The Energy Charter Treaty (ECT), which was signed in 1994 and has been in force since 1998, is a multilateral trade and investment agreement with provisions on investment protection as well as on trade and transit in the energy sector. The centrepiece of the ECT is the controversial Investor-State Dispute Settlement (ISDS). The agreement currently has 50 contracting parties, including 23 EU member states (all except Italy, France, Germany and Poland) as well as the EU itself and Euratom. The contracting parties meet on a regular basis in the Energy Charter Conference, the decision-making body of the ECT. AK opposes privileges for energy corporations based on ISDS and demands the termination of the ECT.

EU exit with obstacles
Initially, the EU Commission was not in favour of an EU withdrawal from the agreement, but aimed for the modernisation of the outdated treaty. After months of negotiations between the ECT parties, an agreement in principle was presented in mid-2022. The Energy Charter Conference was supposed to adopt the modernisation in November 2022. However, this did not happen because the required majority of EU member states was not reached. Germany, France and Poland withdrew from the ECT at the end of 2022. Modernisation has not been at the agenda of the Energy Charter Conference since then. While this circumstance might be delicate diplomacy-wise – the EU had originally initiated the modernisation process and is now impeding it – it is to be welcomed from the perspective of climate protection and the rule of law.

From AK's point of view, modernisation would “green-wash” the ECT while privileges for energy corporations based on ISDS would remain and possibly even be extended further. That is why AK has been calling for the termination of the treaty. The best solution would be a joint and coordinated exit by the EU, Euratom and all EU member states. The EU Parliament also called for this at the end of 2022. The EU Commission followed suit in July 2023, also proposing a joint and coordinated exit by the EU, Euratom and all EU Member States. AK welcomed this 180-degree turnaround by the EU Commission.

Will the EU member states leave the ECT?
Unfortunately, it has turned out that the EU Commission's proposal of July 2023 is not a viable option for the Council. Although the majority of EU member states would be prepared to endorse the withdrawal of the EU and Euratom from the ECT, many states want to decide for themselves on their own membership of the treaty. They therefore reject a joint and coordinated approach. For this reason, the EU Commission presented a new proposal in March 2024. It maintains that the EU and Euratom will withdraw from the ECT, but also facilitates the participation of EU member states remaining in the ECT in the Energy Charter Conference (and their position there on modernisation).

By no longer adhering to a joint and coordinated exit of all EU member states, the EU Commission wants to ensure that at least the withdrawal of the EU and Euratom will be concluded before the end of the current EU legislative period. The EU has moved one step closer to this goal on 9 April 2024. The responsible committees of the EU Parliament INTA (International Trade) and ITRE (Industry, Research and Energy) voted in favour of the withdrawal of the EU and Euratom by a large majority. The next step is the vote of the plenary of the EU Parliament on the issue in its last session of the current EU legislative period before the Council can take a corresponding decision.

What happens next?
If the plenary of the EU Parliament and the Council vote in favour of the withdrawal of the EU and Euratom, the Energy Charter Conference is expected to vote on the modernisation afterwards. The EU member states that remain parties to the ECT are required to endorse the modernisation. However, how many EU member states will take part in that decision depends on the date of the vote. Of the 23 EU member states that are currently still parties to the ECT, three - Slovenia, Luxembourg and Portugal - have notified their withdrawal; they will leave after a one-year period. Other EU member states and the United Kingdom have also announced their withdrawal. It is uncertain whether the remaining ECT contracting parties will be in favour of modernisation, as the EU, which originally initiated the modernisation process, will soon be in a minority in the Energy Charter Conference. According to the EU Commission the current version of the ECT is incompatible with EU law. If modernisation fails, all EU member states will therefore have to leave the ECT, including Austria. AK has been calling for Austria's withdrawal from the ECT for a long time - regardless of whether modernisation comes about or fails.

Further information:
AK EUROPA: The Energy Charter Treaty prevents environmental change
Corporate Europe Observatory: One treaty to rule them all
AK EUROPA: The Energy Charter Treaty – No significant advantages for Contracting Parties
AK: Bewertung möglicher Folgen eines Ausstiegs Österreichs aus dem Energiecharta-Vertrag (German only)
AK: Offener Brief an Bundesminister Kocher und Bundesministerin Gewessler zum ECT (German only)
A&W-Blog: Klimakiller Energiecharta-Vertrag: Wie werden wir ihn los? (German only)