After France, Spain and the Netherlands, the German government has now also announced its exit from the Energy Charter Treaty (ECT). This 30-year-old convention has been accused of stymieing climate ambition. The TCE was ratified in 1994 by around 50 states, including those from the former Soviet bloc, and aimed to secure Western Europe’s supply of fossil fuels. It allows the energy giants to turn against signatories to the treaty who would pursue climate policies unfavorable to their investments.
The parliamentary groups of the governing coalition’s member parties, Social Democrats, Greens and Liberals, gave the green light to this government-proposed exit on Friday. “We are consistently aligning our trade policy with climate protection and therefore, together with our European partners France, the Netherlands, Spain and Poland, want to hold on to Germany’s exit from the TCE and at the same time ratify the CETA agreement,” the three parties said in a statement.
At the same time, the parliamentary groups of the governing coalition member parties, the Social Democrats, the Greens and the Liberals, approved the ratification of the CETA trade agreement with Canada. The Energy Charter Treaty (ECT) has also been seen as an obstacle to the ratification of the CETA Free Trade Agreement between the European Union and Canada. Legislation confirming these measures should be presented to the Bundestag at the end of the month, they said.
Last month, France announced its exit from the ECT. “France has decided to withdraw from the Energy Charter Treaty (…) It is in line with our European climate strategy,” said French President Emmanuel Macron on the sidelines of a European summit in Brussels. “Several recent cases indicate that (the TCE) in fossil fuels has led to somewhat speculative mechanisms and significant compensation for certain actors,” noted the French president.
Symbolic case: After the passage of a Dutch law banning coal by 2030, the German energy group RWE is demanding 1.4 billion euros from The Hague to compensate for its losses at a combined heat and power plant. Italy was ordered in September to pay British oil company Rockhopper €180 million in compensation for refusing it an offshore drilling permit. The German Encavis AG has also filed lawsuits against France because of the change in tariffs for the purchase of photovoltaic electricity in 2020.
Since 2020, Europeans have been trying to modernize the text as litigation has increased. A compromise was reached in June aimed at preventing frivolous or opportunistic claims and removing already started fossil fuel investments from the scope of the treaty after a transition period of 10 years. It must be confirmed by a formal unanimous vote in November. In June, Yamina Saheb, an economist who contributed to the IPCC report (UN climate experts), listed 146 disputes related to the ECT, two-thirds of them within Europe, and the compensation awarded exceeds 42 billion euros.
There remains the thorny issue of the ECT’s “survival clause” to protect covered fossil fuel assets for another 20 years after a signatory state withdraws. The High Council on Climate (HCC), a French advisory body, recommended “neutralizing” this clause to avoid prolonging the treaty’s negative impact by two decades.
Russia withdrew from the treaty in 2009, Italy followed in 2015. Poland initiated a parliamentary procedure to withdraw from the ECT. Like France and now Germany, Spain and the Netherlands have also announced plans to leave the TCE, while calling for a “coordinated exit” of all EU states.
(With AFP and Portal)