It is a little known treaty, but with disastrous effects. “ It makes climate action more expensive, harder and slower “, for Amandine Van Den Berghe, lawyer of the environmental organization Earth Client. The Energy Charter Treaty (TCE) is a very useful tool for investors and fossil fuel companies: its mechanisms make it possible to dissuade or penalize public authorities that take measures favorable to the fight against global warming. Because of it, any country that wants to ban drilling or mining projects is exposed to claims and compensation.
This incident took place in the Netherlands. After being convicted of failing to comply with his climate commitments following the“ Case Urgenda “ and in its country’s historic Supreme Court ruling, the Dutch state decided to phase out coal by 2030. On February 4, the German conglomerate RWEsaddened by the closure of one of its coal-fired plants, he announced that he would attack the Netherlands. For its deficit, the energy company is seeking compensation of 1.4 billion euros, under the TCE.
According to an investigation by the group of journalists Investigate Europe, released this Tuesday, February 23, the fossil infrastructure protected by the TCE in the European Union, Great Britain and Switzerland represent 344.6 billion euros, which is double the annual budget of theEuropean Union. Three quarters of the protected investments are gas and oil infrastructures (126 billion euros) and oil pipelines (148 billion). These revelations are an opportunity to take stock of this little known treatise.
What is the Energy Charter Treaty ?
Signed on December 17, 1994 on TCE entered into force in 1998 and currently has fifty-three stakeholders, including the European Union (European Union) and all the countries ofEuropean Union – except Italy, which withdrew in 2016 -, Japan, Australia and Turkey. “ Its initial goal was to secure the supply of fossil fuels to Western European countries from countries stemming from the Soviet bloc. “, explains a Reporter Yamina Saheb, energy policy expert and former head of the energy efficiency unit of the international secretariat of TCE.
The treaty is based on an investor-state dispute settlement mechanism, which allows companies to sue a state before a private arbitral tribunal. “ If they believe a government policy is detrimental to their business activities, investors can bypass national courts. “, says Yamina Saheb. Thereby, “ the TCE protects foreign investors in their host country by granting them privileged protection, in the form of private justice that is much more favorable to them than domestic courts and empowered to order governments to pay billions of euros to the companies concerned “, deplores Amandine Van Den Berghe. The Netherlands is not the first country to face such a complaint. Since 1998, more than 136 known disputes refer to the TCE, “ including 66 % are intra-European disputes “, Yamina Saheb points out.
Because this treaty hinders the fight against climate change ?
“ This parallel justice may negate the goals of the Paris climate agreement, warns Sara Lickel, trade defense manager atVeblen Institute, which works for a fairer economy that respects the physical limits of the planet. The fossil fuel industry uses more and more TCE to challenge climate action and continue to profit from the combustion of oil, coal and gas. “
In addition to the dispute between RWE and in the Netherlands, Germany has been mentioned twice by the Swedish energy multinational Vattenfall. In the first case, the company has managed to relax the environmental standards imposed on one of its coal-fired plants near Hamburg. Today it claims more than 6.1 billion euros for the deficit linked to two of its nuclear power plants following the gradual abandonment of German nuclear power decided after the Fukushima disaster.
“ These actions help both to slow down some measures, but also to obtain financial compensation that investors would not have obtained nationally. “, observes Amandine Van Den Berghe. However, this compensation is not always justified. In case of RWE, which attacks the Dutch state, “ RWE It should have predicted years ago that measures would be taken to reduce emissions and decided to commission a new coal-fired power plant in 2015 with full knowledge of the facts. Now the company is trying to get the taxpayer to pay the bill. “
- The TCE it was used to lobby France when it wanted to ban new oil drilling.
As shown Investigate Europe Survey, investors can sue governments not only for the value of their infrastructure, but also for the expected deficit, which has the effect of significantly increasing the cost of climate policies. Furthermore, Investigate Europe has demonstrated that senior staff of TCE has strong links with the fossil fuel industry. So much so that going to court has not been the only means of lobbying governments since then“ sometimes it is enough to wield this threat to dissuade policymakers from taking ambitious measures “, Sara Lickel denounces.
