The European Parliament has adopted by a large majority the proposal from the European Commission for the EU and Euratom to withdraw from the Energy Charter Treaty. This withdrawal can be officially notified after the final adoption of the proposal by the Council, in the coming weeks. And it will still take another year for it to become effective.

This decision marks a significant new step following the wave of withdrawal announcements from EU member states (Poland, Spain, the Netherlands, France, Slovenia, Germany, Luxembourg, Denmark, and Portugal) and the United Kingdom.

In practical terms, exiting the treaty means that new investments made in the energy sector (especially fossil fuels) will no longer be protected, which is excellent news. For investments made before the withdrawal date, which remain protected for 20 years, the EU is already planning to adopt an intra-european instrument to clarify that the Energy Charter Treaty (ECT) cannot apply to intra-European disputes. However, it should also prepare a parallel agreement with third countries leaving the ECT to neutralize the ECT’s 20-year survival clause and thereby mitigate the risks of disputes.

Notes:

(1) Among these countries, 5 have officially notified their withdrawal. This withdrawal became effective for France, Germany, and Poland in December 2023. This will also be the case for Luxembourg in June 2024, for Slovenia in October 2024, and for Portugal in February 2025.

(2) The British government announced in February 2024 its upcoming withdrawal from the ECT after the failure of modernization efforts to align the agreement with a carbon neutrality trajectory. The Swiss government also indicated in November 2023 that it would consider withdrawal if modernization could not take place or if many EU member states left the ECT.