A modernised ECT reflecting EU values and objectives: a multilateral framework promoting energy investment in a sustainable way?

Abstract

In recent years, the Energy Charter Treaty has come under immense scrutiny and criticism for allegedly protecting the fossil fuel industry and undercutting sovereignty. As a key stakeholder in the modernisation process, the EU has been determined to reform the investment protection standards and the investor–state dispute settlement mechanism to include new provisions on sustainable development and climate change. However, after three years of protracted negotiations, the proposed reform of the Energy Charter Treaty needs to appropriately address the escalating global challenges regarding climate action and sustainable development. With member states such as Poland, Spain and the Netherlands announcing their intention to withdraw, the future of the Charter is hanging in the balance. This article focuses on the modernisation of the Energy Charter Treaty and whether the reformed Charter is fit for purpose, from an EU perspective, to address the impacts of climate change. In the absence of meeting core EU objectives and alignment with the Paris Agreement, this article questions whether the EU can deviate from the only multilateral framework in the energy sector to address the EU’s climate policy goals. The extent to which the Charter is capable of a new lease of life, moving from the ashes of the Cold War as an instrument facilitating investment protection to a green treaty promoting sustainable development and climate change, remains to be seen.