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Deadlock as member states disagree over withdrawal from Energy Charter Treaty

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Euronews | 10 January 2024

Deadlock as member states disagree over withdrawal from Energy Charter Treaty

By Marta Pacheco

Decision on whether to part from treaty remains in limbo, with some EU countries wanting to stay and others having already departed.

EU diplomats say the process of withdrawal from the Energy Charter Treaty (ECT) has stalled amid division between governments and the European Commission.

Last July, the Commission proposed an EU-wide withdrawal from the treaty after failing to secure sufficient support to modernise it. At stake was an attempt to address concerns that the treaty opened the door to compensation demands by fossil fuel companies against member states implementing policies designed to avert climate change.

The ECT is an international agreement, in force since the early 1990s, that allows energy companies to sue countries taking measures that could harm their expected profits.

Last year, the EU Council agreed to a Swedish proposal that would allow those countries who so wished to remain within the treaty, but the Commission is arguing that participation by some rather than all member states is not legally tenable, an EU diplomat told Euronews, since ECT issues "fall under shared competence” and must be coordinated at EU level.

“If member states want to remain contracting parties of the ECT, that would require an authorisation by the EU and it would require that the treaty is in compliance with the EU treaties, which is currently not the case,” Commission spokesperson Tim McPhie told Euronews.

“This has led to a great deal of discussion in the Council, because the Commission ignores what was decided by the member states,” the diplomat said, referring to the Council’s request for the EU executive to propose a solution granting member states a choice on whether or not to remain in the treaty.

Since October 2022, nine member states have announced their intention to withdraw from the ECT — Poland, Spain, Netherlands, France, Slovenia, Germany, Luxembourg, Denmark, and Portugal. Among those countries, France, Germany, Poland and Luxembourg have officially notified their withdrawal. Italy left in 2016.

However, these member states did not want to block other countries from continuing as members if they so desired, the EU diplomat added.

“Given that some member states have decided to withdraw from the treaty, it’s important to keep an equal level playing field to have a coordinated exit. At the same time, I also understand the need to provide flexibility for those member states who would like to remain members of a modernised treaty if legally possible," MEP Maria da Graça Carvalho (EPP), rapporteur of the European Parliament resolution on the outcome of the modernisation of the ECT, told Euronews.

A second EU diplomat expressed hope that the Commission and Council can “break the current deadlock and find a compromise solution”.

“We would like the EU to withdraw so that the member states that have already left can protect themselves against the risk of litigation that the ECT would continue to give rise to — albeit indirectly — if some member states remained a party to the agreement,” the second diplomat told Euronews.

One possibility, the diplomat added, would be to include guarantees in the European withdrawal decision for those EU countries that have expressed the wish to remain.

“The EU and member states need to solve the ECT deadlock. It is obvious that the treaty continues to undermine EU climate ambitions. Modernisation is no longer an option, since this was blocked by a number of countries,” said Paul de Clerck from Friends of the Earth Europe.

The issue has now passed to the EU Belgian Presidency of the European Council, which began on January 1. De Clerck said he believed the Belgian minister responsible for the ECT negotiations, Tinne van der Straeten, favours leaving the ECT, although the country has no formal position on the issue. Van der Straeten’s office declined to comment citing the “sensitive” nature of the discussions.

“The Belgian presidency needs to prioritise that the Commission proposal for the EU to leave the ECT is approved, otherwise there is the risk that the decision is prolonged forever, with a new European Parliament and Commission coming on board later this year,” de Clerck added.

The ECT secretariat did not respond to a request for comment. The Belgian presidency declined to comment.

 source: Euronews