Debate: Energy Charter Treaty: next steps
Date: WEDNESDAY, 4 OCTOBER 2023
Speaker: Kadri Simson
Language: EN

The Energy Charter Treaty in its current form entered into force in 1998. It is a multilateral trade and investment agreement. It contains provisions on investment protection, trade and transit in energy, materials and products and dispute settlement mechanisms. Most provisions under the treaty fall within the EU’s exclusive competences and this means that the EU has an important role of coordinator to fulfil. Since 1998, the treaty has not been updated, but the EU’s investment policy and energy and climate goals have substantially changed. In light of the European Green Deal, the EU and its Member States called for a modernisation of the updated Energy Charter Treaty and carried out the negotiations between 2019 and 2022 in order to align the treaty, EU law and policy, notably on investment protection and energy and climate goals. Unfortunately, despite efforts on all sides, the Council did not back the Commission proposal on the adoption of the modernised Energy Charter Treaty at the 33rd Energy Charter Conference last year. Therefore, the current and modernised treaty continues to apply to the EU, Euratom and all Member States that are party to the Energy Charter Treaty. The practical implication is that we remain exposed to the adverse impact of an unreformed treaty, which is incompatible with the principle of the autonomy of EU law. The EU and Member States continue to be exposed to the risk of being sued under investment arbitration clauses for withdrawing support for fossil fuels or for changing EU and national legislation, as in the case of the Nord Stream 2 arbitration. Meanwhile, several EU Member States officially notified their withdrawal from the treaty: Italy, who left the treaty already in 2015, Germany, France, Poland and Luxembourg. Others have announced that they will follow: Spain, the Netherlands, Slovenia, Denmark, Portugal and Ireland. Now it is high time to take a decision on the future of the EU and its Member States in the Energy Charter Treaty. The current legal uncertainty is damaging the reputation of the EU and its Member States. It risks damaging our relations with non-EU contracting parties of the treaty. The Commission believes that, in order to unblock this stalemate, a coordinated withdrawal of the EU, Euratom and all remaining Member States from the Energy Charter Treaty is the most straightforward approach from a legal and policy point of view. As a consequence, on 7 July this year, the Commission adopted a proposal for a Council decision on the withdrawal of the EU from the Energy Charter Treaty and a recommendation for a Council decision on the approval of the withdrawal of Euratom from the Energy Charter Treaty. The Commission has also decided to withdraw its proposals on the modernisation of the Energy Charter Treaty of October 2022 because they have become obsolete and are contradictory to the proposals to withdraw the EU and Euratom from the treaty. At this stage, however, the July proposal has not gathered the required majority of Member States. As most provisions of the Energy Charter Treaty fall under exclusive Union competence, Member States cannot remain parties to it unless they are empowered by a legal act adopted by the EU. Discussions are ongoing within the Council. On our side, the Commission aims to explain to the Member States that a coordinated withdrawal of the EU, Euratom and all the Member States from the Energy Charter Treaty is legally and politically still the most straightforward option. Quite simply, the EU and its Member States must have a coordinated and coherent approach when pursuing investment and climate and environmental policies. We cannot have a patchwork of positions. Honourable Members of the European Parliament, I hope this gives you a good overview of where we stand on the discussions concerning the Energy Charter Treaty. The Commission stands with its proposal for a coordinated withdrawal from the treaty in line with the resolution you adopted on 24 November last year. I am very interested to hear your views and your guidance on the way forward.