Brussels The EU and its member states are playing through how to leave the Energy Charter. Energy experts from the member states met on Tuesday. Officials from the EU Commission presented a discussion paper, according to which they presented a coordinated withdrawal by the EU, the EU member states and the European Atomic Energy Community (Euratom) as the most appropriate option. The paper is available to the Handelsblatt.
The activists who have been fighting the Energy Charter for years are almost there. They attribute a harmful effect on the energy transition to the contract.
The Energy Charter is an investment protection treaty between more than 50 countries, most of which are in Europe or Central Asia. It gives energy companies the right to sue for expropriation or alleged unfair treatment before privately run arbitration boards if they see their profits eroded.
What was supposed to promote the development of infrastructure in the East and protect Western companies is now also having an effect on Europe: companies have complained about nuclear and coal phase-outs or about the withdrawal of drilling rights and environmental regulations.
For example, the German group RWE sued the Netherlands because it did not see itself being adequately compensated for the coal phase-out there. The Swedish company Vattenfall sued Germany because of the nuclear phase-out and only withdrew the lawsuit when the federal government promised billions in compensation.
>> Read here: An outdated agreement ties the EU to coal mines and oil pipelines
This should come to an end in the future. Last summer, the EU Commission negotiated a comprehensive modernization of the Energy Charter and asked for support. But fewer and fewer EU countries wanted to follow her. Spain, the Netherlands, Poland, Slovenia and France announced their withdrawal, followed by Germany in November. Italy left the Energy Charter in 2016.
Charter reform failed
The modernization has thus failed, as the EU Commission now recognizes. An energy charter treaty that is not modernized “is not in line with EU investment protection policy or the Green Deal,” the discussion paper said.
The officials stress that their analyzes are not official commission positions. A spokesman for the authority confirmed, however, that a coordinated exit is now being considered.
According to the paper, a qualified majority in the Council of Member States is required for the EU to withdraw. This means that 15 of the 27 states would have to vote for it. Then all other states would be forced to leave the treaty or to organize an exemption from the EU. Because many of the provisions in the Energy Charter fall under the sole responsibility of the EU.
>> Read here: “We waited for the Germans, but it was getting more and more silly” – France leaves the Energy Charter
The Commission officials point the way to derogations as a second option in their discussion paper. The Commission would then have to define the conditions under which a stay is possible.
That could be a compromise if some states balked at the exit, the paper says. But this approach would be “connected with considerable complexity and administrative burden,” it says.
The experts also do not consider the third option, first reforming the contract and then withdrawing it, to be practicable. Above all, those states that have already announced their withdrawal would have to be brought on board.
>> Read here: A new beginning in trade policy – Germany makes new agreements possible
“All the arguments speak for a quick exit,” says MEP Anna Cavazzini (Greens). “The member states should not plan any new attempts at reform now, but make a quick decision.”
It will still take a while for an exit to have an effect: companies can still sue 20 years after the exit if they see their profits from investments already made reduced.
In order to prevent this, the EU Parliament is calling for a side agreement from states that exclude complaints among themselves. That would be possible among the EU countries, but other countries would probably not participate. “To date, no non-EU party has indicated that it would be open to such a solution,” the paper said.
And there are also investment protection clauses in other international contracts that grant companies far-reaching rights to sue. “States should not be open to blackmail,” says Cavazzini. “That’s why we have to systematically examine the old contracts and clearly narrow down the grounds for action.”
More: Germany allows the reform of the Energy Charter to fail