The European Union (EU) is reportedly withdrawing from the Energy Charter Treaty (ECT). Energy ministers met in Brussels to vote on this decision, and they unanimously voted for the EU to officially withdraw from the ECT. However, member states can remain in their own capacity.
According to the ECT’s official website, the treaty provides “a multilateral framework for energy cooperation that is unique under international law.”
The treaty was constructed to promote energy security through the operation of “more open and competitive energy markets while respecting the principles of sustainable development and sovereignty over energy resources.”
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The decision to withdraw did not arise suddenly but was preceded by a European Parliament vote the previous month regarding the intention to pull out from the treaty. The decision stems from the controversies surrounding the treaty.
According to a report by Euronews Green, the treaty protects investments in unstable, formerly communist states. However, the treaty allows energy firms to sue countries that implement steps that could potentially derail their profits.
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For instance, Swedish company Vattenfall sued Germany under ECT concerning its phase-out of nuclear energy.
The decision of the German government to draw the shutters on its nuclear reactors might have potential effects on the foreign investors associated with the nuclear sector.
Belgium proposed that the EU back out of the treaty. Their idea was that the parties mentioned above leave the treaty before the commencement of the next conference scheduled for November.
Since 2022, nine member states have stated their desire to exit the treaty, and some have officially notified their withdrawal.
In addition, the UK had also mentioned that it had the intention to exit the treaty.