Another blow for Energy Charter Treaty as Luxembourg announces exit

Luxembourg has decided to withdraw from the Energy Charter Treaty following in the footsteps of Germany, France, the Netherlands and others who have recently announced their exit from the controversial 1990s charter.

In force since 1998, the treaty, which has 53 signatories including the European Union, allows investors to sue governments over policies that jeopardise their investments and expected profits.

But a growing number of EU countries have decried the ECT for violating the goals of the Paris Agreement by offering legal protection to climate-wrecking fossil fuels.

Germany, preceded by France, the Netherlands, Poland and Spain, have recently announced their intention to withdraw from the treaty, citing the charter’s incompatibility with EU climate goals.

Luxembourg has now come to the same conclusion.

“Today, Luxembourg is exiting the Energy Charter Treaty. This is what the government council has decided today, based on my proposition,” the country’s Energy Minister Claude Turmes said in comments posted on Twitter.

“Even if the modernisation of the Energy Charter Treaty leads to some progress, the treaty is still not compatible with the goals of the Paris Climate Agreement, as it continues to protect investments in fossil and nuclear energies,” Turmes explained.

The ECT was conceived after the collapse of the USSR, at a time when investors were wary of putting their money in the former Soviet bloc. It was designed to promote energy security by fostering open markets and investments in the newly independent states.

However, the European Commission acknowledged that the treaty had been rendered “outdated” by the Paris Agreement to curb climate change and needed to be reformed.

In June, the EU executive announced a breakthrough in talks to reform the ECT, which will be submitted for approval to the treaty’s 53 signatories during a conference of the parties due to take place on 22 November.

Unanimity is needed to pass a new text. But with a growing number of countries planning to withdraw, it is uncertain if the EU will be in a position to back the reformed text at the ECT conference next week.

Blow for reformists

The announcement by Luxembourg is a severe blow for those supporting the treaty’s modernisation process.

Turmes used to be among the most vocal critics of the treaty but backtracked in February last year, shortly before a Luxembourg official, Guy Lentz, was appointed to lead the ECT secretariat in Brussels.

Since then, he had made the case for reforming the treaty, saying EU countries were “a major force” among the signatories, making 65% of the secretariat’s budget.

“An EU withdrawal would be seen as a major diplomatic failure and a step back in the climate ambition” of the EU, Turmes argued at the time.

[Edited by Zoran Radosavljevic]