Investor protection under the Energy Charter Treaty: implications for EU's green transition

Abstract

Amid the intense debate surrounding the ECT's impact on state ability to address climate change and recent withdrawal announcements by several EU member states, this thesis investigates the ECT's investor protection within the framework of the EU’s green transition. It takes an in-depth look at EU commitments under the Paris Agreement and their implementation in EU law, focusing on the energy sector. Adopting a doctrinal legal research approach, this study addresses two primary questions: the influence of ECT's investment protection on the EU's climate goals and the adequacy of the ECT's modernization proposal in aligning investor protection provisions with EU climate objectives. The analysis brings to light potential conflicts within the current ECT framework, notably regarding ambiguous standards, protection for fossil fuel investors, and arbitral awards' inconsistency. The study uncovers potential obstacles presented by the existing legal framework to the EU's green transition, thereby emphasizing the necessity for reform. Upon assessing the modernization proposal, the thesis acknowledges positive elements such as clarified protection standards and the reemphasized right to regulate but also pinpoints weaknesses, including optional fossil fuel exclusion from protection via flexibility mechanism and inherent flaws in the ISDS. The results indicate that while the modernization proposal may not comprehensively address every concern, it is a step in the right direction. The study also cautions against neglecting potential impacts on multilateralism during modernization negotiations. The findings offer valuable insights into how policy and law interact and the challenges finding a balance between investor protection and climate goals within the EU.