The European Commission wants to end the secret system protecting fossil fuel reserves | Fossil fuels
The use of secret corporate panels to protect multi-billion pound fossil fuel investments in Europe could end after a decision by the European Commission.
One-off payments such as a recent £210million award to British oil company Rockhopper would no longer be possible between EU states under a new EU Charter Treaty reform proposal. energy (ECT).
The 52-nation ECT began as an attempt to defend the revenues of European energy companies that invested in former Soviet economies after the fall of the Iron Curtain. This allows them to sue states in a secret court system when they believe their profit expectations have been affected by political decisions. But it could leave states open to action to shut down oil, coal or gas projects to meet the EU’s net zero emissions target for 2050.
More than two-thirds of EU energy investments protected by the treaty are thought to come from investors also based within the bloc, and overall ECT disbursements could reach $1.3 billion by 2050, according to some estimates.
Cornelia Maarfield, senior trade and climate policy officer for Climate Action Network Europe, said: “This proposal would significantly reduce the risk of fossil fuel companies attacking climate policies. – at least within the EU. But it would be even better to open the possibility for non-EU countries to join this agreement in combination with a coordinated withdrawal. Why not give other countries the opportunity to free themselves from the clutches of this treaty monster?
The Commission’s proposal notes the danger that the differences between EU law and the Energy Treaty “turn de facto into a legal dispute because arbitral awards in breach of EU law would circulate in court orders. laws of third countries”. [non-EU] countries”.
“The risk of legal conflict is such that it renders an international agreement incompatible with EU law,” he adds. EU states should thus “confirm that the ECT does not apply and has never applied to intra-EU relations”.
A sunset clause maintaining investment protections for 20 years after the treaty’s termination is also inapplicable to intra-EU cases, the document says.
The Brussels decision is part of an ongoing attempt to “modernize” the ECT, in the face of growing calls for a full exit from the treaty. On Thursday, the lower house of the Polish parliament decisively voted to withdraw from the ECT by 418 votes to 11.
Adam Guibourgé-Czetwertyński, Poland’s deputy climate and environment minister, told the Guardian: “We have just reached a stage where we believe that nothing will come out of this modernization process. There is no indication that our partners would be willing to take more action. Italy is gone [the ECT] five years ago and maybe we should have already left too. At some point, you have to realize that the chance of getting the [treaty] in the form we want it to be will not happen.
Poland has a reputation for being a climate laggard, but it supports the EU’s net zero emissions target for 2050, which requires it to rapidly scale down its vast coal and gas industries.
Investor lawsuits were difficult to predict “but it is clear to us that there is a risk that one day we will have a bad surprise,” Guibourgé-Czetwertyński said. “It’s definitely not a risk worth taking from our perspective.”
The Polish senate now has 30 days to react to the vote of the lower house on the ECT. If not, Poland’s decision to leave the treaty will be considered “approved”, he added.
At the same time, if the committee’s proposal is to succeed, EU ministers must give it the green light by November 22, when an ECT conference must also agree to it at the European Parliament. unanimity.
Guibourgé-Czetwertyński said it was an “illusion” to expect a mutually satisfactory deal.
The European Commission did not immediately respond to a request for comment.
Critics say Brussels’ new scheme would still allow for “letterbox shopping”, in which investors simply move from one jurisdiction to another, where they rebadge themselves and carry on as before.
Yamina Saheb, a former ECT official turned treaty critic who is now the lead author of a report by the Intergovernmental Panel on Climate Change (IPCC), accused the commission of ” hide the obvious failure of his proposals to modernize the ECT”.
These were “unlikely to prevent new ISDS claims from EU investors against EU countries”, she said, noting: ” The UK and Switzerland are likely to become very attractive to these investors.”