The Energy Charter Treaty
The Energy Charter Treaty (ECT) is a 1990s-era trade and investment accord that was designed with the objective of enabling multilateral cooperation in the energy sector. However, the decades since this treaty’s signature has shown the ECT to be deeply problematic on various levels. Along with being the treaty most used in investor-state arbitration, it has also led to record-breaking damages awards and is a hindrance to ambitious climate action.
IISD has been actively engaging with governments, civil society, academia, legal experts, and other stakeholders in how to address the many flaws of the ECT. We have undertaken in-depth research and analysis on the ECT’s design, implementation, and implications for sustainable development objectives, especially as they relate to climate action and the energy transition. We have also covered investor-state arbitrations involving the ECT in detail under our flagship journal, Investment Treaty News, while undertaking news reporting and commentary on the latest developments.
Together with our partners, we urged the European Commission in April 2020 to reconsider its approach to ECT modernisation, so that the treaty undergoes the necessary reforms for achieving the bloc’s climate action objectives and those of the UN’s Paris Agreement on climate change.
We have analyzed how governments could withdraw from the ECT or terminate it outright, which was the subject of our January 2020 webinar on The Energy Charter Treaty: To "modernize" or to exit? We have also explained the dangers of the ECT’s expansion to other countries, including Africa and Asia.
We also led the drafting of the Treaty on Sustainable Investment for Climate Change Mitigation and Adaptation, which was one of the winners of the Stockholm Treaty Lab's 2018 prize. This treaty sets out a legal framework aimed at fostering climate-friendly, resilient investments while disincentivizing unsustainable investments, along with enabling a just transition.
Watch the full recording of our virtual discussion on the Energy Charter Treaty Modernisation Process
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