Norway withdraws from an agreement that protects oil investments

The Energy Charter Treaty is a true child of the 1990s. This is an agreement that would secure international investment in the energy sector, mainly oil and gas. At most, 72 countries had signed the agreement. But a number of countries have recently withdrawn. The idea behind the charter was to incorporate the former Soviet republics into the European energy market. This was later extended to other parts of the world.

The EU is leading the way

The European Parliament this week agreed to the Commission’s proposal that the EU withdraw from the Charter. It was adopted with an overwhelming majority. The reason is that the EU believes the charter is in conflict with the Union’s climate policy and promotes investment in fossil energy.

A number of EU countries have withdrawn from the charter on their own. The decision applies to the EU as an institution.

Norway is now following suit, and is withdrawing from the charter, according to an exchange of letters between the Ministry of Energy and the Foreign Ministry, which Energy and Climate has obtained access to.

Promotes fossil energy

The Energy Charter has long been controversial. As the climate challenges came higher on the political agenda, the charter was seen as a set of regulations that secured the oil and gas industry.

Attempts to reform the charter have proved unsuccessful.

The charter enables energy investors to sue countries and claim damages before international arbitration courts, if political measures or laws have a negative effect on their profits. This also applies if the measures serve the host countries’ legitimate aim of protecting the environment and the climate.

Not ratified

It was in 1995 that Norway signed the Energy Charter Treaty, but it was never ratified. The reason was that the charter had rules for dispute resolution between countries which the Ministry of Foreign Affairs’ experts believed were in conflict with the Constitution. But Norway has always made a financial contribution to the operation of the secretariat. As the charter has not been ratified, it is also not necessary for Norway to withdraw its signature from the Storting. It is done with a letter.

The justification from the Ministry of Energy for withdrawing Norway from the charter is precisely that Norway has not ratified it. This means that the Storting has not incorporated the charter’s rules into Norwegian law. Norway will not ratify the charter either, states the Ministry of Energy. This, together with the fact that more and more countries are withdrawing, means that Norway believes that this is no longer a relevant forum. That is the reason given by the Ministry of Foreign Affairs for Norway’s withdrawal.

The article is co-published with Energy and climate.