Overwhelming MEPs’ vote for EU to leave climate-wrecking Energy Charter Treaty

Energy Charter Treaty gave fossil fuel industry the right to governments for billions over climate policies that resulted in loss of profits

The Energy Charter Treaty dates back from the 1990s and grants sweeping rights and protections to big energy investors – mainly fossil fuel companies
The Energy Charter Treaty dates back from the 1990s and grants sweeping rights and protections to big energy investors – mainly fossil fuel companies

The European Parliament has adopted an EU proposal to leave the Energy Charter Treaty (ECT), an international trade agreement protecting fossil fuel investments that has garnered controversy among environmental activists.

The Energy Charter Treaty is a significant obstacle to enacting national policies to combat climate change.  After years of campaigning for an exit, Friends of the Earth Europe and climate justice activists across Europe celebrate this victory for the environment and the climate.

The proposal was put to plenary vote in the EU Parliament after the Belgian EU Presidency brokered a deal with the European Commission and member states on an EU withdrawal, and following its preliminary approval by the EU Council.

The European Union is now following a long list of member states – including France, Germany, Spain, the Netherlands, Ireland, Luxembourg, Slovenia, Poland – who already took the decision to withdraw from the treaty in the last two years. A petition to leave the ECT was signed by more than 1 million European citizens.

Friends of the Earth Malta has campaigned for a withdrawal from the Energy Charter Treaty and sent a letter to Malta’s energy minister Miriam Dalli in February 2023 alongside 10 European environmental organisations, including Friends of the Earth Europe, Climate Action Network (CAN) Europe, and Client Earth.

The letter was followed up by a request for a meeting to discuss withdrawal from the ECT with the directors of these European organisations, which was declined by the Ministry on account of “aspects of a restricted nature”.

The MEPs’ vote was on a European Commission proposal for the EU and Euratom to exit the Energy Charter Treaty, passing by 560 votes in favour and 43 against.

The EU Council must now provide its final green light, expected to happen in May or June, before the end of the Belgian presidency.

“The proposed Melita TransGas Pipeline is one of many fossil fuel infrastructure projects that are still being proposed today, even though the climate science clearly says we need to move away from fossil fuels now, and invest in the shift to renewable energy instead,” FOE Malta climate coordinator Dr Suzanne Maas said.

“The EU Parliament voting to leave the Energy Charter Treaty is great news, as continued membership enables companies to take legal action against member states to protect their fossil fuel investments, which would lock us into fossil fuel dependency for decades more and descend us further into climate chaos.”  

Today’s vote approves the Commission’s decision that deems the ECT incompatible with the EU’s legal order, investment policy and law, and energy and climate goals. The proposal broke months of deadlock by offering member states the option to remain in the treaty while facilitating an orderly exit for others.

The European Parliament had previously adopted a resolution in November 2022 calling on the EU to withdraw from the ECT.

The Energy Charter Treaty dates back from the 1990s and grants sweeping rights and protections to big energy investors – mainly fossil fuel companies. The fossil fuel industry is using it to sue governments over their climate policies and claim billions of taxpayers’ money in compensation for loss of profits. Cases are heard in parallel private courts or ISDS (investor-state dispute settlement) mechanisms, with settlements made by commercial arbiters who have an incentive to favour corporations. In Europe alone €350 billion worth of oil, gas and coal projects are protected under this treaty.

Some examples include the €2.4 billion in damages sought by German coal firms RWE and Uniper from the Dutch government over its 2030 coal phase-out deadline. Both cases have now been discontinued.

In 2022, British oil company Rockhopper was awarded €190 million plus interest under the Energy Charter Treaty after Italy banned offshore drilling, following a decade of struggle by Italian coastal communities who fought the oil production on their coasts.

Last November, the oil company Klesch Group Holdings Limited sued the EU, Germany and Denmark for at least €95 million over windfall taxes under the Energy Charter Treaty. The lawsuit by the oil company targeted Europe’s efforts to cushion the economic impact of high energy prices.

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This article is part of a content series called Ewropej. This is a multi-newsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author’s view. The action was co-financed by the European Union in the frame of the European Parliament's grant programme in the field of communication. The European Parliament was not involved in its preparation and is, in no case, responsible for or bound by the information or opinions expressed in the context of this action. In accordance with applicable law, the authors, interviewed people, publishers or programme broadcasters are solely responsible. The European Parliament can also not be held liable for direct or indirect damage that may result from the implementation of the action.

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