Germany will pull out of the 1994 energy deal, which was widely criticized for protecting fossil fuel investments, a government spokesman said on Friday.
Franziska Brantner, Parliamentary State Secretary in the Federal Ministry of Economics, said that the decision to withdraw from the Energy Charter Treaty (ECT) is part of the country’s obligation to “consistently align our trade policy with climate protection”.
She added that the move is also an important signal for the United Nations climate change conference, COP27, taking place in Egypt.
Europe’s largest economy is leaving the pact, along with France, the Netherlands, Spain and Poland.
The other countries have said the pact is inconsistent with their commitments under the 2015 Paris Agreement to tackle climate change.
COP27: Germany promotes its “climate club”
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What is the Energy Charter Treaty?
The ECT, which has more than 50 signatories including the European Union, is designed to secure energy supplies and offers protection to companies investing in the energy industry.
The main focus was on energy infrastructure investments in volatile former Soviet Union countries in Central Asia and Eastern Europe,
A key element of the treaty allows energy companies to sue governments over energy policy changes that could harm their investments, exposing states to billions of dollars in damages.
German utility RWE has used the ECT to take legal action against the Netherlands over the government’s failure to allocate adequate time and resources to phase out coal.
The case may have partially motivated the Dutch decision to terminate the contract.
In June, the European Union struck a compromise treaty – due to come into force next month if no signatories object – to revise the treaty to limit legal action if it jeopardizes climate goals.
But climate groups have criticized gaps in the update, saying it continues to jeopardize efforts to curb global warming.
“Obstacles to the energy transition”
Green party leader Katharina Dröge praised the German decision as a “milestone”.
“No other international trade or investment agreement in the world has triggered more lawsuits from investors than the Energy Charter Treaty,” she told the dpa news agency.
“This pact is an obstacle to the energy transition and costs the state billions.”
mm/aw (AFP, AP, dpa, Portal)