Has the Rush to Exit the Embattled Energy Charter Treaty Crossed a Threshold of No Return?

By Dean Ehrlich, 25 October 2022

“If most members of a group make the same behavioral decision – to join a riot, for example – we can infer from this that most ended up sharing the same norm or belief about the situation, whether or not they did so at the beginning.”

 – Mark Granovetter ‘Threshold Models of Collective Behavior’.

Collective processes are driven by individual thresholds. Whether a natural person, a juristic entity or a nation state, each ‘individual’ varies in their limits for joining or leaving a group activity. However, according to American sociologist and professor at Stanford University, Mark Granovetter, a decision to engage in (or depart from) a collective activity depends heavily on how many others have already decided to do so – regardless of whether that decision concerns the right time to leave a dinner party or to join a riot.

Granovetter describes these “thresholds” as “simply that point where the perceived benefits to an individual of doing [something]… exceed the perceived costs.” For example, “the cost to an individual of joining a riot declines as riot size increases, since the probability of being apprehended is smaller the larger the number involved” he explains. The key concept is “the point where net benefits begin to exceed net costs for that particular actor.”

And in recent weeks, the minimum threshold for leaving the Energy Charter Treaty (ECT) appears to have been significantly lowered. Speaking to POLITICO, former Energy Charter Treaty official turned critic, Yamina Saheb, said she expects more countries to withdraw from the treaty in the coming days. “The ball is finally rolling in the right direction. Nothing will stop it” she declared.

While TAO has written in detail [here] about the proposed amendments to the ECT – which will be the subject of a final agreement at the Energy Charter Conference’s meeting in Mongolia on 22 November 2022 – there is a growing consensus that those amendments will not be enough to bring the treaty in line with the Paris Agreement on Climate Change.

On 6 October 2022, Poland voted to exit the ECT. Spain’s decision to do the same followed six days later. The Netherlands followed suit seven days after that, and France joined them a mere 48 hours later. Germany and Belgium are also considering pulling out of the treaty. This despite the fact that the EU itself, and all EU states (except for Italy, which already withdrew 2016), are treaty members. Meanwhile Australia, who signed but never ratified the treaty, officially opted out with effect from 13 December 2021.

Regardless of their other political differences, withdrawing states now appear to be acting politically identically. All cite disillusionment with the ECT’s ability to respond effectively to modern challenges as justification for their actions.

At the time of Poland’s vote to exit the ECT, for example, its vice-minister for climate and environment, Adam Guibourgé-Czetwertyński, told the Guardian: “We’ve just come to a stage where we think nothing is going to come out of this modernisation process. There is no sign that our partners would be willing to take more steps. Italy left [the ECT] five years ago and maybe we should have left already too. At some point, you need to realise that the chance of getting the [treaty] into the shape we want it to be is not going to happen.”

Two weeks later, in explaining the Netherlands’ decision to leave the ECT to the Dutch Parliament, energy minister Rob Jetten reportedly said that “despite the many modernisations being negotiated, we do not see that the ECT has been sufficiently aligned with the Paris agreement.”

In doing so, the Netherlands’ called on the whole of the EU to follow suit. France immediately took up that call, with French MEP (and vice-president of the European Parliament’s trade committee) Marie-Pierre Vedrenne affirming that “the Netherlands are right. Let’s work towards a coordinated exit from the Energy Charter Treaty.”

The French position was further clarified by its High Council on Climate. On 19 October 2022, it published a summary of its assessment of the ECT’s modernisation efforts concluding that “the proposed amendments could be a step forward for Member States if adopted and ratified, but will still not live up to France's climate ambition and its international climate commitments.” [The full assessment is available here, in French.]

While France’s High Council on Climate’s assessment argues that a coordinated withdrawal by EU Member States appears to be “the least risky option to allow the achievement of climate objectives and compliance with the necessary decarbonization rates by 2030,” the European Commission disagrees.

The Commission says, in a position paper released ahead of next month’s Energy Charter Conference, that while “it has been the consistent interpretation of the EU that the ECT does not apply to disputes between a Member State and an investor of another Member State concerning an investment made by the latter in the first Member State” withdrawing from the ECT before the proposed amendments take effect risks making things worse.

Instead, the Commission recommends that the proposed amendments to the ECT first be adopted so that the proposed 10-year phase out of protections for existing fossil fuel projects can come into effect. Leaving the ECT before the amendments are implemented risks leaving Member States caught between the ECT’s 20-year sunset clause and their obligations to reach net zero emissions. [See TAO’s article on the dispute settlement provisions in international investment treaties becoming a risk to be managed rather than a neutral instrument of international relations, here.]

However, if the Commission’s proposal is to succeed, EU states need to adopt a common stance before the next Conference as the proposed amendments must also be unanimously accepted.

Whether the European’s Commission’s advice will be headed remains to be seen. What is clear, however, is that for a growing number of treaty signatories the perceived benefits of ECT membership no longer exceeds the perceived costs, and increasing pessimism about the effectiveness of the proposed amendments to the ECT only risks hastening the rush to the exit.


URL: https://taobserver.com/news/271/has-the-rush-to-exit-the-embattled-energy-charter-treaty-crossed-a-threshold-of-no-return