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The EU certifies its withdrawal from the Energy Treaty for going against the Paris Agreement

Date: March 1, 2024 Time: 06:10:38

The European Commission will request in writing at the end of this week the exit of the community bloc from the Energy Charter Treaty (TEC). Spain has been one of the countries most critical of the agreement, assuring that it makes it impossible to meet the climate goals established in the Paris Agreement. A letter sent to Brussels by the Government of Spain in October last year, in which the country’s intention to withdraw was made official, encouraged the Netherlands, France, Slovenia, Germany and France to do the same. Finally, it seems that it will be done in a coordinated manner against the opinion of the companies.

Specifically, the TCE, in force since 1988, was signed by 53 countries. The modernization of the text is what has been tailing for years. The treaty was opened after the disappearance of the USSR, in a context in which many feared investing in the countries of the Soviet bloc, and was conceived to promote energy security by fostering more open and competitive markets that at the same time respect the principles of sustainable development. and sovereignty over energy resources.

It is subscribed by all the Member States of the European Union, except for Italy, which left it in 2016, and countries such as the United Kingdom, Bosnia and Herzegovina, Japan, Armenia, Jordan, Ukraine or Tajikistan. This contemplates an investment protection system, non-discriminatory treatment for technologies and dispute resolution through arbitration mechanisms. The countries that differ with the agreement assure that the text had become outdated by virtue of the objectives of climate change.

Tied up another 20 years

Initially, the Commission advocated for the reform of the treaty and not for abandoning it. In fact, from Brussels they have already warned Spain and the rest of the countries that anticipated their departure that they will continue to be subject without changes to the arbitration conditions provided for in the international agreement for another 20 years despite breaking with it, according to the survival clause. of Article 47(3).

“The Energy Charter Treaty was in force when the renewable premiums were approved and also when they were retroactively withdrawn, so there will be no change on that front. The agreement includes an exit clause whereby countries leaving the treaty remain bound by its processes for a period of twenty years.

“The exit announced by the EU generates more legal uncertainty in the sector”

In this sense, the same sources stress that the treaty “is totally and absolutely compatible with the use of renewable energy, as shown by the fact that Europe is a leader in this field.” “The Treaty provided the necessary coverage to achieve this leadership position and the exit announced by the EU generates more legal uncertainty in the sector,” they argue.

The latest condemnation of Spain for the mess of renewables has been known this Tuesday. The Permanent Court of Arbitration in The Hague (PCA) has sentenced Spain to compensate the French energy group EDF with a payment of 29.6 million euros for the retroactive withdrawal of premiums for renewables. The process was resolved in April, although the final publication of the award and its official communication to the Government have occurred in recent days. With this new setback for Spain, there are already 23 awards that instantly prompt the State to compensate the affected companies. The resolution of the process involving E.ON, whose lawsuit claimed 600 million euros, is expected soon.

pending awards

However, most of the awards have been channeled through the International Center for Settlement of Investment Disputes (ICSID), belonging to the World Bank. The awards pending payment that Spain accumulates in international arbitration courts reach 1,300 million dollars (1,200 million euros), according to the International Arbitration Compliance Index. This figure excludes late-payment interest, costs and expenses paid by the country to hire lawyers. In total, these obligations are over 250 million euros. According to legal sources, when all the processes are resolved, the cost will rise to between 2,000 and 2,500 million euros, which is around 0.2% of GDP.

RWE, Renergy, Triodos, Nextera, Cube, Soles Badajoz or Eurus are some of those affected by arbitration. The Antin fund, which has recently launched a takeover bid for the Spanish Opdenergy, was another of the big affected. This transferred the rights of the lawsuit to the Luxembourg Company Energy Investments. According to government sources, Spain is reluctant to make the payments because it believes that “they may be contrary to EU law and constitute illegal State Aid.”

Some of the companies affected have launched different legal processes aimed at obtaining the seizure of assets from the Kingdom of Spain. For now, the complainants have obtained the approval of the British and Australian courts and have opened the ban on the seizure of all types of assets. In the case of EDF, the conviction with Spain can unleash new asset seizure processes in countries like Switzerland. The Executive has hired the services of MLL Legal for 363,000 euros (with taxes) to try to avoid the seizure of assets in the Swiss country.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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