* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
An old treaty is undermining climate action and leaving Europe dependent on Russian fossil fuels. What will it take to change that?
Laurence Tubiana is chief executive of the European Climate Foundation and architect of the Paris Agreement on climate change.
A little known but controversial trade agreement, the Energy Charter Treaty (ECT), is one of the last obstacles standing in the way of Europe’s phase out of fossil fuels. If current negotiations to reform the treaty fail, then the EU must consider a coordinated withdrawal.
The shocking and brutal invasion of Ukraine, which highlights Europe’s short-sighted dependency on Russia’s fossil fuel imports, only adds to this urgency.
Adopted in the 1990s and binding dozens of countries around the world, it gives companies the power to sue governments when climate policies impede their profits. Such a brazen form of corporate capture has no place in a world striving to realize the Paris Agreement and reach net zero by 2050, all the more so in a context of acute geopolitical tension.
The ECT, for instance, allows owners of fossil fuel gas pipeline Nord Stream 2 to seek compensation from Germany at international investment tribunals, after the government halted the pipeline’s certification at the onset of the invasion.
Moreover, the ECT is routinely used to strike at the heart of the international community’s climate goals. Today, energy giants such as RWE and Uniper are using it against the Dutch government, which has set a Paris compatible coal phase-out date of 2030.
According to the International Energy Agency (IEA), meeting the Paris Agreement targets means a global phase out of unabated coal and oil by 2040, and advanced economies should reach net zero by 2035.
Phase-out decisions for all of these energy carriers must therefore take place as soon as possible, and without a Damocles sword hanging over decision-makers’ heads.
The only liability governments should have to worry about are those caused by the physical impacts of the climate crisis – not the stranded assets of fossil fuel companies.
COMPROMISES ARE NOT ENOUGH
The European Commission (EC) has called the ECT “outdated”, “no longer sustainable” and in conflict with some of the basic principles of EU law.
Since 2018, together with its member states, it started a reform process to ensure it is no obstacle to the implementation of the Paris Agreement and EU Green Deal.
In June this year, the EC is hoping to end the talks and find an agreement based on its proposal between the 53 states that are parties to the ECT.
These countries stretch from Western Europe through Central Asia to Japan, plus the EU and the European Atomic Energy Community. Their national interests are as diverse as their geographies.
The most ambitious proposal on the table was rejected by some parties to the treaty including countries heavily reliant on revenues from fossil fuel exports – countries that are often, too, laggards when it comes to upholding their commitments under the Paris Agreement.
Since this setback, the EU has sought to find a compromise, leading to what is now termed the ‘flexibility option’, allowing countries to choose which energies can still be covered by the treaty in their jurisdiction, and which to exclude.
While this approach would allow the EU to phase out the ECT’s investment protection for fossil fuel projects at home, it would mean that new and existing investments in certain gas pipelines and gas power stations would continue to be protected for some decades to come.
Meanwhile, other ECT parties could continue business as usual without implementing any changes. Coming amid the latest stark findings from the Intergovernmental Panel on Climate Change, it’s clear this ‘flexibility option’ is a compromise too far.
A MOMENT OF REFLECTION AT THE EUROPEAN PARLIAMENT
While the European Commission is maintaining its goal of having the ECT reformed by June, the current state of negotiations – and stark absence of public debate – is increasingly looking like a crucial missed opportunity for climate leadership, one that would allow the ECT to hold climate policies hostage in Europe and beyond.
If such a greenwashed compromise should come to pass, it would undermine the EU’s own ambitions while doing nothing to further the climate ambition which all states agreed to in the Paris Agreement.
At the end of March, the members of the European Parliament are expected to have the opportunity to make a thorough and honest assessment of the costs and benefits of a reformed ECT during a public debate.
While this meeting is yet to be confirmed, it could be the last opportunity for Europe to assess the good purpose of remaining in a treaty that is holding Europe hostage.
If Parliament concludes that the reforms are doomed, then a coordinated withdrawal of the EU and its member states must be an option. This is an option the EU French presidency can advance (and has already put on the table), given the Commission’s plan to complete ECT reform by mid 2022.
Countries that have already asked to explore exit scenarios, such as Spain and Poland, as well as countries like Germany that have also expressed misgivings, could put forward a joint initiative to call on an EU-wide collective withdrawal.
This would open up greater public discussion and scrutiny of the ECT’s rampant failings in the process: a debate fitting for the climate crisis.
France is in a unique position to lead the line, and give urgent ECT withdrawal the public hearing it so clearly needs.
