CYIL vol. 12 (2021)

CYIL 12 (2021) THE MODERNIZATION OF THE ENERGY CHARTER TREATY TO ENABLE CLIMATE… use by 2040 must be retrofitted. 11 The report calls for no investment in new fossil fuel supply projects from now on and no further investment decisions on new coal plants which don’t have carbon capture technology. 12 Government climate policies will play a crucial role in implementing the energy transition and reduction of greenhouse gas (GHG) emissions. 13 The wide-ranging measures of central or local government bodies will inevitably interact with current investment law regimes and, if not revisited, with the ECT in the energy sector. The article will first discuss the topics proposed for reform, ECT’s interrelation with the climate change regime and the milestones achieved in the negotiation process. The next sections will introduce proposed amendments to the ECT that will enable the contractual parties to advance commitments under the Paris Agreement without exposure to claims under the ECT, including changes to both substantive (Section 2) and procedural (Section 3) provisions. The Conclusion provides an overall assessment of the achievement of climate related topics in the ECT modernization. 1. Need For A Reform The ECT has generated 135 investment disputes and has become the most frequently used international investment agreement in investor-state arbitrations. 14 Its frequent use attracted criticism and calls for reform. Already in 2010, the Energy Charter Secretariat adopted the Road Map for the Modernization of the Energy Charter Process, which resulted in conducting public consultations. One of the objectives of the process was already at that time the assessment of the ECT’s investment regime with regard to the subject of climate change and promotion of low-carbon investment. 15 The issue did not attract too much attention and in any event it did not seem politically feasible to amend the ECT itself. It must be though noted that the Preamble of the ECT recalls the United Nations Framework Convention on Climate Change (UNFCCC). 16 At the same time, it needs to be underlined that the birth of the ECT falls into the pre-Koyoto Protocol area of soft climate commitments and it is a product of its time. 17 The ECT’s primary objective was the 13 Policies include (i) regulations accelerating the deployment of renewable energy technologies such as feed- in-tariffs, quotas, priority grid access, building mandates, biofuel blending requirements, and bioenergy sustainability criteria; (ii) fiscal incentives such as tax policies and direct government payments (rebates and grants); and (iii) public finance mechanisms (loans and guarantees). See International Panel on Climate Change (IPCC): Special Report of the IPCC on Renewable Energy Sources and Climate Change Mitigation, prepared by Working Group III of IPCC (O. Edenhofer, R. Pichs-Madruga, Y. Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel, P. Eickemeier, G. Hansen, S. Schloemer, Ch. von Stechow (Eds.)), 2012. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, p. 24. 14 See the ECT statistics at https://www.energychartertreaty.org/cases/list-of-cases/. Visited on 1 June 2021. 15 Cameron, P. The Energy Charter Treaty Provisions on Low Carbon Investment . Final Report. Revised 12 April 2013. [online]. Available at . Visited on 1 June 2021. 16 The United Nations Framework Convention on Climate Change signed on 9 May 1992 and entered into force on 21 March 1994. Among its 197 contracting parties is the Czech Republic. 17 For details on the evolution of the ECT see e.g., Coop, G. 20 Years of the Energy Charter Treaty, ICSID Review – Foreign Investment Law Journal , Volume 29, Issue 3, Fall 2014, pp. 515–524; Hóber, K. Investment Arbitration and the Energy Charter Treaty, Journal of International Dispute Settlement , Vol. 1, No. 1 (2010), pp. 153–190. 11 Ibid. p. 19. 12 Ibid. p. 19.

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