The Energy Charter Treaty

The Energy Charter Treaty (ECT) was designed to enable multilateral cooperation in the energy sector. However, in the decades since its signature, it has proven to be the most used treaty in investor–state arbitration, leading to record-breaking damages awards that have cost governments millions of dollars. The looming threat of claims from fossil fuel investors can prevent governments from taking ambitious climate action. Widespread recognition that the ECT is an obstacle to the transition to a low-carbon economy had led to negotiations on how to effectively “modernize” the treaty. 

IISD conducts research, analysis, and capacity-building events to influence the modernization process and ensure it supports an expedited phase-out from fossil fuels, as well as to prevent the ECT model from being replicated or maintained in other regions of the Global South. We also actively engage with policy-makers, civil society actors, and the wider public on legal and policy options, including the possibility of withdrawal and termination. In 2020, we worked with partners to urge the European Commission to reconsider its approach to ECT modernization so that the treaty undergoes the reforms necessary for achieving climate action objectives.