Signed in 1994 to protect cross-border investments in the energy sector, the Energy Charter Treaty has faced growing criticism from environmental g
Signed in 1994 to protect cross-border investments in the energy sector, the Energy Charter Treaty has faced growing criticism from environmental groups and governments that say it impedes countries’ efforts to phase out fossil fuels. Spain has said the EU must push for huge changes or pull out – warning individual members states could soon break rank and quit unilaterally.
The agreement enables foreign investors to seek financial compensation from governments if changes to energy policy negatively affect their investments.
Some countries are growing impatient, after three rounds of negotiations last year failed to yield progress.
Spain said this weekend it had written to EU leaders calling for the bloc to consider quitting the treaty if it cannot be redesigned to support Europe’s plans to curb greenhouse gas emissions.
“The negotiations… have practically made no progress since they began in July 2020,” a Spanish official said.
Spain is seeking “full alignment with the Paris Agreement (on climate change) or withdrawal from the treaty”, Spanish Energy and Environment Minister Teresa Ribera wrote on Twitter.
Speaking to Politico, she added: “We are not very optimistic on the possibilities to get a successful result from the coming rounds of negotiation.”
In a stern ultimatum to Brussels, the Spanish Minister said efforts to reform the treaty should be clear by the end of 2021.
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Among the most recent uses of the treaty, RWE last month sought compensation from the Dutch government over its plan to phase out coal-fuelled power by 2030, which would affect the German utility’s Eemshaven power plant.
The treaty’s more than 50 signatories meet next month to negotiate an updated text.
EU officials said the European Commission is expected to produce its negotiating position late on Monday, for EU countries to consider.
France has also called on EU countries to jointly quit if negotiations do not deliver progress this year.
Luxembourg this month wrote to Brussels asking it to seek an end to the treaty’s protection of fossil fuel investments.
Luxembourg energy minister Claude Turmes said failure to do so would “jeopardise the pace for our common road to climate neutrality”.
Germany has also warned the treaty could clash with the bloc’s Green Deal targets.
A spokesperson for Germany’s economy and energy ministry said: “Under no circumstances may the Energy Charter Treaty be used in contradiction to climate protection or the energy transition.”
Hungary, Slovakia, Poland, the Czech Republic and Romania, however, said they accept the Commission’s proposal for a slow phase-out of non-renewable fuels like natural gas.
A Slovak official in Brussels said: “We support the Commission’s current proposal but we are not supportive of any stricter criteria on deadlines or thresholds that would undermine investments in gas infrastructure.”
They think pulling out of the agreement is precipitous as the treaty has a 20-year sunset clause that allows for lawsuits to be brought even after countries leave.
Climate campaigners, which support an EU exit from the agreement, say meaningful change is unlikely since it would need unanimous approval from all signatories – among them Japan, Turkey and all EU states except for Italy, which left the agreement in 2016.