The Energy Charter Treaty (ECT): Assessing its geopolitical, climate and financial impacts
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OpenEXP | 10 September 2019

The Energy Charter Treaty (ECT): Assessing its geopolitical, climate and financial impacts

The “raison d’être” of the ECT is no longer there

The original objective of the ECT was quite rightly to overcome the political and economic divisions between Eastern and Western Europe as well as to strengthen Europe’s energy security. It was vital for Europe to secure the access to fossil fuels resources of the former Soviet regions by protecting the needed investment in these countries. However, the emergence of new global, regional and bilateral treaties and partnerships, since the entry into force of the ECT in 1998, questions the “raison d’être” of the ECT. This is particularly true as Europe’s energy security in a warming planet must be secured increasingly by endogenous energy savings and renewables and not by imported fossil fuels.

Almost 90% of the ECT signatories are members of the World Trade Organisation (WTO). Russia, with its ex-tensive reserves of oil and natural gas, withdrew from the ECT in 2009 and swapped its provisional application of the ECT for WTO membership. Most of Eastern European countries are either members of the European Union or signatories of the Energy Community Treaty which aims at building an integrated and sustainable pan-European energy market by extending the EU energy acquis to neighbouring eastern countries. Furthermore, the over-protection of the economic interests of foreign investors by the ECT regime conflicts with the EU law which aims at protecting public interests and EU citizens who are expected to bear the cost of the long-term car-bon neutrality target.

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source: OpenEXP