EU proposes Energy Charter Treaty exit after climate concerns

The European Commission proposed on Friday that EU countries jointly quit an international treaty that has been criticised for blocking efforts to fight climate change because its protection of energy investments extends to fossil fuels. The 1998 Energy Charter Treaty allows energy companies to sue governments over policies that damage their investment and has in recent years been used to challenge policies that require fossil fuel plants to shut. Its roughly 50 signatories include European Union countries.

“I proposed that the EU withdraws from the Energy Charter Treaty, because in its current, unmodernised version it is no longer in line with the EU’s energy and climate goals,” EU Energy Commissioner Kadri Simson said. In its proposal to leave, the Commission, the EU executive, said the treaty had become “increasingly outdated”, and its fossil fuel protections undermined the EU’s plans to shift to cleaner energy sources to curb greenhouse gas emissions. Brussels has faced pressure to lead an EU exit, after member states including Denmark, France, Germany, Luxembourg, Poland, Spain and the Netherlands announced plans to quit, with most citing climate change concerns as the reason. Italy left in 2016. The Commission proposal needs approval from a reinforced majority of EU countries and the European Parliament’s consent. The European Parliament has previously urged the EU to leave the treaty.

Countries including Cyprus, Hungary and Slovakia have said they would prefer to stay in an updated version of the accord – but reforms to the treaty agreed last year, aimed at addressing some climate concerns, appear unlikely to come into force as EU countries have not supported them. Sources familiar with the discussions said Brussels considered a partial exit that would allow some countries stay in the treaty, but decided against it over legal concerns. Withdrawing from the treaty would still leave the EU subject to a sunset clause that for 20 years protects existing investments – including in fossil fuels – in EU countries by investors from non-EU signatories such as Japan and Turkey. Reuters