Far from being immutable, international governance bodies have always been adapted to their time and their challenges. Each era has its own rules and adaptations. Obsolete bodies disappear. New ones are established.
New world, new governance.
History bears witness to these adjustmentsadjsutements: in the 1500s, the discovery of America generated its share of new rules and treaties of governance between European countries.
In the last century, many rules, still valid today, were established post-World War II or post-Cold War, at a time when the main issues were the reconstruction of an environment conducive to economic recovery and the creation of a world order with a balance of power. It was in this context that the Energy Charter Treaty (ECT) was established.
A vestige of an old world, the Energy Charter Treaty, signed more than thirty years ago when the climate crisis was not yet considered a threat, is now jeopardising the European energy transition.
The changes introduced in the text of the treaty, on which an agreement in principle was published in June 2022 are not satisfactory because the protection of existing investments in fossil fuels is maintained by 2030 and in gas power plants until 2040 in the European Union countries. However, as the IPCC report and the latest IEA reports state, it is during this period that EU member states must decarbonise and prematurely shut down their fossil fuel installations.
Knowing that fossil energy is the first source of carbon emissions, the ECT prevents governments from decarbonising their economies and taking the bold decisions on which the future of our planet depends.
There is an urgent need for a thorough review of some rules and governance agreements, starting with the ECT. Some countries, like Italy, have already opted out. More recently France, Germany and Poland have notified their withdrawal from the ECT while Spain, The Netherlands, Luxembourg, Slovenia and Denmark have announced their exit from this treaty. Other EU countries like Czechia, Portugal are supportive of a collective withdrawal of EU countries, an option supported at the EU level by Franz Timmermans. The withdrawal of the EU will automatically lead to the withdrawal of the remaining EU countries
To be consistent with the Paris Agreement, the European Union should also reject this text to allow the implementation of the energy transition and to avoid locking the EU member states in carbon.
Breaking free from incoherent and obsolete rules.
Imagine a world where the major cigarette brands would receive billions of euros in compensation from a country for having decided to ban smoking in public places. Difficult to accept, isn’t it?
And yet, applied to energy, and in particular to fossil fuels, this rule does exist. This is the spirit of the Energy Charter Treaty (ECT): any signatory country that decides to modify its energy policy in a way that is contrary to the interests of energy companies and investors can be taken to court and claim for billions of dollars in damages.
For example, the German company Uniper sued the Dutch government for its decision to prematurely shut down coal-fired power plants following a court ruling in favor of civil society to accelerate climate action. In early 2022, the Financial Times reported that four other companies were suing Italy, Slovenia, Poland and again the Netherlands over the shutdown of coal and oil projects. Germany had to negotiate a compensation of 4.35 billion euros to avoid prosecution under the treaty.
While the IPCC report alerts us to the fact that we have no more time to waste before reversing the trend of carbon emissions, that urgency is there. Knowing that fossil energy is the first source of carbon emissions, the ECT simply prevents governments from decarbonising their economies and taking the bold decisions on which the future of our planet depends.
This is the time for new international frameworks, like the Paris Agreement on climate or the Kunming-Montreal agreement on biodiversity to gain priority over these obsolete rules. Last but not least, these international accords must now keep evolving and give birth to other elements of governance, by example the proposed Fossil fuels Non proliferation Treaty. This is the course of history.
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