The German Economy Ministry announced on November 11th that Germany will pull out of the Energy Charter Treaty (ECT). The treaty, signed in 1994, was designed to protect investments in fossil fuels and allow utility firms to sue governments for changes to energy policies. Germany’s decision to withdraw is part of its strategy of “consistently aligning our trade policy with climate protection,” said Franziska Brantner, parliamentary state secretary at the Economy Ministry. In doing so, Germany joins France, the Netherlands, Spain, and Poland, who had disengaged from the treaty earlier.
The treaty was originally introduced to protect energy infrastructure investments in former Soviet states in Eastern Europe and Central Asia but has gained renewed importance during this year’s energy crisis. Notably, the German utility company RWE sued the Netherlands, claiming that the Dutch government had not allowed adequate time and resources to move energy production away from coal. The Deutsche Welle speculates that this law case might have contributed to the Netherlands’ decision to exit the ECT.
As Reuters reports, the German traffic light coalition released a statement announcing their plan to depart the treaty. “We want, like our European partners, France, the Netherlands, Spain, and Poland to agree to Germany’s departure from the energy charter at the same time as we ratify the CETA agreement,” the statement reads. The decision is to be presented to parliament by the end of November.
Anna Cavazzini, a German representative of the Greens in the European Parliament, naturally welcomed the decision. “The Energy Charter Treaty is a toxic treaty, which slows down the energy transition.” Her party colleague and parliamentary group leader Katharina Dröge referred to the decision as a “milestone,” adding that “no other international trade or investment agreement in the world has triggered more investor lawsuits than the Energy Charter Treaty. This pact is an obstacle to the energy transition and costs the state billions.”
As Pieter Cleppe recently laid out in an essay for the European Conservative, the exit strategy of European states leaving the ECT amounts to “a massive own goal” [unintended win for the opposite side]. While many Greens and climate activists consider the ECT to be a roadblock to progressing the energy transition, the results of the current investor-unfriendly policy might drive away the remaining companies willing to invest in the European market, which will not only affect fossil fuel investors, but also those invested in so-called renewables. If that happens, the deindustrialization of Europe will progress at a hitherto unknown rate.
