The young generation requests EU policy-makers to pull out of the Energy Charter Treaty and stop its expansion to other countries! The treaty 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! We want Climate Justice, and we want it now!
This action is supported by a broad coalition of civil society organisations from across Europe.
What is the Energy Charter Treaty (ECT)?
Watch this excellent 2-minute explainer video by independent journalists from Investigate Europe to find out:
The ECT is a 1994 international agreement which applies to more than 50 countries. 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.
How does the ECT undermine the clean energy transition?
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.
A recent in-depth investigation revealed that the UK, Germany, France, Italy, Denmark and the Netherlands face particularly high risks of future ECT suits over climate action – because most fossil fuel assets that are protected under the ECT can be found in those countries.
What about the expansion to even more countries?
The Brussels-based Secretariat of the ECT – the driving force behind drumming up both support and new signatories for the treaty – is putting great effort into expanding the geographical reach of the agreement to countries in Africa and the Middle East, Asia, and Latin America. The Secretariat downplays the risks of the ECT and exaggerates its benefits. As a result, many countries are in line to sign the agreement, with its extreme investor privileges. In signing up, they risk shrinking their ability to decide their own energy policy, as well as opening themselves up to the potential for costly lawsuits by investors. We need to stop this dangerous expansion of the ECT.
How can countries get out of 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. A joint withdrawal of all remaining EU member states would have an even greater positive impact.
What’s the role of the EU?
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 decarbonize rapidly.