Luxembourg backtracks on Energy Charter Treaty withdrawal

In 2019, Turmes argued that if reform talks drag on for too long, the EU should consider a coordinated withdrawal from the Energy Charter Treaty. [European Committee of the Regions / Flickr]

Claude Turmes, the Grand Duchy’s energy minister who used to be at the forefront of calls to withdraw from the Energy Charter Treaty, has backtracked on his earlier statements, saying the EU should first aim to redouble efforts to reform the beleaguered post-Soviet-era charter.

Turmes, a former Green lawmaker in the European Parliament, has spearheaded efforts to reform the little-known Energy Charter Treaty, trying to build a coalition of like-minded EU countries to align the charter with the Paris Agreement on climate change.

When reform talks began in 2019, he argued that if discussions drag on for too long, the EU should consider a coordinated withdrawal.

However, Turmes is now having second thoughts on this strategy, warning of a contractual pitfall in the treaty that should encourage negotiators to continue talks.

“I do not believe that leaving the ECT is the right starting point,” Turmes argued in a letter addressed to the European Commission and dated 5 February.

EU countries are “a major force” among the 54 signatories of the treaty, making 65% of its budget, he pointed out, making the case for renewed efforts at European level to modernise the treaty.

“An EU withdrawal would be seen as a major diplomatic failure and a step back in the climate ambition just months before the Glasgow COP26,” he wrote in the letter, seen by EURACTIV.

The treaty caught media attention last week when German energy giant RWE used it to claim compensation from the Netherlands over its planned coal phase-out.

The arbitration claim for €1.4 billion in compensation was denounced by climate campaigners as yet more proof that the treaty, an international investment agreement signed in 1994, is unfit to support the shift away from fossil energy.

Germany's RWE uses Energy Charter Treaty to challenge Dutch coal phase-out

German energy giant RWE has used the Energy Charter Treaty to claim compensation from the Netherlands over its planned phase-out of coal from the country’s electricity mix by 2030.

Attempts to reform the treaty have yielded little result since talks began in 2019.

Any amendment must be approved by unanimity among the treaty’s 54 signatories, which include countries like Kazakhstan, Turkmenistan and Uzbekistan, whose economies are highly dependent on fossil fuels exports and have little incentive to reform.

France has recently shown signs of impatience, saying the EU and its member states should consider withdrawing from the treaty after three rounds of talks last year showed little progress.

“Not all Contracting Parties seem to share European ambitions in the field of the fight against climate change,” Paris said in a letter to the European Commission, adding that “the option of a coordinated withdrawal” from the treaty “should be raised publicly from now on”.

France puts EU withdrawal from Energy Charter Treaty on the table

The European Union and its member states should draw the consequences of the current stalemate in multilateral talks aimed at reforming the Energy Charter Treaty and consider a coordinated withdrawal, Paris has said in a letter seen by EURACTIV.

But in his letter, Turmes expressed “doubt” that a full withdrawal from the treaty is “legally and technically feasible” because of a “sunset clause” which binds signatories for 20 years even after they leave.

Leaving the treaty without reforming it would keep the sunset clause alive, “offering a 100% fossil fuel investment protection” for two more decades at least, Turmes warned in the letter.

“Leaving the ECT may only be a last resort option, not a starting point to enter the modernisation negotiation,” he wrote.

When he spoke about the treaty’s reform in September 2019, Turmes said that withdrawing was “an option worth considering seriously” should discussions on the treaty’s modernisation lead to nowhere.

“I would give it a few months,” he said back then.

> Read the full letter below or download here.

ECT letter Luxembourg

[Edited by Zoran Radosavljevic]

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