Energy Charter Treaty: Council issues negotiation directives

energy charter treaty
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The Council of the EU has issued the European Commission with a mandate to begin negotiations on updates to the Energy Charter Treaty.

The Energy Charter Treaty (ECT), a multilateral framework agreement for EU-wide trade and investment within the energy sector, initially came into force in 1998 and currently has 53 signatories and contracting bodies. The negotiations will form a precursor to a full-scale modernisation of the ECT, aimed at expanding its provisions to take into account the ongoing global shift towards renewable and sustainable energy production, as well as the wider effort to combat climate change.

The Council’s directives for renegotiation of the Energy Charter Treaty state: ‘The objective of the Modernised ECT should be to facilitate investment in the energy sector in a sustainable way between the ECT Contracting Parties by creating a coherent and up-to-date legally binding framework that provides for legal certainty and ensures a high level of investment protection. The modernised ECT should aim at establishing clear rules on a broad number of investment-related issues. This in turn will allow the ECT Contracting Parties to strengthen their institutional capabilities, public policies and legislative frameworks in the energy sector.

‘The modernised ECT should clarify that the EU can require market participants from third countries operating within the internal market to comply with applicable Union and Member States’ laws, including those concerning environmental and safety policy. The Modernised ECT should reflect climate change and clean energy transition goals and contribute to the achievement of the objectives of the Paris Agreement.’

In addition to prioritising compliance with the EU’s laws and guidelines concerning sustainable development and the clean energy transition, the Council has recommended the Commission negotiate guarantees for high levels of protection of investments in the energy sector and outline the ‘right to regulate’ – the rights of contracting parties to implement regulatory measures to protect the environment and public health and safety.

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