Spain withdraws from the Energy Charter Treaty

Spain has begun the process of withdrawing from the Energy Charter Treaty (ECT), which protects investments in fossil fuels and other energy infrastructure, official sources confirmed to partner EURACTIV EFE.

subordinate ECT is a multilateral treatySigned by 53 countries, it has been in effect since 1998 and its four-year revision has been negotiated.

After a final round of negotiations in June, the treaty is now set to be formally revised in November, provided all signatories agree and then ratify it.

Investors in the energy sector enjoy special protection under the agreement. Over the years, some companies have used ECT to challenge decisions by European Union countries to phase out fossil fuels.

Several EU member states, including Spain, the Netherlands and Luxembourg, have called on the European Commission to either reform the treaty or abandon it.

Spain’s Green Transition Minister Teresa Ribera has called in the past for a “coordinated exit from ECT” by the European Union and its member states and ultimately decided to take the step, official sources told EFE.

Enhance energy security

The contract was drawn up after the collapse of the Soviet Union, at a time when investors were reluctant to invest their money in the former Soviet bloc. The aim of the treaty was to enhance energy security by encouraging more open and competitive markets in the newly independent states.

The contract provides an investment protection regime, intended to protect against discriminatory treatment and to promote dispute settlement through arbitration.

He has had support from several EU member states – with the exception of Italy, which left in 2016 – and others such as the UK, Bosnia and Herzegovina, Japan, Armenia, Jordan, Ukraine and Tajikistan.

However, the European Commission said the treaty was “outdated” under the 2015 Paris Agreement to mitigate climate change and needed reform.

Many of the points of contention under discussion arouse strong reservations. This is particularly true of protecting investments in fossil fuel infrastructure and settling disputes through private arbitration.

Last week, Poland’s lower house of parliament also passed a law formally withdrawing from the treaty, a decision that will become final after a vote in the Senate.

Environmental groups including the Climate Action Network (CAN) welcomed Spain’s exit from the deal, which called the decision of Spain and Poland “courageous” and called on other EU countries to follow suit.

“The risk remains. We cannot allow countries to waste public money compensating fossil fuel companies when they take action to reduce emissions,” Cornelia Marfield, a trade policy expert at the NGO CAN Europe, told EFE.