Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I am very grateful for the opportunity to address the House on the Energy Charter Treaty. I want to briefly address a comment from Deputy Whitmore who asked why our emissions are still going up. She will be glad to hear that they are falling. The authority on our level of greenhouse gas emissions is the EPA. It reported that our emissions fell 1.9% last year and that they have fallen 4.6% since pre-Covid times. Our emissions are falling and they are going to continue to fall this year as well.

Deputy Whitmore also asked why we have not put a single solar panel on a single school. Approximately 250 schools have solar panels on them now. They have been put on under a number of different schemes, including the pathfinder programme. I expect the Department of Education to announce the start of a much larger scheme in the next ten days.

As the Minister, Deputy Eamon Ryan, has already stated, the practical consequence of the 2022 vote is that the modernisation of the charter was neither adopted nor rejected by the energy charter conference. In the absence of an EU and Euratom endorsement of the modernisation of the ECT, the unmodernised ECT, which is not in line with the EU's policy on investment protection or the European Green Deal, continues to apply.

Consequently, in agreement with the member states, the Commission requested the removal of the modernisation of the ECT from the agenda of the energy charter conference. Discussions were subsequently held in the working party on energy, with the participation of delegates from the Trade Policy Committee, Experts, Services and Investment, on 7 February 2023 and 14 March 2023, on the basis of a non-paper from the European Commission, with a view to identifying common ground on the way forward.

The discussions showed that there is limited but clearly insufficient support for the option 1 in the Commission non-paper which proposed a co-ordinated withdrawal by the EU and its member states. This option was considered unacceptable by a number of member states that are concerned that this would trigger the sunset clause, thus conserving an unreformed treaty for another 20 years for existing investments and amid concerns expressed about the legal effectiveness of the proposal for an interpretation of the EU to end its application to intra-EU investments. The discussions showed that a number of member states wish to remain parties to a modernised ECT and that several member states that have announced their withdrawal could still support the modernisation. While it was broadly held that member states should be allowed to remain parties to a modernised ECT, several member states considered also that this would not require prior authorisation pursuant to Article 2 (1) of the TFEU.

A proposal by the chair of the ECT to have a decision on the modernisation package taken by way of a written procedure did not go through following strong objections raised by the EU in the management committee in April 2023. To date, the EU has thus intervened twice to stop the adoption of the modernisation package in line with the absence of an EU position on the modernisation. On 7 July 2023 the Commission published two proposals for Council Decisions that the European Union and the European Atomic Energy Agency both withdraw from the Energy Charter Treaty. The proposal advises that remaining a contracting party to the current, unmodernised ECT is not an option for the EU or its member states, as the current, unmodernised treaty is not in line with the EU's investment policy and law and with the EU's energy and climate goals.

I am now going to refer to some rulings by Court of Justice of the European Union, CJEU. Recent rulings have determined that the arbitration system under the Energy Charter Treaty cannot be used to claim compensation in intra-EU disputes. As Ireland does not have any bilateral investment treaties, the ECT is the only instance in which Ireland could be subject to intra-EU arbitration.

The court confirmed that despite the multilateral character of the Energy Charter Treaty, and the fact that it also governs relationships with non-EU countries, "the preservation of the autonomy and specific character of EU law precludes the Energy Charter Treaty from being able to impose the same obligations on the Member States among themselves".

Most recently, on 2 September 2021, the CJEU ruled that the investor-state dispute settlement mechanism provided for under Article 26 of the Energy Charter Treaty is not applicable to intra-EU disputes. I refer to case C-741/19, Republic of Moldova v. Komstroy.

This ruling is consistent with the Commission's interpretation of the 2018 Achmea judgment, C-284/16 - Slovak Republic v. Achmea. In the Achmea judgment, the CJEU effectively found that all investor-state arbitration clauses in intra-EU bilateral investment treaties, BITs, are incompatible, and that any arbitration tribunal established on the basis of such clauses lacks jurisdiction due to the absence of a valid arbitration agreement. The Commission's interpretation of the Achmea judgment extends to include the ISDS provisions of the ECT.

Member states have been calling on the Commission to begin work on implementation of the Komstroy judgment. However, the Commission was waiting for the opinion of the court in Opinion 1/20, Belgium's request for the court's opinion on the intra-EU applicability of the ECT and whether lack of intra-EU application should be enshrined in the ECT itself. On 16 June 2022, the court determined that Belgium's request was inadmissible on account of its premature nature.

I will now refer to the Irish position. The Minister, Deputy Eamon Ryan, publicly stated earlier this summer that the Energy Charter Treaty is not fit for purpose and that it needs to have fossil fuels removed. The ECT modernisation has not progressed adequately so far. Europe has, as a whole, signalled a full exit now that modernisation was not possible. The removal of fossil fuels and the elimination or reduction of the sunset clause were key asks for Ireland as part of the modernisation process.

Ireland has signalled its intent to leave, but wants to do so in a co-ordinated way with European colleagues. Ireland has expressed strong views within the EU on the compatibility of the Paris climate agreement and the Energy Charter Treaty's dispute resolution mechanism.

We continue to express our strong views on these issues within the EU and we believe our views carry more weight in international negotiations by advocating them as part of the EU.

The European Commission has recommended that all member states leave the Energy Charter Treaty as the path to modernisation has been blocked. The removal of fossil fuels and the elimination or reduction of the sunset clause protecting fossil fuel investments were key requirements for Ireland as part of the modernisation process.

On 7 July 2023, the Commission published two proposals for Council decisions to have the EU and the European Atomic Energy Agency both withdraw from the energy charter treaty. The Commission is also withdrawing its previous proposal to ratify a modernised treaty, as it is impossible to achieve a qualified majority at the Council. The legal proposals will now be submitted to the Council of the EU, where a qualified majority vote is necessary for their approval. Ireland has signalled its intent to leave but wants to do so in a co-ordinated way with the other member states. We continue to express our views on these issues within the EU and believe our views carry more weight in international negotiations by advocating them as part of the EU.

The Department is engaging, as necessary, with the Office of the Attorney General on legal issues relating to the Energy Charter Treaty and the withdrawal process. While the Department of the Environment, Climate and Communications does hold the policy, this is an international treaty and any major changes to it, as with any other treaty, will of course involve a full Government decision. Thus, it is not solely at the discretion of the Department.

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