April 20, 2024
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European Union to Withdraw from Energy Charter Treaty over Climate Concerns

European Union countries have reached an agreement to collectively withdraw from the 1998 Energy Charter Treaty, citing concerns that it undermines efforts to combat climate change.

The treaty allows energy companies to sue governments over policies that harm their investments, which has been used in recent years to challenge measures aimed at phasing out fossil fuel plants.

Ministers from EU countries made the decision to exit the treaty during a meeting in Brussels, according to two EU officials who spoke to Reuters.

The next step involves seeking consent from the European Parliament, which is expected to approve the decision given its previous support for leaving the treaty.

The move to exit the Energy Charter Treaty was first proposed by Brussels last July, following announcements from several member states—including Denmark, France, Germany, Luxembourg, Poland, Spain, and the Netherlands—expressing intentions to quit, primarily due to climate change concerns.

While some EU countries, such as Cyprus and Hungary, were initially reluctant to withdraw from the treaty, a recent proposal to allow reforms to pass before exiting has helped ease concerns.

Under this proposal, EU countries will approve the acceptance of treaty reforms in May, as confirmed by a Reuters source in Belgium’s EU presidency.

Reforms to the treaty, agreed upon by around 50 signatories last year, include reducing the protection period for energy firms from non-EU countries like Japan and Turkey from 20 years to 10 years for existing investments in the EU.

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