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As the tenth round of negotiations on modernising the Energy Charter Treaty (ECT) gets underway this week (18-21 January), a new example of how this secretive corporate court system is undermining climate and environmental policies of EU member states has been brought to light.

The ECT, an axe to climate action

The Slovenian government decided that low-volume hydraulic fracturing, also known as fracking, will be allowed in Slovenia under amendments to the country’s mining rules.  This will pave the way for Ascent Resources, a UK company, to frack for gas in the Petišovci gas field in the east of the country. Fracking is known to have strong negative environmental impacts and to result in even higher climate emissions than normal gas exploration. When the Slovenian government announced that Ascent Resources needed to undertake an Environmental Impact Assessment (EIA) and obtain environmental consent for the project,  the company objected and launched a claim against the Slovenian government under the Energy Charter Treaty, seeking €100 million of taxpayers’ money in damages.

This threat seems to have been successful as the Slovenian government is now laying the ground for the start of the fracking activities. The legislation was adopted just a day after a rival bill that would ban fracking altogether was discussed by a parliamentary committee.

Andrej Gnezda, project officer for Umanotera said:

“The Petišovci fracking project clearly shows how energy companies are using the Energy Charter Treaty to extort governments and demand special treatment. Instead of performing the needed impact assessment, Ascent Resources decided to sue Slovenia for more than a 100 million euros. This is simply unacceptable; governments need to leave the ECT and protect our environment.”

Time to #ExitECT

As another round of negotiations to modernize the ECT takes place this week, Friends of the Earth Europe says this example is just another in a long line of cases demonstrating how Investor State Dispute Settlement (ISDS) claims are being used by corporations to obtain outrageous compensation and to pressure governments to cancel or withdraw environmental and climate policies and safeguards.

Paul de Clerck, trade campaigner for Friends of the Earth Europe continued:

“Ascent Resources used this obscure treaty to pressure the Slovenian government into allowing highly toxic and climate damaging fracking for gas. It is clear that the ECT is gravely undermining desperately needed climate and environmental policies.

“The climate crisis cannot wait for more negotiations to fail to bring the ECT in line with the Paris Agreement – enough is enough. The EU and member states must leave the Energy Charter Treaty.”

Following nine unsuccessful negotiations rounds during which no progress has been made to phase out investment protection for fossil fuels and to bring the ECT in line with climate commitments in the Paris Agreement and the European Green Deal, the European Commission has given an ultimatum for the negotiations. If no agreement is reached by summer 2022, the Commission will start preparing to exit the ECT. EU member states such as France, Poland and Spain have already been pushing for such an exit.