The world’s biggest dirty energy club is cracking up – POLITICO

The world's biggest dirty energy club is cracking up – POLITICO

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The fossil fuel industry is facing the disintegration of one of its most important international agreements — and the man running the show is not taking it well.

A succession of major European Union governments have now dumped the Energy Charter Treaty (ECT), a deal between 53 countries originally designed in the 1990s to protect Western investments in the energy systems of post-Soviet states.

It is the international pact most used by energy companies to sue governments when policies hit the profits they make, often from selling polluting fuels. France, Spain and the Netherlands, all conscious of their green obligations, have said the treaty’s punitive legal protections for fossil fuel projects are anathema to their efforts to fight climate change.

For the ECT’s Secretary-General Guy Lentz, the strain is clearly showing. Last week, he lashed out on Twitter at a researcher who criticized a set of reforms aimed at cutting fossil fuels out of the treaty.

“Who is paying those clowns for this kind of shit?” he asked, before doubling down in a series of angry or mocking tweets and responses, as well as in text messages to a POLITICO reporter when questioned.

On Monday morning, sitting in his office in the leafy outskirts of Brussels, Lentz said he regretted the first of his tweets. “But then, believe it or not, the rest was hacked,” he claimed. “It was not me.”

The tweets provoked the European Commission and others to ask Lentz for an explanation, he said.

“He’s probably really passionate about his work,” Dutch Climate and Energy Minister Rob Jetten said, adding: “It’s always more helpful just to keep the conversation going than to start, I don’t know, yelling at everyone on Twitter.”

Asked by POLITICO to provide evidence that his Twitter account had been hacked, Lentz declined.

It was one of several confusing or contradictory claims made during an hour-long interview with POLITICO by the boss of the treaty organization, which offers sweeping protections for an estimated €344.6 billion worth of fossil fuel investments in the EU, UK and Switzerland alone.

Most strikingly, Lentz could not give a straightforward answer when asked whether it would be better for the climate if the treaty did not exist at all.

“Definitely,” he said, at least when it comes to the EU’s climate ambitions. “But we have this existing treaty, you cannot make as if it is not existing. So what we are making is damage control.”

In a later phone call, he clarified that he had been hasty in his response because he had not considered that a series of reforms — negotiated by the EU but yet to be signed off by its member countries — would cancel lawsuits within the bloc. In addition, he said the coverage the deal offered to renewable energy investments internationally meant “it would be better to have this for the future” as the treaty seeks to expand to a further 40 countries, largely in Africa.

His confused position reflects the wider sense that the ECT is a treaty at once outdated yet impossible to scrap.

“This treaty was invented in a completely different period in our history,” said Jetten. “We really need different kinds of international agreements, on investment policies and on climate policy.”

The ECT’s sword of Damocles hangs over countries’ green goals. This year, two German companies sued the Netherlands over its phaseout of coal. The treaty can also create a so-called “regulatory chill” effect, where countries are dissuaded from changing their laws less they get sued. But even if countries choose to exit the treaty, they can still get sued up to 20 years after they’ve left the organization.

The reform process, led by the European Commission, sought to end protection for fossil fuels. But resistance from Japan, Kazakhstan and other members meant it could only partially achieve its goal. The EU and UK have won a concession allowing them to stop shielding fossil fuel projects in 10 years’ time. For other members of the 53-country treaty, it will be business as usual.

The Commission is now trying to sell that as a victory and get EU members to give the final sign-off. But several EU countries are cutting and running.

On Friday, French President Emmanuel Macron announced this country would withdraw from the investment pact because it did not align with the Paris Agreement on climate change.

The French decision followed announcements from Poland, Spain and the Netherlands that they were pulling out. Those countries are now pushing for the EU as a whole to quit the treaty. Jetten said he would be lobbying fellow ministers at a summit in Luxembourg on Tuesday. Germany is considering it and Belgium’s Climate Minister Zakia Khattabi also called for her country to pull out on Monday, describing the treaty as a “Trojan horse” that endangers European climate policy.

Lentz and the European Commission are pleading with those countries to not block the reforms at the EU level so that they can be passed at a crucial meeting on November 22, when the 53 countries will gather in Mongolia.

“If by November, we don’t adopt the modernization, the result is simply the status quo,” Commission official Carlo Pettinato told members of the EU Parliament on Monday.

There is a third way: Countries could vote through the reforms and then quit the deal. That’s the Netherlands’ plan and Lentz said the French had indicated to him they would do the same.

The Commission argues the benefits of the deal to renewables should not get thrown out over concerns about fossil fuel investments. But for the Netherlands, Jetten said, the lessons of the coal lawsuits have been taken to heart.

“It is better to leave this treaty and, after 10 years, be rid of it and have more openness and more policy freedom,” said Jetten.

Opening the door to China

Lentz believes that big countries like France and Germany leaving the deal would be a major strategic error, annoying key EU energy suppliers — such as Azerbaijan — and opening the door for China to take over from Europe as the treaty’s top dog.

Beijing made its first moves toward accession five years ago before the EU hit the brakes. “This treaty would really be able to accelerate the Silk Road,” Lentz said, adding that China could eventually take the lead of the international organization with the French and potentially Germany leaving. “It’s a big void. I mean, someone could look at that and say, ‘well, this could be an opportunity.’”

Brussels also argues that despite the newer treaty version continuing to shield fossil fuel infrastructure, the pact is still useful for promoting green energy investments and even rebuilding war-torn Ukraine.

Lentz, for his part, appears mystified at the countries’ decision to leave, but admits that there are two ways of looking at it. “I would see the full side of the glass and not the empty one,” he said, holding a tumbler of water in the air.

Camille Gijs contributed reporting.

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