CIEL | October 2022
A backdoor for fossil fuel protection: How extending ECT coverage to CCUS, hydrogen, and ammonia will lock-in oil & gas
Extending protection under the Energy Charter Treaty (ECT) to investments in carbon capture, utilization and storage, hydrogen, and ammonia, among other emerging energy technologies and products, could hamper the ability of States to end reliance on fossil fuels. It could also discourage States from adequately regulating technological responses to climate change that risk harming human rights and the
environment. This briefing explains why.
- Including carbon capture, utilization, and storage (CCUS), hydrogen, ammonia, synfuels, and methanol in the ECT serves as a backdoor extension of protection for fossil fuels because each is dependent on fossil fuels directly or indirectly, and all are promoted by the fossil fuel industry to justify its ongoing operations.
- These new technological applications pose diverse challenges and significant risks, and protection under the ECT, including access to investor-state dispute settlement (ISDS), may stifle State Parties’ ability to appropriately regulate emerging challenges.
- Protections under the ECT could keep States from taking measures necessary to restrict and regulate the deployment of these technologies as their dangers become more apparent, or to roll back incentives when they prove ineffective or counterproductive to climate action.
- Exclusions from Treaty coverage put forward by the European Union (EU), the United Kingdom (UK), and Switzerland have significant loopholes and do not eliminate many protections for fossil fuels.
- The risks associated with extending the ECT to cover CCUS, hydrogen, ammonia, synfuels, methanol, and biomass/biogas are yet another reason that Parties should reject the modernized ECT and withdraw from the Treaty altogether.
In light of the analysis presented, and in view of other concerns regarding provisions in the modernized Treaty, we conclude that:
- The Contracting Parties should not endorse these changes at the Energy Charter Conference in November 2022 and should ultimately withdraw from the ECT; and
- The EU and its Member States, as well as the UK and Switzerland, should recognize that the carve-outs under the “flexibility mechanism” are not climate-compatible and vote against the modernization package as it has been agreed in June 2022 by the signatory parties, and ultimately withdraw from the ECT.
Full report (pdf)