The Netherlands is pulling out of a controversial Energy Charter treaty. This was announced by Climate Minister Jetten in a debate in the House of Representatives. According to Jetten, the Energy Charter Treaty (ECT) is not in line with the Paris climate agreement and the ECT stands in the way of achieving the “one and a half degree target”.

The agreement is controversial because, on the basis of the agreement, producers of fossil energy can make demands on governments if they are disadvantaged by climate policy. You can claim compensation not only for the investments made, but also for lost income. This leads to sky-high standards.

Italy recently had to pay 240 million euros to the British oil company Rockhopper because it had to stop drilling for oil off the Italian coast. There is also a lawsuit by the German energy group RWE against the Dutch state. The company wants 1.4 billion euros from the Netherlands because of the closure of the coal-fired power plants on the Maasvlakte in 2030.

Recently, environmental groups have called for exit from the ECT. Climate activist Greta Thunberg also made such an appeal:

According to the organizations, the contract is slowing down the energy transition because heads of government are sticking to a strict climate policy for fear of demands. There has also been resistance to the ECT in the House of Representatives for some time. According to Lammert van Raan (Party for the Animals), the contract is no longer up to date.

“ECT is a guarantee for companies that operating license long lost,” Van Raan said in the debate. “Fossil will remain protected into the next decade. That’s bizarre and a big finger into the future.”

Adjustments don’t go far enough

In response to the criticism, the treaty is modernized; Various adjustments are currently on the table designed to limit protections for fossil fuel companies. According to Minister Jetten, the adjustments do not go far enough. He now prefers to exit the treaty simultaneously with all EU countries that have joined the treaty. If no agreement can be reached on this, the Netherlands would get out on its own, said Jetten. Italy, Poland and Spain have already withdrawn from the contract.

If the Netherlands withdraws from the ECT, not all current and future claims will be withdrawn. In the contract is a ‘sunset clause‘, which allows fossil fuel companies to claim investments twenty years after exiting the ECT.

It is not yet known when the Netherlands will leave the ECT. The cabinet will later issue a detailed letter to Parliament. On November 22, all ECT members will meet in Mongolia to vote on the contract changes.