OPINION: The road ahead for governments’ energy transition policies must be clear of obstacles if Western economies are to be weaned off fossil fuels.

Governments should be in a position to take bold action to speed up the transition, be it with renewables, low-carbon energy technologies or investment — and the necessary policies need to be formed without fear of repercussions.

Last week’s vote at the European Parliament, backing a European Union-wide exit from the controversial Energy Charter Treaty (ECT) is a step in the right direction.

As it is, the ECT represents a major stumbling block for Europe’s energy transition.

Under its provisions, the charter allows companies to pursue legal action in closed-doors arbitration courts against governments that threaten fossil fuel-related interests.

The terms are particularly pervasive and can affect anything from a government blocking an oil project to laws supporting renewables or other low-carbon resources.

The treaty was drawn up in the mid-1990s, in a different global context to today’s.

The aim was to protect investment in energy infrastructure amid the collapse of the Soviet Union, specifically safeguarding Western energy companies with assets in the Soviet bloc.

However, today’s European priorities, which have energy transition and security at their core, are in evident opposition to the ECT.

As long as the treaty remains in place, the threat of legal action could deter nations from legislating against fossil fuels, further slowing down the energy transition.

Developer Rockhopper was awarded over $100 million for having to abandon an early-stage project in Italy for which it had invested less than a third of that sum. The ruling is now being challenged by Italian authorities.

Members of the European Parliament did not mince their words and described the ECT as an “outdated” tool that can put the transition “in jeopardy”.

While the parliament has voted to drop the charter and the EU’s bureaucratic machine can be notoriously slow to introduce change, the need to clear the road ahead must prevail.

The EU must act fast to consign the ECT to history.

(This is an Upstream opinion article.)

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