There are currently 56 signatories and contracting parties to the Energy Charter Treaty (ECT), including both the European Union and Euratom. The treaty was signed in 1994 and entered into force in April 1998.
The treaty provides a multilateral framework for energy cooperation among the signatories. It was designed to promote energy security through the operation of more open and competitive energy markets while respecting the principles of sustainable development and sovereignty over energy resources. It also established the Energy Charter Conference, an inter-governmental organisation which meets on a regular basis to discuss issues affecting energy cooperation.
In addition to the Energy Charter Conference, the International Energy Charter aims to promote energy cooperation among nations who have signed the treaty.
In the absence of any substantial update of the ECT since the 1990s, it has become increasingly outdated and no longer matches the climate ambition at the EU and international level. The EU has been at the forefront of efforts to address this problem and a modernisation process was initiated in November 2018.
In January 2021, EU leaders sent a strong political message in the Council conclusions on climate and energy diplomacy, stating that “EU energy diplomacy will discourage all further investments into fossil fuel-based energy infrastructure projects unless they are fully consistent with an ambitious, clearly defined pathway towards climate neutrality in line with the long-term objectives of the Paris Agreement and best available science”.
Negotiations on the modernisation of the ECT concluded with an ‘agreement in principle’ at the extraordinary Energy Charter Conference of 24 June 2022. The Commission considered the negotiated outcome to be in line with the mandate received from the Council in July 2019 and consequently put the necessary proposals before the Council suggesting that the EU and Euratom supported the adoption of the “modernisation package”. However, these proposals were not backed by the Council, due to a blocking minority of 4 EU countries and therefore the modernised text of the ECT could not be adopted.
In the absence of a common position in the Council, the EU and Euratom cannot take part in a vote on the adoption of the modernisation package at the Energy Charter Conference. Remaining as part of the current, unmodernised Energy Charter Treaty is also not an option for the EU nor its Member States, because the unmodernised Treaty is not in line with the EU’s investment policy and energy and climate goals under the European Green Deal.
In order to unblock this stalemate, a coordinated withdrawal of the EU, EURATOM and all remaining EU countries from the Energy Charter Treaty is therefore the most straightforward approach from a legal and policy point of view.
Consequently, as a first step, on 7 July 2023, the Commission adopted proposals to withdraw the EU and Euratom from the Energy Charter Treaty. At the same time, the Commission decided to withdraw its proposals on the modernisation of the treaty of October 2022 because they have become obsolete and are contradictory to the proposals to withdraw the EU and Euratom from the treaty.