EU seeks end for coal and oil investment protection: reports

The European Union is expected to lobby for a gradual phasing out of the protection for fossil fuels as part of an updated international energy treaty.

More than 50 signatories to the Energy Charter Treaty (ECT) will resume talks next month to update the agreement, which was created in the 1990s to protect international energy investments.

The ECT is an international agreement dating from the mid-1990s that established a framework for cross-border co-operation in the energy industry, and includes a mechanism for investor-state dispute arbitration that allows international investors to take legal action against signatories.

The European Commission submitted its proposal to reform the treaty on Monday 15 February.

According to reports, the proposal would immediately end protections for new investments in coal and oil, plus power produced from these sources.

New investments in natural gas-fuelled power infrastructure would retain their protection until end-2030, if they emit less than 380g of CO2 per kWh and can use low-carbon gases.

If such gas plants replace more-polluting coal, they would be protected for 10 years after the treaty amendment takes effect, or until 2040 at the latest.

This timeline would also apply to protections for existing investments in any fossil fuels.

Under the EU proposal, the treaty would protect hydrogen produced using fossil fuels, if carbon capture technology is used to curb the resulting emissions.

The charter currently has more than 50 member countries, including the EU. Italy, which withdrew from the agreement in 2016, is the only member to have done so.

However, the charter has faced growing criticism since the EU last year promised to make Europe the world’s first climate-neutral continent by 2050, requiring decarbonisation and a shift away from fossil fuels among its 27 member states.

It has faced mounting criticism from European governments and environmental groups that say it undermines efforts to end fossil fuel use because it allows foreign investors to sue countries over policies that affect their investments.