Today the European Union took a step closer to exiting the high risk Energy Charter Treaty (ECT), when the European Parliament overwhelmingly voted to leave the treaty. This little known and outdated treaty is being used by the fossil fuel industry to sue governments for billions over climate policies.

Protest with giant inflatable dinosaur in front of EU building
Protesters call for the EU to exit the ‘dinosaur’ ECT. Image credit: Lode Saidane

A growing number of countries have been walking away from the treaty, in order to put an end to the danger that it poses. In the past two years, eleven countries have announced they are leaving the ECT: Spain, France, Germany, Netherlands, Slovenia, Poland, Luxembourg, Denmark, Ireland, Portugal and the UK. Italy withdrew earlier, in 2016.

Now the EU itself is on the brink of joining the exit. The decision still needs a final green light from EU governments in the Council, but as preliminary agreement has already been reached, it is widely anticipated that this may come in May.

Jean Blaylock, ETJC Coordinator said:

“The climate-wrecking Energy Charter Treaty is a straitjacket and the European Parliament’s vote today begins to free the EU from its constraints. This is an amazing victory for campaigners across Europe who for many years pressured the EU to exit the treaty.

“Now those European countries which have been sitting on the sidelines need to take action and join the exit from the ECT. Otherwise they will be left behind in a crumbling treaty, bearing all the risk, while others move on”

Background

Today’s vote

Today’s vote was on a Commission proposal for the EU institutions and Euratom to withdraw from the Energy Charter Treaty. The Commission considers that the ECT is not in line with the EU’s legal order, its investment policy and law, and its energy and climate goals. The proposal broke months of deadlock by leaving the option open for some member states to remain in the treaty while facilitating an orderly exit for others.

The vote was passed by 560 votes for, 43 against, 27 abstentions.

The European Parliament had previously adopted a resolution in November 2022 in favour for an EU exit of the Energy Charter Treaty.

What next:

The proposal will now go to the Council’s ministerial meeting for final decision in May.

About the ECT

The Energy Charter Treaty gives companies sweeping rights to sue governments through parallel private courts or ISDS (investor-state dispute settlement) mechanisms. This allows companies, even climate-wrecking fossil fuel companies, to claim billions of taxpayers’ money if governments pass or enforce legitimate and much-needed climate and environmental laws. Cases are heard in secretive tribunals outside of the national legal system.

Some examples of cases:

  • In 2021, German coal firms RWE and Uniper sought €2.4bn in damages from the Dutch government over its 2030 coal phase-out deadline. Both cases have now been discontinued.
  • In 2022, The British oil company Rockhopper was awarded €190 million plus interest under the Energy Charter Treaty after Italy banned offshore drilling, following a decade of struggle by Italian coastal communities who fought the oil production on their coasts.
  • Last November, the oil company Klesch Group Holdings Limited sued the EU, Germany and Denmark for at least €95 million over windfall taxes under the Energy Charter Treaty. The lawsuit by the oil company targeted Europe’s efforts to cushion the economic impact of high energy prices.