Germany pulls out of fossil fuel treaty

Germany on Friday joined France and the Netherlands in pulling out of a 1994 energy treaty which critics say protects investments in fossil fuels.

“We are consistently aligning our trade policy with climate protection and are withdrawing accordingly from the Energy Charter Treaty,” said Franziska Brantner, parliamentary state secretary at the Economy Ministry.

“This is also an important signal to the UN Climate Change Conference,” she added.

France and the Netherlands have withdrawn from the treaty in recent weeks as they deem it to be incompatible with the Paris climate accord to combat global warming.

The Energy Charter Treaty started out as a way to protect energy investment, especially in Central Asia and eastern Europe, in volatile ex-Soviet countries.

A key element of the treaty was allowing energy companies to sue governments over energy policy changes that could hurt their investments — exposing states to multi-billion-dollar compensation claims.

But as Europe transitions towards a carbon-neutral future, that treaty has become something of an albatross.

In June, the European Union struck a compromise deal — to come into force next month if no signatories object — to revise the treaty to limit legal actions where they jeopardise climate goals.

But climate groups have criticised loopholes left in the update and say the treaty continues to put efforts to curb global warming at risk.