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The Energy Charter Treaty

The Energy Charter Treaty is a regional trade and investment agreement in the energy sector that has grown into an obstacle to impactful climate and sustainability policies—and a safeguard for the fossil fuel industry. Eight major EU member states have recently decided to walk away from the treaty. IISD has had an impactful role throughout the developments, promoting an outcome that accelerates rather than undermines the phase-out of fossil fuels.

The Energy Charter Treaty (ECT) was introduced in 1994 to enable multilateral cooperation in the energy sector. However, today its signatories widely recognize it as an obstacle to the green energy transition and a safeguard for the fossil fuel industry. The ECT has become the most used treaty in investorstate arbitration, costing governments hundreds of millions of dollars and preventing more ambitious climate action.

Despite efforts to reform the treaty in recent years, eight major EU member states, including Germany, France, Italy, Spain, and the Netherlands, have recently decided to walk away from the treaty. These EU member states concluded that the proposed reform was unable to address the core problem and instead favoured a clean slate. The European Parliament has also adopted a resolution calling for withdrawal, upping the pressure on the European Commission to facilitate a coordinated withdrawal for the whole bloc.

IISD has played an active role throughout these developments, both publicly and behind the scenes. Our experts conduct cutting-edge research and real-time analysis as intelligence about the negotiations emerges. Through regular capacity-building events and direct outreach to political decision-makers, IISD has continuously promoted an outcome that accelerates rather than undermines the phase-out of fossil fuelsand worked to prevent the model from being replicated in regions of the Global South.

Together with our academic and civil society partners, IISD will continue to be at the forefront of the fast-changing international energy investment landscape in the months and years ahead.

 
 

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