Report

Modest Modernization or Massive Setback?

An analysis of the Energy Charter Treaty agreement in principle

This paper provides a detailed analysis of selected key aspects of the public communication explaining the main changes in the agreement in principle on the modernization of the ECT (“the Communication”) released by the Energy Charter Secretariat on June 24, 2022.
  • Reforms to the Energy Charter Treaty are too modest, too piecemeal, and too untested to transform the Treaty into an instrument that is compatible with the global climate agenda and states’ energy transition goals.

  • In the EU and UK, existing fossil fuel investments will continue to enjoy ECT protection for at least 10 more years—a length of time at odds with current knowledge on the speed of fossil fuel phase-out required to limit global warming to 1.5°C.

  • Existing and new fossil fuel investments could continue to be covered indefinitely in almost all ECT parties other than the UK and EU.

The paper explains both the changes outlined in the Communication and identifies key areas where no change has been indicated, with a view to examining how the revised ECT text will impact the critical objective of limiting global warming to 1.5°C.

The analysis concludes that, while the changes address some of the problems inherent in old generation investment treaties, the reforms are too modest, too piecemeal, and too untested to transform the ECT into an instrument that is compatible with the global climate agenda and states’ energy transition goals.

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