The Energy Charter Treaty (ECT) is an international agreement that establishes a multilateral framework for cross-border cooperation in the energy industry, principally the fossil fuel industry. The treaty covers all aspects of commercial energy activities including trade, transit, investments and energy efficiency. The treaty contains dispute resolution procedures both for States Parties to the Treaty (vis-à-vis other States) and as between States and the investors of other States, who have made investments in the territory of the former. Full versions of the treaty, both consolidated and official, are readily accessible.
Initially, the Energy Charter process aimed to integrate the energy sectors of the Soviet Union and Eastern Europe at the end of the Cold War into the broader European and world markets. Its role, however, extends beyond east–west cooperation and, through legally binding instruments, free trade in global energy markets and non-discrimination to stimulate foreign direct investments and global cross-border trade.
Awards and settlements of the international arbitrations put forward by breaking the law of the Energy Charter Treaty are sometimes in the hundreds of millions of dollars. In 2014, the Yukos cases were decided in favour of the claimants on the basis of the treaty with a record-breaking US$50 billion award, although appeals continue in courts in the Netherlands.
The Energy Charter Treaty has been criticized for being a significant obstacle to enacting national policies to combat climate change, and for actively disincentivizing national governments from compliance with recent international climate treaties such as the Paris Agreement due to the threat of significant financial loss.
, numerous countries have either left or have announced plans to leave the ECT, with reports that the European Commission was planning legislation for the EU and all its member states to leave the ECT simultaneously.
History
European Energy Charter
The beginnings of the Energy Charter date back to a political initiative launched in Europe in the early 1990s. The end of the Cold War offered an unprecedented opportunity to overcome previous economic divisions between the nations on both sides of the Iron Curtain. The brightest prospect for mutually co-dependent beneficial cooperation was the energy sector, given Europe's growing energy demand and vast resource availability in post-Soviet nations. Additionally, there was a recognised need to establish a commonly accepted foundation for energy cooperation among the states of Eurasia. By these considerations, the Energy Charter process was born.
The original European Energy Charter declaration was signed in The Hague on 17 December 1991. It was a political declaration of principles for international energy cooperation in trade, transit and investment, together with the intention to negotiate a legally binding treaty, setting the beginning of the development of the Energy Charter Treaty. One of the final hurdles was to find language to ensure national sovereignty over natural resources while enshrining the principle of international cooperation to allow outside access to those resources. Negotiators also succeeded in assuring Austria and Switzerland that they would not bear an undue transit burden for energy resources.
Energy Charter Treaty
The treaty is a legally binding multilateral agreement covering investment promotion and protection, trade, transit, energy efficiency and dispute resolution. The treaty was signed in Lisbon in December 1994, together with a "protocol on energy efficiency and related environmental aspects" (PEEREA). The treaty and the protocol came into effect in April 1998. An amendment to the trade-related provisions reflecting the change from the General Agreement on Tariffs and Trade to World Trade Organization processes was also agreed at that time.
International Energy Charter
The International Energy Charter is a non-binding political declaration underpinning key principles for international energy cooperation. The declaration attempts to reflect the changes in the energy world that have emerged since the development of the original Energy Charter Treaty in the early 1990s. The International Energy Charter was signed on 20 May 2015, by 72 countries plus the EU, Euratom and ECOWAS at a Ministerial conference hosted by the government of The Netherlands.