Redesigning the Energy Charter Treaty to Advance the Low-Carbon Transition

Published in TDM 1 (2019) "Modernisation of the Energy Charter Treaty (ECT)" Special Issue as N. Bernasconi-Osterwalder; M.D. Brauch; "Redesigning the Energy Charter Treaty to Advance the Low-Carbon Transition", TDM 1 (2019).

28 Pages Posted: 24 Sep 2019

See all articles by Nathalie Bernasconi-Osterwalder

Nathalie Bernasconi-Osterwalder

International Institute for Sustainable Development

Martin Dietrich Brauch

Columbia University - Columbia Center on Sustainable Investment

Date Written: February 1, 2019

Abstract

The Energy Charter Treaty (ECT), if revised, could have a particularly important role to play, given the importance of the energy sector in relation to both contributing to global warming and providing climate change solutions.

Unlike most other investment treaties and chapters in trade agreements covering all sectors and measures indiscriminately, the ECT covers only activities in the energy sector. It covers indiscriminately a large range of activities relating to oil, gas, and coal, as well as wind and solar power and other renewable energy sources.

At a time when climate change is a top priority and the most pressing environmental and developmental issue for the future of our planet, a revised ECT should, from a normative perspective, play an important role in the transition from fossil fuel–based energy to renewable, clean energy.

In order to ensure mutual supportiveness between environmental and economic goals set at the international level, the ECT should be redesigned to be brought in line with and help achieve states’ international commitment under the Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC).

This paper discusses the ECT and the Paris Agreement regimes, as well as their inter-relationship, highlighting how they pull in different directions. It presents three building blocks that could be adopted in a revised ECT to align it with the Paris Agreement: encouraging low-carbon energy investments; discouraging carbon-intensive energy investments; and ensuring a just transition to low-carbon economies and societies. Finally, it proposes ways to reform the ECT, through a climate lens as well as through a broader socio-economic sustainability lens.

Keywords: Energy Charter Treaty, ECT, reform, international investment law, climate change, Paris Agreement

JEL Classification: K33

Suggested Citation

Bernasconi-Osterwalder, Nathalie and Dietrich Brauch, Martin, Redesigning the Energy Charter Treaty to Advance the Low-Carbon Transition (February 1, 2019). Published in TDM 1 (2019) "Modernisation of the Energy Charter Treaty (ECT)" Special Issue as N. Bernasconi-Osterwalder; M.D. Brauch; "Redesigning the Energy Charter Treaty to Advance the Low-Carbon Transition", TDM 1 (2019)., Available at SSRN: https://ssrn.com/abstract=3446723

Nathalie Bernasconi-Osterwalder

International Institute for Sustainable Development ( email )

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Winnipeg
Manitoba, R3B 0Y4, Manitoba
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HOME PAGE: http://www.iisd.org/investment

Martin Dietrich Brauch (Contact Author)

Columbia University - Columbia Center on Sustainable Investment ( email )

William C. Warren Hall, 1st floor
410 West 116th Street
New York, NY 10027
United States

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