Modernizing the Energy Charter Treaty: facilitating foreign investment in the renewable energy sector

Abstract

The multilateral Energy Charter Treaty was concluded in the early 1990’s with the purpose of stimulating trade and investment in the energy sector between Western European countries and the countries of Eastern Europe and the former Soviet Union. To that end, rules were established regarding trade, investment, and the transit of energy. This dissertation examines the role that the treaty can play in the current energy transition, by analyzing how it can contribute to the facilitation of investments in the renewable energy sector. The main emphasis in this dissertation is on the investment chapter, which is in practice frequently invoked by renewable energy investors. By reference to economic theories and the business practice in the renewable energy sector, this dissertation comes up with various recommendations that could be considered in the recently initiated modernization process of the treaty. Since the investment chapter is analyzed against the wider background of international economic law, the recommendations conform to contemporary policy tendencies, as preferred by the Energy Charter Conference during the modernization process. Amongst the recommendations is that rules regarding investment protection are of great importance in the renewable energy sector, as practice already demonstrates, but that these should be accompanied by rules concerning investment promotion. Ideally, these rules would be concluded in the context of a broader agreement that also regulates trade, in both goods and services, since investment and trade in the renewable energy sector are closely interrelated.