The Energy Charter Treaty and EU-Growth Policies

The basic policy tool for increasing FDI is international investment agreements (IIAs), state-to-state treaties that protect FDI against host country policy measures. This note focuses on the IIA of most relevance from an EU growth perspective, the Energy Charter Treaty (ECT), which protects FDI in the energy sector. Since fossil energy use is a main source of CO2 emissions, the EU should be highly sensitive to any restrictions that the ECT might impose on EU energy policies. The ECT should be thoroughly revised to not become an obstacle to the EU ambition to transform the EU economy toward carbon-neutrality.