In France, the Canadian oil company Vermilion has managed to push the government back on the hydrocarbon bill. It was 2017 and Nicolas Hulot’s Ministry for Ecological Transition presented a bill that ended the exploration and exploitation of hydrocarbons throughout France by 2040. It prohibited the issuance of new exploration permits as well as the renewal of permits of exercise. Dissatisfied, the Vermilion company sent a note to the State Council, threatening France with lawsuits in arbitration courts because the bill violated its investor rights under the TCE. The final version of the law finally authorized the renewal of oil operating licenses until 2040, or even beyond under certain conditions.
“ By protecting foreign investment in fossil fuels, the TCE protects foreign investments in greenhouse gas emissions, summarizes Yamina Saheb. It defeats the sovereignty of states at a time in our history when we must engage in the most ambitious energy policies possible. “
Sign out or reform ?
What to do with this treaty: transform it or leave it ? Since 2019, the European Union and the secretariat of TCE they are negotiating a “ modernization “ of the treaty. Three rounds of negotiations took place in 2020 and the next one will take place from 2 to 5 March. But “ the ongoing negotiations on the modernization of the TCE lead to a treaty compatible with the Paris Agreement “, judge Yamina Saheb. Any modification of the treaty requires the unanimous vote of all signatory countries, but the positions of the states are very disparate. Some, like Japan, which invests heavily in coal, live off fossil fuel revenues and oppose treaty reform.
Result: a report of the secretariat of TCE, leaked in December, shows that there has been no progress in discussions on the modernization of the treaty. The next phase of the negotiations is certainly no longer encouraging. Brussels proposes to continue protecting existing projects and some new investments in fossils for ten years and to extend investment protection to hydrogen and biomass. Even within the European Union the voices diverge and are not in line with the position defined in the Commission, in particular on the energy sources to be excluded from the protection of the TCE.
Some states, such as France or Spain, do not believe in the modernization of the treaty. In December, French ministers Bruno Le Maire, Barbara Pompili, Franck Riester and Clément Beaune spoke a letter to the European Commission in which they recognize it “ evidently the conditions for predicting a satisfactory conclusion of the negotiations in the short or medium term are not met “ and ask for it “ the option of a coordinated withdrawal of the European Union and its Member States is now publicly mentioned while being evaluated in its legal, institutional and budgetary modalities “.
- The headquarters of the European Commission, in Brussels.
The coordinated exit desired by France is necessary in order to cancel the “ survival clause “ of TCE. This clause extends the application of the provisions of TCE for a period of twenty years to investments made in the country withdrawing from the treaty. But “ a joint exit is unlikely, as Europe is torn on the issue “, judge Amandine Van Den Berghe. Germany is currently silent and Luxembourg believes that a collective exit from TCE it would be a failure of diplomacy. However, MEPs managed to include an amendment in the European Commission’s draft law on climate that requires the Union to put “ ending the protection of investments in fossil fuels in the context of the modernization of the Energy Charter Treaty “. “ The first step for states wishing to end our countries’ participation in this treaty should be to support this amendment during the ongoing negotiations on climate law. “, says Yamina Saheb.
On the part of civil society, discontent against the treaty and the procrastination of diplomats is growing. This Tuesday, February 23, several dozen European organizations, including Youth For Climate, Alternatiba, Attac, Friends of the Earth and Stop Ceta-Mercosur, published a petition ask governments and European institutions to exit the treaty and stop its expansion into new countries. “ Disarm the fossil fuel companies now “, they urge.
A few months earlier, already, several statements and letters, from European parliamentarians, scientists,players in the renewable market or also young people around the world called theEuropean Union and its member states to withdraw from the Energy Charter Treaty. “ The road to reform will be long and insufficient, says Amandine Van Den Berghe. We don’t have time. Better to start from scratch to be more creative and ambitious. “
Source: Alexandre-Reza Kokabi for Reporter
Drawing: © Sanaga/Reporter
Menu: © Gaelle Sutton/Reporter
. European Commission © Alexandre-Reza-Kokabi /Reporter
. Oil well – CC OF–HER 4.0 Floréalréal / Wikimedia Commons