CYIL vol. 12 (2021)

CYIL 12 (2021) THE MODERNIZATION OF THE ENERGY CHARTER TREATY TO ENABLE CLIMATE… than 31 December 2040). 56 More specifically, future investments in electricity generation from oil and other gaseous hydrocarbons through power plants and other infrastructure shall be maintained until the end of 2030, but only if two cumulative conditions are met, i.e., they enable the use of renewable and low-carbon gases, and emit less than 380 g of CO2 of fossil fuel origin per kWh of electricity. The same shall apply to such investments that replace existing investments producing electrical energy from fossil fuels, i.e., facilitating the intermediary means in transitioning zero-emission technologies. 57 The threshold is stricter than the EU’s initial proposal of 550gCO2/kWh, but remains higher than the limit stated in the EU’s green finance taxonomy (100gCO2e/kWh). 58 During the fifth negotiation round, the EU’s proposal on the definition of ‘Economic Activities’ received a mixed response. Most parties declared the need for a flexible approach to respect each country’s individual climate goals and specific energy mixes. 59 Support was expressed for further discussion to analyse compromise options. 60 Save for the clarification over fossil fuel phase-out it would be beneficial if the revised treaty provide further guidance on whether mitigation measures such as carbon capture and storage technologies, technological improvements in energy efficiency, including improvements in cement production or aluminium manufacturing, could be considered to be within the ECT’s scope of coverage, thus giving clear signal for desirable investments. Right to regulate The ECT, like other international investment agreements, focuses on creating a stable and predictable climate for investors once the investment has been made. The EU Proposal incorporates an express statement of the state’s ‘right to regulate’ within its territory to achieve legitimate policy objectives in the areas of public interest and to change legal regulation. 61 56 Answer given by Ms. Simson on behalf of the European Commission to a parliamentary question date 12 May 2021. [online]. Available at: < https://www.europarl.europa.eu/doceo/document/E-9-2021-000683-ASW_EN.pdf>. Visited on 1 June 2021. 57 Some states complain about the uncertainty of what the emissions threshold of 380g of CO2 from fossil fuels per kWh of electricity shall mean. The Polish Minister of Climate and Environment stressed out that while it might be generally inferred that setting the emissions value at this level can cover gas-fuelled electricity generation but exclude coal-fired installations, the absence of specific statement to this effect creates room for doubts. See Bukowski, M.: The EU’s Bittersweet Proposal to Redefine ‘economic activity’ under the Energy Charter Treaty: Expected Implications for International Arbitration. Kluwer Arbitration Blog. March 2021. [online]. Available at: < http://arbitrationblog. kluwerarbitration.com/2021/03/21/the-eus-bittersweet-proposal-to-redefine-economic-activity-under-the-energy- charter-treaty-expected-implications-for-international-arbitration/>. Visited on 1 June 2021. 58 Commission Delegated Regulation (EU) of 4. 6. 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives, p. 4. 59 See European Commission: Fifth negotiation round to modernise Energy Charter Treaty. 4 June 2021. [online]. Available at: . 60 ECT Secretariat: Public Communication on the fifth negotiation round of the Modernisation of the ECT. 4 June 2021. [online]. Available at: . 61 Part III of the EU Proposal.

391