Germany to leave Energy Charter Treaty in effort to better tackle climate change

Parliamentarians from Germany's ruling parties SPD, FDP and the Greens have announced an agreement for the country to leave the Energy Charter Treaty (ECT) and instead support new EU free trade agreements with the U.S., Canada and South America, Tagesspiegel Background reports. Germany will become the latest EU country to exit the ECT, which was originally signed in 1994, establishing a multilateral framework for cross-border cooperation in the energy industry that protects investments in certain sectors, in particular nuclear and fossil fuel energy sources. The pact allows international investors in energy projects to sue governments for profits lost as a result of policy changes, and is now viewed as a major threat to national climate plans to shut down coal plants or limit production of oil and gas, wrote Politico. Critics of the ECT, including NGO Climate Action Network (CAN) Europe, thus see it as incompatible with the objectives of the Paris Climate Agreement.

“We applaud the German decision to leave this toxic treaty behind,” said Cornelia Maarfield, trade and investment policy expert at CAN Europe. “An EU withdrawal from the Energy Charter Treaty has become inevitable. The Union cannot remain in an agreement that all of its largest members reject as an obstacle to climate policies.” Maarfield called for the European Commission to “initiate a coordinated withdrawal immediately”.

Efforts to reform the ECT in June were seen as insufficient after failing to address German and European ideas on climate neutrality and a technology-open design of investment protection, resulting in the exits of France, the Netherlands, Spain and Poland from the treaty, wrote Tagesspiegel. As another part of the coalition deal, MPs are expected to approve the ratification of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada in the coming weeks. In addition, Germany is aiming to conclude trade negotiations with Chile and Mexico and renew efforts for a trade agreement with the U.S.