London withdraws from the Energy Charter Treaty: a lesson for Africa?

A new European country withdraws from the Energy Charter Treaty (ECT). The United Kingdom joins other European countries such as Germany, France, the Netherlands, Spain and Italy, all of which have slammed the door on the treaty, which they consider obsolete and not at all suited to the climate emergency, which requires every state to invest in decarbonization. This means gradually phasing out fossil fuels.

Today I am confirming that we are leaving the Energy Charter Treaty.
 
Talks with other nations for crucial reforms have reached a stalemate and staying in could undermine the UK’s world-leading clean energy sector. https://t.co/WINgHi7XaD

— Claire Coutinho MP (@ClaireCoutinho) February 22, 2024

The ECT was signed in the geopolitical context of the post-Cold War era in 1994 and came into force in 1998, with the aim of promoting and protecting investment between energy-producing and energy-consuming countries, particularly in Europe and Central Asia. Under the treaty, energy companies, particularly those operating in the oil and gas sectors, can take a state to court if its climate policy is likely to harm their investments.

The difficult reform of the ECT

“Remaining a member would not help our transition to cleaner, cheaper energy, and could even penalize us for our leading efforts to achieve carbon neutrality,” explained Graham Stuart, the UK’s Minister of State for Climate. He added that “the Energy Charter Treaty is out of date and in urgent need of reform, but negotiations are deadlocked and a sensible renewal looks increasingly unlikely”.

All attempts to reform this treaty have ended in deadlock. This was particularly true of the most recent negotiations, which ended in November 2022 with no result. According to the British government, “European Parliament elections in 2024 mean that modernization could now be postponed indefinitely”. For Lukas Schaugg, international law analyst at the International Institute for Sustainable Development (IISD), the complexity of TEC reform goes back to its origins.

The risk of extension to Africa

“An ambitious reform of the ECT might have been possible if the contracting parties had agreed on an ambitious reform mandate from the outset. This was not the case, as certain crucial issues, notably the investor-state dispute settlement (ISDS) mechanism and the so-called survival clause, were excluded from the reform mandate from the outset”, explained Lukas Schaugg a few months ago in an interview with Afrik 21.

While several European countries have been condemned several times in proceedings brought by oil and gas companies, the Energy Charter Treaty threatens to spread to Africa. Burundi, Niger, Morocco and Burkina Faso have already begun the process of joining the ECT.

However, the extension of the ECT represents a threat to developing countries. For “RDIE calls into question the legal and regulatory sovereignty of states hosting investments, and can therefore even hinder the exploitation of these resources in a way that guarantees local added value and compliance with environmental standards”, explains analyst Lukas Schaugg. This attempt at extension orchestrated by the treaty secretariat comes at a time when several African countries are embarking on the exploitation of their fossil fuel deposits. These include Senegal, Uganda and Mozambique.