Comment: European governments are abandoning a treaty that has become a barrier to climate action, but legal hurdles remain A demonstration against the Energy Charter Treaty by Friends of the Earth Europe in July 2021 (Pic: Friends of the Earth Europe/Flickr) European governments are finally starting to abandon a treaty that could stop them taking much-needed climate action and that protects the interests of fossil fuel companies and investors. The Energy Charter Treaty (ECT), which has been signed by 53 European and Asian countries, was drafted to protect energy firms in formerly Soviet countries from falling into state ownership and being subject to excessive regulation. But the ECT has become outdated. The continued protection of fossil fuel investors – and the suing of governments for millions of euros – contradicts the efforts of European countries to curb their emissions in line with the 2015 Paris climate agreement. The legitimacy of the treaty has also come under fire. European states are therefore exiting the treaty. France announced earlier this year that it was to leave. Spain, the Netherlands, Poland, Slovenia and Germany have since followed. However, with former members bound by the treaty for 20 years after they leave, it could still hamper future climate action unless it is reformed. International investment agreements protect and promote the investments made by companies from one state in a foreign territory. There are roughly 2,500 such agreements in force today. Since coming into force in 1998, the ECT has provided the framework for energy cooperation across the European continent by providing the legal basis for open and competitive energy markets. Investors can claim compensation from sovereign states through a mechanism of international law called investor-state dispute settlement if governments breach the investment protections provided by the ECT. The ECT has allowed energy and fossil fuel... |