The fifth round of negotiations on reforming the Energy Charter Treaty – an international agreement that allows energy companies to sue governments for decisions impacting their investments – took place in early June.

But attempts by the European Commission to bring the treaty in line with international climate goals have so far fallen flat, according to two leaked diplomatic cables...

The European Commission, which negotiates on behalf of the 27 EU member states, has proposed gradually reducing protection for fossil fuel investments but has seen little support from other treaty signatories.

Unanimity is required to modify the treaty, whose 54 members include countries like Azerbaijan and Kazakhstan, which are heavily reliant on fossil fuel export revenues and have little incentive to reform.

A sixth round of negotiations to reform the Energy Charter Treaty is opening on Tuesday (6 July) by which point the European Commission hopes to have rallied more support from non-EU states, like the UK and Balkan countries.

However, support for the EU’s reform plan was close to non-existent in the last negotiation round, where only six signatories even expressed views on the Commission’s proposal...

Even if negotiations were to be successful, the EU proposal has been criticised by environmental groups for lacking ambition...

Concern has grown about the treaty hampering the energy transition following two lawsuits against the Netherlands for its coal phase-out law. The Dutch plan to ditch coal by 2030 has been met with compensation claims from German company, RWE, and Uniper...

Climate Action Network Europe [...] is one of over 400 signatories to a joint statement on the treaty, calling it “an obstacle to the clean energy transition” that must be ended...

They called for the European Union and all EU countries to exit the treaty by the COP26 climate summit in November.

However, there are concerns that leaving the treaty could be ineffective because of a sunset clause that means investments will still be protected for twenty years. While walking out would mean no new investments are covered, protection would still be granted to fossil fuel investments.

To get around this, European countries could agree on a change to the treaty applicable only to them that would prevent certain claims. This would be effective as most of the claims are between EU countries.