Speaker 1: Hey there, I'm Kyle triggsta Politics editor for Bloomberg Government,
Speaker 1: and I'm Greg Durou, Senior Elections reporter for Bloomberg Government.
Speaker 1: Check out our podcast, down Ballot Counts. Each week, Greg
Speaker 1: and I will be breaking down all of those down
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Speaker 1: Listen and subscribe to Downballot Counts from Bloomberg Government wherever
Speaker 1: you get your podcasts. On this episode of Parts Pervilion,
Speaker 1: we go back to the nineties and talk about why
Speaker 1: a European energy treaty from the era of Nirvana and
Speaker 1: Pearl Jam is having some major unintended consequences today. Hello,
Speaker 1: and welcome back once again to Parts per Billion, the
Speaker 1: environmental podcast from Bloomberg Law. I'm your host, David Schultz. Hey,
Speaker 1: do you guys remember nineteen ninety one. I sort of do.
Speaker 1: I was eight years old around that time, so I
Speaker 1: wasn't paying much attention to much of anything. But back then,
Speaker 1: this was on the radio, This was in movie theaters,
Speaker 1: Astilla Vista Baby, and this guy was winning his first
Speaker 1: of many NBA titles, Fire and Beyond. All of that
Speaker 1: pop culture. Nineteen ninety one was also the year this happened.
Speaker 1: Mikayle Gorbachev said it best today, just moments before he
Speaker 1: resigned his post as the last president of the Soviet Union.
Speaker 1: The collapse of the Soviet Union was a pretty big
Speaker 1: deal in ways that were still almost thirty years later
Speaker 1: trying to figure out. But one of the most significant,
Speaker 1: or at least significant for the purposes of this podcast,
Speaker 1: is that it turned one really big country into fifteen
Speaker 1: much smaller countries. And in the early nineteen nineties, these
Speaker 1: fifteen new countries, as well as the other former warsaw
Speaker 1: PAC countries, needed to reboot their economies and fast, and
Speaker 1: they especially needed investment in their energy infrastructure power plants,
Speaker 1: oil wells, pipelines, and on and on and on. That's
Speaker 1: how we got the Energy Charter Treaty, which is the
Speaker 1: topic of today's podcast. I spoke about this treaty with
Speaker 1: Stephen Gardner of Bloomberg Law correspondent based in Brussels who
Speaker 1: covers the EU. He said the purpose of the treaty
Speaker 1: was to make it a little less scary for Western
Speaker 1: countries to invest in an energy project in a brand
Speaker 1: new country. What it does, essentially is it sets minimum
Speaker 1: standards for the treatment of energy related investment. So in
Speaker 1: other words, a German energy company should be treated by
Speaker 1: those governments in a fair way as they would treat
Speaker 1: one of their homegrown back companies. So it's a kind
Speaker 1: of minimum standard or intended to create a level playing field.
Speaker 1: At the time, this was seen as a win win
Speaker 1: for both sides of the recently shattered Iron curtain. Western
Speaker 1: companies could develop energy projects in the East without the
Speaker 1: fear of having the rug pulled out from under them,
Speaker 1: and the new former Soviet countries were more than willing
Speaker 1: to live with the restrictions the treaty imposed on them.
Speaker 1: So the treaty was negotiated about thirty years ago. Now
Speaker 1: the Soviet Union had just collapsed and it split into
Speaker 1: fifteen countries in fact, and since then the landscape has
Speaker 1: changed completely. But back in those days, there was a
Speaker 1: demand for investment in those countries, and that investment essentially
Speaker 1: was going from west to east. It was essentially going
Speaker 1: from wealthy countries such as Germany or France or the
Speaker 1: Scandinavian countries to those the much poorer countries of the East,
Speaker 1: which also had very antiquated energy systems at the time.
Speaker 1: That's a really important point. The treaty was basically designed
Speaker 1: to make it easier for energy investment to flow across
Speaker 1: Europe from west to east, and initially that's exactly what
Speaker 1: it did. But the world of nineteen ninety one is
Speaker 1: definitely not the world of twenty twenty. European countries have
Speaker 1: very different energy priorities than they did back then, developing
Speaker 1: fossil fuel resources in form or Soviet republics, and yet
Speaker 1: the Energy Charter Treaty hasn't really changed since then. The
Speaker 1: problem that's being highlighted now in some quarters, by some
Speaker 1: lawmakers in the European Parliament, for example, and by some
Speaker 1: environmental groups is that the treaty can be used to
Speaker 1: protect fossil fuel investments. And obviously we're in a situation
Speaker 1: now where in the European Union, in particular, there's a
Speaker 1: move to very rapidly move away from fossil fuel infrastructure
Speaker 1: and fossil fuel energy supply towards renewables, and the treaty
Speaker 1: is being seen potentially as an obstacle to that, and
Speaker 1: some of the arbitration cases that have arisen give weights
Speaker 1: to that argument. There have been cases of fossil fuel
Speaker 1: companies essentially trying to stop governments from phasing out fossil fuels.
Speaker 1: So that's an outcome that the original signatories of the
Speaker 1: treaty probably couldn't foreseen when they signed it in nineteen
Speaker 1: ninety one. And we're going to get into what might
Speaker 1: be done about this in a minute, but first we're
Speaker 1: going to take a quick break. Don't go anywhere. So
Speaker 1: just to reset the stage here, we've got a treaty
Speaker 1: from the early nineteen nineties that was designed to prevent
Speaker 1: former Soviet republics from interfering in energy projects funded by
Speaker 1: foreign money. And this treaty is still on the books,
Speaker 1: but now it's being used in a very different way.
