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22 Jun 2022

Dylan Underhill, The Third Pole

Comment: an obscure treaty could hinder Central Asia's decarbonisation

'An obscure treaty could hinder Central Asia’s decarbonisation', 22 June 2022

"The Energy Charter Treaty (ECT) is a little known but controversial trade agreement which potentially stands as an obstacle against the decarbonisation of Central Asia’s energy systems.

Signed in the 1990s, the Energy Charter Treaty aimed to create a more attractive investment environment for European energy companies by protecting investors against the prospect of expropriation and nationalisation, particularly in former Soviet states. Membership of the Energy Charter Treaty has since broadened and it now binds more than 50 countries, including almost all of Europe and the Central Asian countries of Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, as well as Mongolia and Japan...

...As countries across Central Asia start to increase climate ambition in line with their commitments under the Paris Agreement, there is a growing risk that the kind of cases seen in Europe are more and more likely to emerge in this part of the world, along with an accompanying ‘regulatory chill’...

... Litigation under the Energy Charter Treaty has already been seen in Central Asia. According to a 2018 report from the Corporate Europe Observatory (CEO) and the Transnational Institute (TNI), at least five cases had been brought against the Kazakhstan government, with USD 520 million granted in awards. The report cites two cases in Mongolia, with awards of USD 80 million granted, and one each in Kyrgyzstan, Tajikistan and Uzbekistan.

A recent study calculated that in Kazakhstan alone, the cancellation of oil and gas projects under development could cost the government USD 6-18 billion in ISDS claims..."