The EU Council has today given a mandate to the European Commission to begin negotiations on the modernisation of the Energy Charter Treaty (ECT).
The aim of the negotiations is to modernise the provisions of the ECT so that it takes account of sustainable development and climate goals, as well as modern standards of investment protection and investor-state dispute settlement. The objective of the modernised ECT should be to facilitate investment in the energy sector in a sustainable way, provide for legal certainty and ensure a high level of investment protection.
Among the main elements of the EU’s negotiating directives is a focus on ensuring that climate change and clean energy transition goals are reflected in the modernised ECT. This includes a clarification that the EU can require market participants from third countries to comply with applicable laws of the EU and Member States, including those concerning environmental and safety policy.
The EU will aim to bring the provisions on investment protection in line with the modern standards of agreements recently concluded by the EU and its Member States. The modernised ECT should explicitly reaffirm the so-called “right to regulate”, i.e. the right of the contracting parties to take measures for the protection of health, safety, the environment and other public policy objectives.
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The Energy Charter Treaty is a multilateral agreement that provides a framework for trade and investment in the energy sector. It was signed in December 1994 and entered into force in April 1998. Currently there are 53 signatories and contracting parties to the ECT, including most EU Member States, the EU and Euratom.
