Today, the European Parliament overwhelmingly adopted the EU’s proposal to leave the controversial Energy Charter Treaty (ECT), an international trade agreement protecting fossil fuel investments. 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.
Paul de Clerck, trade expert at Friends of the Earth Europe, commented:
“Today’s vote proves people power can win even over big corporations. After years of campaigning, we’ve successfully lifted the ECT’s sword of Damocles threatening EU governments’ climate action goals.
Politicians now have the duty to further unlock Europe from fossil fuels, scrap the ISDS parallel justice system that lets industry sue states over public interest policies in many other trade and investment deals, and accelerate the clean energy transition.”
Next step
The EU Council must provide its final green light. This is expected to happen in May or June, before the end of the Belgian presidency.
Background
Today’s vote
Today’s vote was on a EU Commission proposal for the EU and Euratom to exit the Energy Charter Treaty. The Commission 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 vote was passed by 560 votes in favour and 43 against.
The European Parliament had previously adopted a resolution in November 2022 calling on the EU to withdraw from the ECT.
About 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 euros worth of oil, gas and coal projects are protected under this treaty.
Some examples of cases:
- In 2021, German coal firms RWE and Uniper sought €2.4bn in damages from the Dutch government over its 2030 coal phase-out deadline. Both cases have now been discontinued.
- In 2022, The 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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Stop the Energy Charter Treaty
The Energy Charter Treaty (ECT) is a major obstacle to fast and effective action on the climate and environmental crisis. Our transformation to a green and fair society will become harder, slower and more expensive if we don’t stop it.