Speaker 1: And Stephen says, to make matters even more confusing, there's
Speaker 1: no provision in the treaty that says disputes have to
Speaker 1: be adjudicated in public. So that means that if an
Speaker 1: energy company sues a country for violating the treaty, we
Speaker 1: may not actually know about it. There's no obligation in
Speaker 1: the treaty for or the parties in a dispute to
Speaker 1: make their dispute public, and there are no reporting obligations. Particularly,
Speaker 1: and obviously some of the countries that the Treaty covers
Speaker 1: are not known for transparency or openness, so there could
Speaker 1: be many cases going on in those countries that nobody
Speaker 1: knows about. Maybe to give one example, there's a German
Speaker 1: company called Uniper which is reported i should say reportedly
Speaker 1: suing the Dutch government because the Dutch government has taken
Speaker 1: a decision to phase out coal from its power generation mix.
Speaker 1: Uniper is a German company which operates a coal fired
Speaker 1: power plant in the Netherlands and is reportedly suing the
Speaker 1: Dutch government over this. I think it's important to point
Speaker 1: out the geographical irony here. The treaty was again written
Speaker 1: to protect Western energy companies from the whims of eastern governments,
Speaker 1: but now we have a German company suing the Dutch government,
Speaker 1: so that lawsuit now is flowing from east to west.
Speaker 1: And there are many cases like this. To give another example,
Speaker 1: the Swedish company Vatenphile is suing the German government over
Speaker 1: Germany's nuclear closed down because Germany has taken the decision
Speaker 1: to close its nuclear plants by twenty twenty two. Vattenfahl
Speaker 1: is seeking some five billion euros in compensation. So what's
Speaker 1: the solution here? Environmental and climate change activists hold a
Speaker 1: lot of sway in the EU well they persuade lawmakers
Speaker 1: to take the Energy Charter Treaty and rip it up.
Speaker 1: Steven says, no, I think there's no chance of it
Speaker 1: being ripped up. I think that's highly unlikely. But certainly
Speaker 1: the European Union wants a revision. However, any revision would
Speaker 1: have to be agreed animously by the parties to the treaty.
Speaker 1: It's probably worth pointing out that the parties to the
Speaker 1: treaty are the European Union and the countries of the
Speaker 1: European Union. Most other European countries, the countries of Central
Speaker 1: Asia such as Kyrgyzstan, Tajikistan, Uzbekistan, Mongolia. Also Japan and
Speaker 1: Australia are parties. So it's quite a diversity of countries
Speaker 1: with different interests in terms of energy. For example, Australia
Speaker 1: is a big coal exporter. Getting all of those countries
Speaker 1: into the same room would be a major undertaking, let
Speaker 1: alone getting them to agree to shred a thirty year
Speaker 1: old treaty. But Stephen also says even the climate hawks
Speaker 1: in Europe may not want to see this treaty go
Speaker 1: by the wayside. He says the treaty also provides the
Speaker 1: renewable energy sector with some surprising benefits. The European Union
Speaker 1: is also taking the view that the treaty doesn't need
Speaker 1: to be trashed because it also protects renewable energy investment.
Speaker 1: And in fact, the Charter Secretariat pointed out to me
Speaker 1: that about sixty percent of the cases brought under or
Speaker 1: the publicly known cases listed cases brought under the treaty
Speaker 1: actually concerned renewable energy. There are a whole host of
Speaker 1: cases relating to Spain because a few years ago Spain
Speaker 1: introduced a guaranteed price for energy from renewable sources, encouraging
Speaker 1: a lot of investment into renewables, and then it changed
Speaker 1: the price dramatically lowering the price, taking away the incentive
Speaker 1: for investments. So a whole host of cases were brought
Speaker 1: or have been brought are still ongoing. So basically the
Speaker 1: gold now for many environmentalists in Europe is not to
Speaker 1: get rid of the Energy Charter Treaty, but just to
Speaker 1: make it a little bit smaller. It's not necessarily the
Speaker 1: case that the view is that the treaty should be scrapped,
Speaker 1: that it should be somehow ring fenced so that fossil
Speaker 1: fuel investment is no longer protected. But this is seen
Speaker 1: as a very very difficult thing to achieve because of
Speaker 1: the different interests of the parties involved, And we'll actually
Speaker 1: find out exactly how difficult this will be next week,
Speaker 1: when negotiations over the future of this treaty are scheduled
Speaker 1: to formally kick off. Well that's it for today's episode
Speaker 1: of Parts per Billion. If you want more environmental news,
Speaker 1: check us out on Twitter. We use a pretty easy
Speaker 1: to remember handle. It's at environment. Just that at Environment,
Speaker 1: I'm at David B. Schultz if you want to tell
Speaker 1: me your deepest, darkest secrets. Today's episode of Parts per
Speaker 1: Billion was produced by myself with Josh Block. Special assistance
Speaker 1: on this episode came from Anna Yukonanov. Parts per Billion
Speaker 1: was created by Jessica Coombs and Rachel Daegel. The music
Speaker 1: for today's episode is a Message by Jazarre and Smoking
Speaker 1: Monkey by Tom Hillock and Nicholas Boskovic. You were used
Speaker 1: under a Creative Commons license. Thank you for listening everyone,
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