022, The British oil company Rockhopper was awarded €190 million plus interest under the Energy Charter Treaty after Italy banned offshore drilling, following a decade of struggle by Italian coastal communities who denounced the danger of coastal drilling. 
  • Last November, the oil company Klesch Group Holdings Limited sued the EU, Germany and Denmark for at least €95 million over windfall taxes under the Energy Charter Treaty. The lawsuit by the oil company emerged amidst Europe’s broader efforts to transition towards sustainable energy and overcome the economic impact of high energy prices. 

For more information and media requests:

Jani Savolainen, Communications Coordinator

jani.savolainen@caneurope.org

Interviews available in EN, FR, SP, NL, PT, DL

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