CYIL vol. 12 (2021)

CYIL 12 (2021) THE MODERNIZATION OF THE ENERGY CHARTER TREATY TO ENABLE CLIMATE… Canada, or Brazil, and the views on the sector might differ. On the other hand, half of the ECT parties are signatories to the Paris Agreement and shall be driving in the same direction. In the meantime the treaty remains surrounded by ambiguity over the applicability of its dispute resolution provisions in the EU context and it continues to play a role as regards current exits of ECT parties from coal and bans on fossil fuel projects that prematurely strand investors’ assets. The dissatisfaction with the pace of the negotiations and exposure to potential investment claims might result in the unilateral withdrawal from the treaty by the EU or some member states which, however, does not seem to be a good option given the existence of the sunset clause and protection of existing investments for the next twenty years. The ECT has long been used by fossil fuel investors but out of the total claims the majority now relates to renewable energy sector. The primary focus of the proposed reform is the abandonment of the protection of investment based on fossil fuels. However, the clean energy transition will require substantial private investment in renewable energy sources. In any prospective reform, if politically possible, it will thus be essential to address both the continuing impacts of the previous high carbon investments on climate change, and encouragement of clean energy and climate mitigation measures to achieve the Paris Agreement goals. The current phase of the modernization process is significant as its success or failure might have impact on the energy transition in the ECT contracting states and the faith of the ECT itself.

397