The EU and UK Withdraw from the Energy Charter Treaty: A New Era for Climate Action

The EU and UK have withdrawn from the Energy Charter Treaty (ECT), but a 'sunset clause' in Article 47(3) may extend fossil fuel investment protections for up to 20 years, potentially until 2043. The author contends that the ECT is part of a systemic global issue involving over 2,800 bilateral investment treaties (BITs) and 450 treaties with investment provisions (TIPs) that facilitate investor-State dispute settlement (ISDS) claims against climate policies. Current reform efforts by UNCITRAL, UNCTAD, the WTO, and the OECD are described as fragmented or focused on procedural rather than substantive changes. The document proposes the use of 'inter se' agreements to neutralize sunset clauses and the creation of a legally binding multilateral or plurilateral agreement to immediately remove investment benefits for fossil fuels and align financial flows with Article 2.1(c) of the Paris Agreement.

• The Energy Charter Treaty's (ECT) 'sunset clause' in Article 47(3) allows investment protections to persist for up to 20 years after a state withdraws, creating an 'entrenchment effect' that could extend fossil fuel benefits in the EU and UK until at least 2043.
• The risk of the sunset clause is illustrated by Italy, which faced an ISDS claim and a multimillion-dollar award to the UK company Rockhopper over a ban on coastal oil drilling, despite having withdrawn from the ECT in 2016.

APA

de Anzizu, H. (2024). The EU and UK Withdraw from the Energy Charter Treaty: A New Era for Climate Action. Center for International Environmental Law. https://www.ciel.org/ect-sunset-clause-fossil-fuel-investments-challenges/

Chicago

de Anzizu, Hélionor. The EU and UK Withdraw from the Energy Charter Treaty: A New Era for Climate Action. Center for International Environmental Law, 2024. https://www.ciel.org/ect-sunset-clause-fossil-fuel-investments-challenges/.

Wikipedia

{{cite report |last1=de Anzizu |first1=Hélionor |title=The EU and UK Withdraw from the Energy Charter Treaty: A New Era for Climate Action |publisher=Center for International Environmental Law |date=12 December 2024 |url=https://www.ciel.org/ect-sunset-clause-fossil-fuel-investments-challenges/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{deanzizu2024withdraw, author = {de Anzizu, Hélionor}, title = {{The EU and UK Withdraw from the Energy Charter Treaty: A New Era for Climate Action}}, institution = {Center for International Environmental Law}, year = {2024}, month = dec, url = {https://www.ciel.org/ect-sunset-clause-fossil-fuel-investments-challenges/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }