Energy Charter Treaty

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Event.png Energy Charter Treaty (treaty) Rdf-entity.pngRdf-icon.png
ECT.png
Date17 December 1991 - Present
Websitewww.energychartertreaty.org
Interest ofWilliam Sargant

The Energy Charter Treaty (ECT) is an international agreement that establishes a multilateral framework for cross-border cooperation in the energy industry, principally the fossil fuel industry. The ECT covers all aspects of commercial energy activities including trade, transit, investments and energy efficiency.

The Energy Charter Treaty was developed on the basis of a political declaration, the 1991 European Energy Charter signed at The Hague on 17 December 1991,[1] but while this declaration signalled the political intent to strengthen international energy ties, the ECT is a legally binding multilateral agreement. It is the only agreement of its kind dealing with inter-governmental cooperation in the energy sector, covering the whole energy value chain (from exploration to end-use) and all energy products and energy-related equipment.

The ECT was signed in Lisbon in December 1994, together with a "protocol on energy efficiency and related environmental aspects" (PEEREA). Both the ECT and PEEREA came into effect in April 1998.[2]

Sweeping powers

The ECT gives foreign investors in the energy sector sweeping powers to sue states over government actions that have supposedly ‘damaged’ their investments. Investors use a parallel court system to sue, and the compensation governments have to pay out can be in the billions. The ECT is increasingly controversial – particularly due to its potential to obstruct the transition from climate-wrecking fossil fuels towards renewable energy.

The ECT allows foreign investors in the energy sector to sue governments for decisions that might negatively impact their profits. That includes climate policies, for example German coal giant RWE is suing the Netherlands for €1.4 billion in compensation for the Dutch coal phase-out. Because the ECT’s legal regime favours investors, is unpredictable, and the fines that governments can be hit with are catastrophically large, the treaty acts as a strong incentive to delay, weaken, or drop much needed action to advance the energy transition.

Together with member states like the Netherlands and the UK, the EU was the driving force behind the ECT negotiations in the 1990s. They wanted to protect the investments of fossil fuel companies like Shell and BP in post-Soviet bloc countries. But today, EU member states are at the receiving end of costly claims and the ECT threatens to undermine the European Green Deal and the EU’s climate law. Having started the ECT mess, the EU has the responsibility for cleaning it up – for the sake of a world that needs to decarbonise rapidly.

ECT membership

Member countries and Regional Economic Integration Organisations are party to the ECT through ratification or accession. Membership also includes signatories which provisionally apply the treaty pending entry into force. Such provisional application applies automatically after signature, unless it is inconsistent with the domestic law of the country concerned. As October 2022, the ECT has 53 contracting parties, while it is provisionally applied by two countries. All Members have ratified the ECT except for Australia, Belarus, Norway, and the Russian Federation. Belarus has however accepted provisional application of the treaty.

Contracting parties

Afghanistan, Albania, Armenia, Austria, Azerbaijan, Belarus°, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, European Union and Euratom, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Japan, Jordan, Kazakhstan, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Mongolia, Montenegro, The Netherlands, North Macedonia, Norway°, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, Türkiye, Turkmenistan, Ukraine, United Kingdom, Uzbekistan, Yemen

° did not ratify the ECT

Withdrawing from the ECT

Withdrawing from the ECT is not difficult. As soon as a country has been a member for five years, it can leave the ECT at any time by simply giving written notification. This is true for nearly all of the treaty’s 50-plus members, including the EU and its member states. They could withdraw from the ECT immediately; Italy did just that in 2016.[3] A joint withdrawal of all remaining EU member states would have an even greater positive impact.

Announced withdrawals

Russia and Australia provisionally applied the ECT, but indicated the end of the provisional application period in 2009 and 2021 respectively. As of October 2022, Spain, the Netherlands and Poland intend to withdraw from the ECT and Germany, France and Belgium are "examining their options". On 21 October 2022, France announced it will leave the treaty, citing a desire to accelerate nuclear and renewable energy use before fossil fuels.[4] And on 14 November 2022, Germany announced its intention to withdraw in order to better tackle climate change. Slovenia had earlier stated its intention to withdraw.[5]

Exit ECT

On 18 November 2022, CAN Europe tweeted:

BREAKING NEWS: Luxembourg is the 8th country to announce its withdrawal from the #EnergyCharterTreaty!

It's a domino effect: more & more states are leaving & the climate-damaging treaty is imploding!

The EU needs to finally #ExitECT[6]

ECT petitions

A CAN Europe petition, supported by a wide coalition of organisations, including Avaaz, Campact, Corporate Europe Observatory, Transnational Institute, WeMove and many others, demands from European governments, parliaments and EU institutions:

“Pull out of the Energy Charter Treaty and stop its expansion to other countries! The ECT allows coal, oil and gas corporations to obstruct the transition to a clean energy system. Disarm fossil fuel firms now, so they can no longer impede urgent climate action!”[7]

The CAN Europe petition, with more than a million signatures, can be signed here.

Friends of the Earth UK launched this petition:

Exit the Energy Charter Treaty today and stop its expansion to other countries. The treaty allows coal, oil and gas corporations to obstruct the transition to net zero. Urgent climate action cannot be made slower or more expensive by fossil fuel firms. Over a million people across Europe have asked their governments to withdraw from the ECT. Countries including Germany, France and Spain already have. Please sign this petition to demand the UK withdraws too.[8]


 

Related Document

TitleTypePublication dateAuthor(s)Description
Document:The dirty secret Europe is hiding at the COP27 climate summitWikispooks Page16 November 2022Jonathan CookGrand declarations at COP27 on tackling the climate emergency are sabotaged by the Energy Charter Treaty from the 1990s that sees European nations held to ransom by the energy companies


References

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