Energy Charter Treaty (ECT) reform: Why it has failed to deliver on the EU’s own objectives

The European Union's decision to exit the Energy Charter Treaty (ECT) is a landmark victory for climate action. For years, the ECT's Investor-State Dispute Settlement (ISDS) mechanism has enabled fossil fuel companies to challenge climate policies, hindering progress towards sustainability.

Earlier this month, the Energy Charter Treaty (ECT) has decided to halt the geographic expansion to new member states, pending the finalization of the ongoing modernization process within the ECT. Both ENDS and our partner SEATINI, who amongst other things have been calling for this stop, welcome this decision.

The decision of Minister for Climate and Energy Rob Jetten to withdraw from the Energy Charter Treaty (ECT) is good news for the energy transition in the Netherlands and beyond. Governments of countries that are party to this treaty can therefore shape the transition to sustainable energy without having to fear claims by Dutch-based businesses.

Hundreds of organisations from dozens of countries have expressed solidarity with the Ukrainian people in a collective call on world governments to end fossil fuel production once and for all. The current crisis sees Putin weaponising oil and gas money to threaten livelihoods and fuel terror with escalating violence, underscoring the fossil fuel system's role in driving conflict.

Brussels, 7 May 2019 - In an unprecedented Climate Action Call published today, a broad coalition is urging European leaders to take decisive action to respond to the climate emergency. Hundreds of European cities, regions, businesses, youth and faith groups and civil society organisations working on climate, human rights, litigation, mobilization, sports and health call upon leaders to profoundly alter the way we run our societies and economies to limit temperature rise to 1.5°C.

At the core of the Fair, Green, and Global (FGG) Alliance’s mission is the commitment to building a just and sustainable world. As members of this alliance, Both ENDS, SOMO, and the Transnational Institute (TNI) recognise the urgent need to reimagine global investment frameworks. These frameworks, entrenched in outdated treaties such as Bilateral Investment Treaties (BITs) and the Energy Charter Treaty (ECT), often prioritise corporate profits over human rights, environmental sustainability, and social justice.

Today an alliance of more than 150 organisations, trade unions and social movements in countries across Europe is launching a joint programme against unfair trade and investment agreements, and especially against the controversial Investor-to-State-Dispute-Settlement (ISDS) mechanism. Under ISDS, investors can bring complaints against states whose social and environmental legislation pose a threat to their profits.

This short animation functions as a primer to the policy paper written by Both ENDS, and makes the case for an investment policy that aims for an energy independent Netherlands, a country that goes about its daily affairs in a social and environmentally sound way.

Good news for the climate: last week, the European Investment Bank (EIB) decided to stop investing in fossil fuels by 2021. This is part of its new energy strategy.

The European Investment Bank EIB should get rid of its gas-investments, and the Netherlands can take the lead in this. The Netherlands appears to be relying less and less on gas in its energy policy, and also seems to focus on gas-free investments at the EIB. Now it is important to maintain this position and also convince the other EU countries.

Although outgoing economics minister Henk Kamp stated in May of this year that fossil fuels are not subsidised in the Netherlands, a report out today shows that this is clearly not the case. The report. ‘Phase-Out 2020: Monitoring Europe’s fossil fuel subsidies’, by the Overseas Development Institute (ODI) and Climate Action Network Europe (CAN-Europe), says that the Netherlands is supporting the fossil sector at home and abroad with more than 7.6 billion euros a year (1). The Netherlands made international agreements as long ago as 2009 (2) to ban subsidies for fossil fuels. Environment NGO Milieudefensie and Both ENDS – both members of CAN-Europe – call attention to these findings because they find it unacceptable that the government perpetuates our dependence on fossil fuels in this way.

Almost 100 candidate EU Members of Parliament have signed a pledge drafted and endorsed by European NGOs and prominent individuals in which they commit  - once elected - to promoting policies to protect and restore forests worldwide and to recognising and securing forest peoples’ territories and their rights, including the rights of women, for generations to come. The organisers hope to get many more signatures before the EU elections, to make sure the new EU parliament will start treating these topics with high urgency as soon as it is installed.

Our new report titled EU ECA fossil fuel phase-out tracker by Both ENDS, Counter Balance and Oil Change International sheds light on the concerning lack of harmony between EU Member States' export credit climate policies. 

The report was updated on April 17th, following new responses by Member States on their respective policies.