EU tries to stop rush to exit energy treaty – POLITICO

The European Commission is hitting back at a rebellion by national governments who say the bloc has failed to stop a global energy pact from being a climate killer.

Spain, the Netherlands and Poland have all declared their intention to withdraw from the Energy Charter Treaty (ECT). Italy left in 2015. Germany, France and Belgium are considering their options, officials from those countries said.

But a Commission spokesperson warned that leaving the treaty would not protect these countries from lawsuits over their climate policies because of a sunset clause in the deal that binds members to its obligations for two decades after their departure.

“The risk of further claims from existing investors, including on fossil fuels, remains,” the spokesperson said.

The pact, which was designed to create a stable investment environment in post-Soviet Europe, allows international investors in energy projects to sue governments for profits lost as a result of policy changes. This is now seen as a major threat to national climate plans to shut down coal plants or limit oil and gas production.

The 27 EU countries have asked the Commission to negotiate the end of the protection of fossil fuels with the other members of the treaty of more than 50 countries. Those talks ended this summer and the EU was offered an exception so that its member countries could phase out protections for fossil fuel investments over the next 10 years.

The Commission spokesperson said the outcome of the talks brought the treaty “in line with … modern standards of investment protection and the Paris agreement” on climate change. In an email, the spokesperson noted that “all” EU countries had “approved” the outcome of the negotiations in June.

But a growing number of governments are distancing themselves from the agreement brokered by the Commission.

“We are critical of the result obtained on a number of points. The treaty continues to offer too much protection to the fossil fuel industry,” Dutch Energy and Climate Minister Rob Jetten said on Wednesday, a day after announcing his country’s departure from the deal. Spain’s assessment was even starker, calling it ‘no improvement’.

Yamina Saheb, a former Energy Charter Treaty official turned whistleblower, told POLITICO that the Commission was “cheating” member countries “in trying to make a success story out of failed modernization.”

She said the Commission should expect more countries to pull out in the coming days. “The ball is finally rolling in the right direction. Nothing will stop him. »

Germany is drawing up plans to exit the deal, a spokesman for Economy and Climate Minister Robert Habeck said, although a final decision has not been made. “Minister Habeck has repeatedly expressed his critical position on the TCE and its possible negative effects on climate action. The German government is currently defining its position on the TCE.”

On Wednesday evening, the French High Council for the Climate – a government advisory body – issued an opinion that the proposed reforms were incompatible with EU climate objectives and said that only the withdrawal of the TCE coupled with the “neutralisation” of the sunset clause could “restore the sovereignty of Member States in their climate and energy policies by limiting the risk of litigation.

Leaving the deal, the Commission says, would only make matters worse, as the 10-year phase-out of protections for existing fossil fuel projects would not apply, leaving governments exposed to the sunset clause of 20 years even as they step up their efforts to achieve net zero emissions.

“That’s the main downside of the withdrawal,” said Johannes Tropper, a researcher and lecturer in public international law at the University of Vienna. “If you want to take regulatory action against fossil fuel investment, the problem is existing investment, not new investment.”

The French council has approved a Commission proposal for a side deal between EU countries that would prevent EU-based investors from targeting governments within the bloc. This would immediately defuse the majority of investments currently protected by the ECT in Europe.

“I think there’s a lot of legal uncertainty about this approach,” Tropper said. “There’s an indication that the courts wouldn’t necessarily see it the same way.”

Several countries, including France, have previously demanded that the Commission carry out a legal assessment for the bloc to leave en masse.

“The Commission is not preparing a coordinated withdrawal,” the spokesperson said. “The EU will remain a party to the ECT in its own right.”

Leonie Kijewski and Barbara Moens contributed reporting.


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