Making the Energy Charter Treaty Climate-Friendly: An (Almost) Impossible Leap

Abstract

This article provides a critical assessment of the ‘modernisation’ process of the Energy Charter Treaty (ECT). First, the research frames the ECT reform as a means for resolving the clash between the treaty and climate action, that cannot be effectively managed through conflicts rules. Consequently, the text of the ‘modernised’ ECT is analysed, with particular attention to the ‘flexibility mechanism’ for the optional progressive carve out of fossil-fuel investments, which is supposed to represent the key tool to make the ECT climate-friendly. The research shows that even this mechanism would ensure fossil-fuel investments protection at the crucial stage of energy transition. Therefore, the hypothesis of a withdrawal of the EU and its Member States is considered. Before mentioning the potential legal hurdles of this strategy, the research aims at understanding its impact on the political economy of investment law. Hence, the ‘geopolitical’ and ‘neoliberal’ drivers of the treaty are analysed through the notion of ‘institutional project’. Notwithstanding the unclear legal consequences of withdrawal, its symbolic value goes far beyond the ECT alone, certifying an unprecedented setback in the project of investment law.