Why France is right to tear up the 1991 Energy Charter Treaty

France has unilaterally decided to abandon the Energy Charter Treaty (ECT), a shameful agreement signed in 1991 in the form of an intergovernmental organization that allowed oil companies to claim damages from governments for any policy change or circumstance that might harm their economic performance.

France’s decision, which follows a vote in the Polish Parliament to the same effect and announcements by Spain and the Netherlands that they will do the same, makes perfect sense in an environment that precedes the biggest energy transition in history, the decarbonization of energy, and aims to put an end to an agreement signed by 52 countries to protect the interests of foreign companies that decided to invest in the former Soviet republics. The idea was to protect them from risks such as nationalization.

At the present moment, opaque agreements like this to protect the economic interests of oil companies contradict the aims of the Paris Agreement and the progress of decarbonization, and allow these companies to claim huge compensation every time a government, driven by environmental concerns, decides to rescind a permit to exploit an area for the extraction of fossil fuels. Needless to say, the taxpayer picks up the tab for cleaning up the mess that these companies have created.