September 18

Energy Charter Agreement

The objective of the Energy Charter Treaty in energy trade is to create open and non-discriminatory energy markets in all its Member States. This framework follows the rules of the multilateral trading system, as enshrined in the General Agreement on Tariffs and Trade (GATT), which later became the World Trade Organization (WTO). The Energy Charter Treaty expanded the GATT and, later, WTO rules in the energy sector among its members. In addition, the treaty covers trade in all energy materials (e.g. B crude oil, natural gas, wood fuel, etc.), all final energy products (e.g. B oil, electricity, etc.) and energy-related equipment. Trade rules concern only trade in goods, not trade in services, or intellectual property rights. No other international trade or investment agreement in the world has generated more investor-state complaints than the Energy Charter Treaty. In March 2020, the ECT secretariat listed a total of 134 company rights. And the number of claims has exploded in recent years. While only 19 cases were registered in the first 10 years of the agreement (1998-2007), 102 investor complaints were filed in the last ten years (2010-2019), an increase of 437% in the number of cases filed.

This trend is expected to continue. ECT is increasingly used by speculative financial investors, such as portfolio investors and holding companies. In 85% of the complaints filed up to 2020 about cuts to renewable energy support programmes in Spain, the applicant is not a renewable energy company, but an equity fund or other type of financial investor, often linked to the coal, oil, gas and nuclear industry. Some of them were only invested when Spain was already in the midst of an economic crisis and some changes had already been made to the aid schemes (which the funds then argued undermined their profit expectations). Some investors see ECT not only as insurance, but as an additional source of profit. Italy was a party to the TEC until 1 January 2016, when it withdrew from the Energy Charter Treaty. Investments made after that date in Italy in the energy sector are not protected by the ECT. On the contrary, investments made in Italy before 1 January 2016 will remain protected until 2036.

The Russian Federation has signed the treaty and applied it provisionally, but has not ratified it. He linked the ratification of the treaty to the negotiations on a transit protocol for the Energy Charter. In October 2006, German Chancellor Angela Merkel and French President Jacques Chirac proposed the creation of a balanced energy partnership between France and Germany, which represents the European Union, and Russia. . . .

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