Brussels surrenders to the evidence. In view of the fact that more and more countries, including Spain, have made it clear that they do not want to continue within the Energy Charter Treaty (TEC) of the 1990s, the European Commission has presented this Friday a proposal to make an exit “coordinated” of the EU and its members of this agreement. Closed at the end of the Cold War, it was intended to protect energy investments, but it is also blamed for having shielded the fossil fuel sector to the detriment of renewables and thus preventing it from meeting the environmental objectives that the community bloc has set itself.
The initiative to withdraw from the treaty must be ratified with a qualified majority (55% of States representing at least 65% of the population) in the Council of the EU. Negotiations for this will begin at the informal meeting of energy ministers that will be chaired in Valladolid by the third vice president, Teresa Ribera, next week, the Commission has announced.
Signed in 1994, although it did not enter into force until four years later, the TCE, ratified by more than fifty States, as well as by the EU and Euratom (the European public body in charge of coordinating research programs on nuclear energy) , originally sought to protect the investments of Western energy companies in ex-Soviet countries, which at that time offered interesting business opportunities, especially in terms of fossil fuels. But it has ended up becoming, according to its critics, a drag on the transition to renewable energy, especially due to the arbitration system that it includes, which has allowed investors and companies, especially fossil energy companies, to claim million-dollar compensation from the signatory countries. by policy changes that affect their investments.
“We are reformulating our energy and investment policies through the European Green Pact to guide them towards a sustainable future and the obsolete Energy Charter Treaty is not aligned with our environmental law or our commitments under the Paris Agreement”, recalled the Vice President of the Commission responsible for the Green Deal, Frans Timmermans, in a statement.
For this reason, Brussels has formally proposed “that the EU, its Member States and Euratom withdraw from the TCE in a coordinated and orderly manner”, as announced by the Commission’s General Directorate for Energy. The objective, he adds, is “to guarantee the fair treatment of investors in the EU and beyond.” To ensure that there is “legal clarity”, the Commission also proposes to abandon at the same time its previous proposal to ratify a modernized ECT, something negotiated during the last years, but which has met time and again with the opposition of many countries. . “The majority of the Member States have not achieved it,” Brussels now states concisely.
“It is time for Europe to withdraw from this treaty and for us to focus all our efforts on building an efficient and competitive energy system that promotes and protects investments in renewable energy,” Timmermans claimed.
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The decision to propose a coordinated exit from the TCE was the option that, among others, was demanded by Spain, which announced at the end of last year its decision to withdraw from the treaty. Finally, it did not comply, since it has preferred to wait for Brussels to take the step, thus allowing, as Madrid preferred, a “concerted” exit from the agreement. Almost at the same time as Spain, Poland, the Netherlands and France also announced that they would leave the treaty, as did Denmark, Slovenia, Finland and Luxembourg. Until now, however, only Italy had followed through on its threat, leaving it in 2016. In addition to the remaining 26 Member States, the EU itself as an institution and Euratom, the ECT is signed by Japan, Switzerland, Turkey and most of the countries of the Western Balkans and the former Soviet Union, except for Russia and Belarus, recalls the Commission.
“At a time when accelerating a transition to clean energy has become more urgent than ever, it is time for the EU and its Member States to begin a coordinated withdrawal from the ECT,” said Ribera a year ago.
This is recognized by the Commission proposal, which states that “the guaranteed protection of fossil fuels (…) does not match the objectives of the EU defined in the European Green Pact, REPowerEU or the Climate Law, that is to say: accelerate the distance from fossil fuels to renewable energy, achieve greater energy independence, ensure EU energy security and meet the commitment to reduce greenhouse gases by at least 55% by 2030 and achieve climate neutrality by 2050″. As a result of all this, concludes the legal text, “the EU withdrawal from the ECT is the only possible solution”.
“At the moment we live, we must concentrate our investments to go faster in renewables, energy efficiency (…) several recent cases show that [el TCE] it led to somewhat speculative mechanisms and significant compensation from some players” in fossil fuels, French President Emmanuel Macron also said when he announced in October that he would withdraw his country from the treaty.
The lawsuits filed under this mechanism are indeed breaking records: according to the TCE system’s own count, there are at least 150 corporate lawsuits. Spain is the country with the most claims, 51, since the treaty has been used by many foreign investment funds to denounce the country for the cut in premiums for renewables for a decade, a fact for which lobbyists critical of The withdrawal warns that this is an “error” because the TCE, they maintain, does not only protect fossil fuels.
What the experts do agree on is that, given the large number of arbitration cases, it was essential that the exit of the TCE be coordinated. For ClientEarth lawyer Amandine Van den Berghe, “the fastest and easiest way to free the EU from the ECT’s regulatory deterrent effect is for all member states to leave it together.” Only then, she points out, “can the EU preserve solidarity in the international arena and accelerate its climate ambitions without fear of reprisals from the fossil energy industry.”
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