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EU’s climate tilt tripped up by post-Soviet energy treaty

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Steam and smoke rise from cooling towers and chimneys of a coal-fired power plant in Moscow, Russia. ALEXANDER NEMENOV/AFP

EU’s climate tilt tripped up by post-Soviet energy treaty

Tackling climate change is a top priority for the incoming European Commission, but a decades-old energy treaty protecting fossil fuel investments is proving a tricky obstacle, experts said on Wednesday.

The Energy Charter Treaty, struck in the 1990s, is meant to boost energy cooperation across borders. Initially, it sought to protect the investment in developing states, initially in post-Soviet states in eastern Europe.

The EU is part of the treaty – as are its member states – but Russia dropped out in 2009.

Now the treaty’s provisions allowing companies to sue states over blocked projects has become a millstone on efforts to make the switch from greenhouse gas-emitting sources to renewable energy.

That has spurred calls for a reform of the treaty – or even for it to be scrapped – to give primacy to the 2015 Paris Climate Agreement meant to limit the rate of global warming.

“We’ve been pushing like crazy to change this treaty,” Carlo Pettinato, an investment officer in the Commission’s trade unit, said during a panel debate in Brussels.

He admitted though that, with 50 signatory states and arbitrators outside the EU justice system in charge of the dispute resolution mechanism, “it’s not going to be easy”.

Battling climate change is a stated priority of Ursula von der Leyen, the new president-elect of the European Commission who will take charge with her team in November.

But other experts lamented that treaty change could take years, and the climate issue was too urgent to wait.

“How can you in today’s situation protect investments that provenly destroy the planet?” asked Pia Eberhardt, of the Corporate Europe Observatory, a non-governmental campaign group that exposes corporate lobbying on EU policies.

She enumerated cases of corporations suing countries over stalled projects.

These included Sweden’s Vattenfall power company using the treaty to demand compensation for environmental restrictions on a coal-based plant and over the phasing out of nuclear energy.

British firm Rockhopper is going after Italy for banning offshore oil drilling, Eberhardt said.

Luxembourg’s Energy Minister Claude Turmes said his country was trying to build a coalition of “energy-responsible countries” to bring about changes to the treaty.

“If the EU is to be the new global climate leader, which Ursula von der Leyen spelt out, then if we are to be a global leader we need to attack and be much proactive on this treaty,” he said.

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