Towards a New Energy Charter: Re-imagining International Investment Treaties for a Just and Sustainable Energy Transition

The EU’s withdrawal from the Energy Charter Treaty (ECT) in 2024 marked the end of a European energy project that was first embarked upon in the early 1990s. Despite efforts to modernise the ECT, the treaty is seen as a barrier to climate action and no longer fit for purpose.

This thesis looks at what (if any) lessons can be learnt from the failure of the renegotiation process and how these lessons can inform attempts to develop a new, more sustainable international energy charter, that is in line with the goals of the Paris Agreement 2015.

The thesis adopts a mixed-method approach, integrating historical analysis, doctrinal legal research, critical socio-legal theory, and empirical case studies to argue that there is a misunderstanding about the original objectives of the European Energy Charter which has fed into judicial interpretations of the ECT. It concludes that there is still a strong case for a multilateral treaty with investment protection provisions that applies specifically to the energy sector.

However, in order to adequately address the challenges ahead, the shift towards renewable energy requires a transformation of the energy sector towards a decentralised mode of generation and distribution. This will have far reaching economic, social and environmental consequences.

The thesis explores how this process can be adequately embedded in an international energy governance framework that can benefit both foreign investors as well as local communities by drawing on thinkers such as Habermas, Kuhn and Latour to deconstruct the current dual-actor paradigm of investment law and to achieve a paradigm shift towards a multi-actor approach in which local communities can take an active part.

By applying Ostrom’s theories on polycentric governance of common resources to three local energy projects in Germany the thesis highlights the potential links between foreign direct investment and local energy communities.

The thesis concludes by recommending a redesign of the corporate investment vehicle to facilitate this multi-actor governance and ensure that investment protection mechanisms, such as Investor-State Dispute Settlement (ISDS), are redesigned to support, rather than hinder, climate action and local value creation.