After many years of civil society mobilisation, the European Commission has finally put forward a proposal in favour of a coordinated withdrawal from the Energy Charter Treaty (at EU and member states levels and Euratom). With this long-awaited proposal, the European Commission has sided with the European Parliament and the 8 Member States that have already announced their exit from the ECT, having concluded that the coordinated withdrawal option was the safest and most legally and politically sound path.
This proposal must now be discussed at the informal Council of Energy Ministers to be held on 12 July in Spain, and then be subject to a qualified majority vote in the Council and approval by the European Parliament.
A joint letter signed by 25 european civil society organization has been sent on 10 July.
The decision to leave the ECT has dragged on for too long. It is now time for the Council of the EU to show leadership. The Energy Charter Treaty is not fit for purpose and will remain a barrier to EU climate and energy goals unless the EU and all its member states jointly withdraw from it. This is also increasingly recognized in ECT contracting states outside the EU. In line with the assessment of the independent French High Council on Climate issued in October 2022, the British Climate Change Committee has also called on the British government to reconsider its membership to this outdated agreement.
The UK-based oil company Lansdowne Oil & Gas has initiated an ECT claim against Ireland, the first known investment arbitration against the country. The company is reportedly demanding $100 million compensation for the refusal of the Irish Energy Minister to grant them a further lease to drill for oil and gas in the Atlantic as the company did not meet the recommended financial guidelines. This sum almost equals Ireland’s annual spending on climate action.
This case highlights the significant danger currently facing ECT Member States that decide to limit fossil fuel activities within their borders. It follows RWE’s €1.2 billion claim against the Netherlands for a law requiring a coal exit by 2030 and Ascent Resources’ €500 million claim against Slovenia for requiring an environmental impact assessment for a fracking project. The oil company Rockhopper recently won a €250 million payout against Italy for the refusal to grant an oil exploration licence.