EU should withdraw from the Energy Charter Treaty, NGOs say

Slovenian non-governmental organisations have called on their government to push for withdrawal from the Energy Charter Treaty as part of its presidency of the Council of the EU. They have thus joined more than 400 organisations across Europe that had previously called on the EU and its member states to withdraw. The treaty, which protects more than EUR 340 billion in fossil fuel investments in Europe, is, they say, wholly incompatible with the climate targets that have been set.

The Slovenian group of 38 non-governmental organisations, Plan B for Slovenia, published a call for the EU and its member states to withdraw from the Energy Charter Treaty (ECT). The Slovenian government should make use of the fact that it has held the presidency of the Council of the EU since July and put withdrawal on the agenda of the September meeting of industry, energy and environment ministers. This will be the last opportunity for such Europe-wide talks before the UN climate summit in Glasgow. The summit will take place in November, and Slovenia will represent the European Union there.

In July, more than 400 European non-governmental organisations signed a similar call, warning that the ECT protects fossil fuel investments in Europe alone worth more than EUR 340 billion. More broadly, they said the ECT is entirely incompatible with the EU’s and member states’ climate commitments, and that withdrawal is the only solution.

The Glasgow conference will assess progress in meeting commitments under the Paris Agreement and hold further talks on introducing global carbon pricing, as envisaged by the Paris Agreement. It is also the first international conference since the publication of the latest report by the Intergovernmental Panel on Climate Change, which stated that achieving the goal of limiting planetary warming to just 1.5 °C is not possible without immediate and decisive measures to reduce greenhouse gas emissions.

The Energy Charter Treaty and the coal phase-out

The ECT was concluded in 1994 and has gradually been joined by more than 50 states and international organisations from Europe, Asia and Africa. Its aim is to support cross-border investment in energy sectors. Its most important provision is Article 26, under which foreign investors may use international arbitration to sue contracting states for compensation for their lost investments. There are more than 130 such publicly known disputes.

At present, these are primarily disputes related to the Netherlands’ plan to close all coal-fired power plants by 2030. Germany’s RWE has already launched proceedings seeking EUR 1.4 billion in compensation for the closure of the Eemshaven coal-fired power plant. Uniper announced the same intention immediately after the Dutch plan was published. In the past, however, the Czech Republic and the Czech Republic and Spain have also been sued as a result of legislative changes to renewable energy support.

The treaty has long faced criticism, and the European Union is seeking to reform it so that it reflects the fight against climate change. However, withdrawal raises an issue with the so-called sunset clause, under which protection for investments already made remains in force for 20 years after a state withdraws from the ECT. All fossil fuel investments would therefore continue to be protected.