Energy investment treaty update fails to win over environmentalists

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REUTERS/Nick Oxford

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June 24 (Reuters) - Years-long talks over updating an international energy investment treaty ended on Friday with a provisional deal which would allow the exclusion of fossil fuels interests but not fast enough to silence environmental campaigners' complaints that it undermines efforts to curb climate change.

The 1994 Energy Charter Treaty (ECT) was conceived to support the energy sector in former Soviet Union countries, allowing investors to sue governments over policies that jeopardise their investments.

When it was signed, it was the first agreement covering production, distribution, export and use of energy resources to be signed by all the former Soviet republics, central and eastern Europe, the European Union and other industrialised countries.

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The updated version gives countries the option to remove protection from investments in fossil fuels made on their own territory, which had attracted criticism from some European governments and campaigners who said it threatened the transition to low-carbon energy.

Existing investments can be excluded 10 years after the new mechanism comes into force, and new investments nine months after. The updated agreement introduces technologies that were not previously covered, including hydrogen and synthetic fuels.

Countries have reached what the European Union described as a "tentative agreement" on the changes, two years after formally starting negotiations.

European energy commissioner Kadri Simson said on Twitter that negotiations had been "long and difficult", but that the "revised ECT will be better aligned with the #EU's climate ambition & help direct new investments toward #cleanenergy technologies".

But charity ClientEarth said the proposal was still not in line with the 2015 Paris Agreement on climate change.

"EU countries could still be sued for putting in place progressive climate policies for at least another decade – the key window for action if humanity is to avoid climate catastrophe," said ClientEarth lawyer Amandine Van Den Berghe.

Negotiators have tried to introduce greater transparency in dispute settlement provisions and stronger safeguards against unfounded claims.

German utility RWE (RWEG.DE) used the treaty last year to seek compensation for a Dutch plan to phase out coal-fuelled power by 2030, which would affect its Eemshaven power plant.

Five young people sued 12 governments this week to remove obstacles to fighting climate change allegedly created by the ECT. read more

Spain, France and Luxembourg have raised the possibility of EU countries leaving the treaty. Spanish Energy and Environment Minister Teresa Ribera was quoted by Politico this week calling for a "coordinated withdrawal" by the EU.

The provisional agreement means that if all parties stay silent until a conference in November, the text will be formally adopted, the EU said. It will then require the agreement of the European Council and the consent of the European Parliament.

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Reporting by Isla Binnie, additional reporting by Kate Abnett; editing by David Evans

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