The European Commission has proposed that European Union countries jointly quit the international Energy Charter Treaty, agreed in 1998, that allows energy companies to sue countries for policies that damage their investments.

Concerns over the impact of the treaty on climate change mitigation actions is the key reason why the EC has proposed EU countries leave it, with EC Energy Commissioner Kadri Simson saying that “in its current, unmodernised version [the treaty] is no longer in line with the EU’s energy and climate goals”. According to Reuters, member states including Denmark, France, Germany, Luxembourg, Poland, Spain and the Netherlands (as well as the European Parliament) have been putting pressure on the EC to lead EU countries out of the treaty, with Italy already having left it in 2016.

There is some disagreement within the trading bloc, with Cyprus, Hungary and Slovakia amongst the countries having expressed a preference to remain within the treaty. If EU countries were to exit the treaty, a sunset clause would still protect energy businesses’ investments for another 20 years.