EU tries to unlock deal to quit contentious energy investment treaty

*European Union flags flutter outside the EU Commission headquarters, in Brussels, Belgium, February 1, 2023 REUTERS/Yves Herman

Brussels — The European Commission on Friday urged member states not to oppose reforms to an international energy treaty it says the bloc should leave anyway because it undermines efforts to fight climate change.

Allowing the treaty to be reformed would halve the time non-EU energy firms would continue to enjoy the pact’s protections to their investments in the EU after the bloc’s departure.

The 1998 Energy Charter Treaty allows energy companies to sue governments over policies that damage their investments and in recent years has been used to challenge policies that require fossil fuel plants to shut.

Brussels first proposed a coordinated EU departure from the treaty last July, after member states including Denmark, France, Germany, Luxembourg, Poland, Spain and the Netherlands announced plans to quit, with most citing climate change concerns.

But other countries have yet to come on board, with some, including Cyprus and Hungary, keen to stay in, and others concerned that their efforts to modernize the treaty would go to waste with their departure.

In a bid to find the required majority support for a joint exit, the European Commission proposed on Friday that EU countries should back reforms the treaty’s roughly 50 signatories agreed last year, but which had little chance of coming into force without the EU’s green light.

Lukas Schaugg, an analyst at the International Institute for Sustainable Development think tank, said he was hopeful the proposal could “unblock the deadlock” among member states.

One of the key proposed reforms to the treaty is the reduction to 10 years the period energy firms from non-EU signatories such as Japan and Turkey would enjoy protection of their existing investments in the bloc.

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Brussels’ proposal would allow the changes to enter into force, after which, the EU would leave the treaty.

Withdrawing from the treaty without first approving the reforms would leave the EU subject to the current sunset clause that for 20 years protects existing investments.

Reporting by Kate Abnett Editing by Tomasz Janowski – Reuters

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