More EU nations to exit Energy Charter Treaty amid climate change concerns

The Energy Charter Treaty (ECT), first established in 1998, has in recent years been used by companies to challenge anti-fossil fuel climate policies.

Annabel Cossins-Smith March 08 2024

More EU nations on Thursday agreed to jointly quit an international energy treaty that allows fossil fuel companies to sue governments over policies that damage their operations, citing concerns over its impacts on climate action.

The ECT, first established in 1998, has in recent years been used by companies to challenge moves from signatory governments that involve shutting down or limiting fossil fuel activity.

Ministers from EU countries voted in favour of exiting the treaty at a meeting in Brussels, two officials from the bloc told Reuters but did not specify which nations were involved. The decision will now go to the European Parliament to receive lawmakers’ consent, which is highly likely as the EU assembly has previously urged the bloc to leave the treaty.

Member states Denmark, France, Germany, Luxembourg, the Netherlands, Poland and Spain announced plans to leave the treaty last summer, also citing climate change concerns, sparking debate in Brussels around a coordinated EU departure.

However, a desire to remain in the ECT from some member states including Cyprus and Hungary have so far delayed a decision on the bloc’s total departure.

Just two weeks ago, the UK said it will exit the treaty after efforts to modernise its terms failed. Proposals put forward by European countries to better align the ECT with international net-zero policies hit a stalemate after drawn-out talks, the government said at the time. Discussions around reform of the treaty have been ongoing for several years.

Energy Security and Net Zero Minister Graham Stuart has called the treaty “outdated and in urgent need of reform”.

To reconcile clashes between member states, last week the European Commission urged remaining signatories to accept reforms before a full-scale exit. A deal regarding changes to the ECT, which had already been accepted by some 50 treaty members last year, will now be voted on in May.

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