EU asserts ‘right to regulate’ as part of energy charter treaty reform

(EurActiv, 16 Jul 2019) EU member states gave the European Commission a mandate on Monday (15 July) to revise the Energy Charter Treaty, saying the legally-binding charter must reinstate Europe’s “right to regulate” in areas like climate change and workers’ rights.

The Council of the EU, representing the bloc’s 28 member states, gave the European Commission its green light to begin negotiations on the revision of the Treaty.

“The modernised ECT should explicitly reaffirm the so-called ‘right to regulate’” in areas such as health, safety, and the environment, the Council said, announcing the approval of EU negotiating directives to revise the charter.

In a statement, the Council insisted on “ensuring that climate change and clean energy transition goals are reflected in the modernised ECT.” This, it added, includes “a clarification” that EU governments are entitled to enforce environmental and safety laws on foreign companies operating on their territory.

As part of the revision process, the EU also seeks to clarify that investment protection clauses in the ECT “cannot be interpreted as a commitment” that EU laws won’t be changed in the future, “even if that may negatively affect the investor’s expectations of profits”.

Signed in 1991 after the collapse of the Soviet Union, the Energy Charter’s initial objective was to provide legal protection for oil and gas companies investing in the former communist bloc.

However, the treaty is regarded as “outdated” by the European Commission, which proposed reforming the energy charter earlier this year, notably when it comes to investor protection clauses, climate change and the clean energy transition.

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EurActiv, 16 Jul 2019: EU asserts ‘right to regulate’ as part of energy charter treaty reform