Redefining energy governance: The great (ECT) exodus
For years, the Energy Charter Treaty afforded fossil fuel companies power and protection. Things might be about to change.
The 1994 Energy Charter Treaty (ECT) was signed by 53 countries to foster global cooperation on energy investment and trade. In reality, it serves as a powerful shield for the fossil fuel industry. One controversial feature of the treaty is the investor-state dispute settlement (ISDS), a secretive, legal mechanism that allows foreign investors to take governments to court if they believe their rights have been violated. In 2022, a tribunal ordered the Italian government to pay more than $260m in damages to UK oil and gas company Rockhopper over an offshore drilling ban.
It has become clear that the ECT is at odds with the goals of the Paris Agreement. Mechanisms like ISDS can also lead to regulatory chill, whereby the threat of lawsuits prevents governments from setting ambitious climate policies. The European Commission has made attempts to reform the outdated ECT since 2017, with little success. However, in a U-turn earlier this year, the Commission proposed a mass exit of its 27 member states from the ECT as the "unavoidable" option. For this to happen, the proposal would need the backing of at least 15 member states.
What do you think are some of the implications of states withdrawing from the ECT? What new agreements do you hope to see? Join the discussion and connect with other public servants on Apolitical.
