France becomes latest country to leave controversial energy charter treaty

Quitting the ECT, which protects fossil fuel investors from policy changes that might threaten their profits, was ‘coherent’ with Paris climate deal, Macron said

France has become the latest country to pull out of the controversial energy charter treaty (ECT), which protects fossil fuel investors from policy changes that might threaten their profits.

Speaking after an EU summit in Brussels on Friday, French president, Emmanuel Macron, said: “France has decided to withdraw from the energy charter treaty.” Quitting the ECT was “coherent” with the Paris climate deal, he added.

Macron’s statement follows a recent vote by the Polish parliament to leave the 52-nation treaty and announcements by Spain and the Netherlands that they too wanted out of the scheme.

Earlier on Friday, an ally of Macron’s in Brussels, the French MEP Pascale Canfin, said: “We need to exit the energy charter treaty because we end up being sued by multinational companies through private tribunals which prevent us carrying out our climate policies.”

The European Commission has proposed a “modernisation” of the agreement, which would end the writ of the treaty’s secret investor-state courts between EU members. That plan is expected to be discussed at a meeting in Mongolia next month.

A French government official said Paris would not try to block the modernisation blueprint within the EU or at the meeting in Mongolia. “But whatever happens, France is leaving,” the official said.

While France was “willing to coordinate a withdrawal with others, we don’t see that there is a critical mass ready to engage with that in the EU bloc as a whole”, the official added.

The French withdrawal will take about a year to be completed, and in that time, discussion in Paris will likely move on to ways of neutralising or reducing the duration of a “sunset clause” in the ECT that allows retrospective lawsuits. Progress on that issue is thought possible by sources close to ongoing legal negotiations on the issue.

The energy charter treaty was set up in 1994 to protect western energy firms working in former Soviet countries. It allows investors to sue governments which enact policies that could undermine their expected financial returns.

However, critics have estimated that the final cost in compensation to fossil fuel companies could rise to more than a trillion dollars.

In August, the UK oil firm Rockhopper received a £210m award as compensation for an Italian offshore drilling ban. Italy has also withdrawn from the treaty.

coverphoto: France joins Poland, Spain, the Netherlands and Italy in withdrawing from the ECT. Photograph: Ludovic Marin/AFP/Getty