Published 25 January 2019
As the conversion to low carbon technologies continues to accelerate, it is timely to ask whether the Energy Charter Treaty (ECT) - the world's foremost treaty for the encouragement and protection of investments in the energy sector - is equipped to embrace energy transition. Central to that enquiry is the question of the scope of coverage the ECT is able to extend to emergent and as yet unforeseen technologies that may come to play an important role in the energy mix. The answer will turn, at least in part, on the breadth and flexibility of the definition of "Investment" in the ECT. The purpose of this article is to examine that multi-layered concept, in particular the final paragraph of Article 1(6) of the ECT which qualifies that an "Investment" must be "associated with an Economic Activity in the Energy Sector", by reference to two rapidly expanding technologies - liquefied natural gas (LNG) and hydrogen. In doing so, it will show that the notion of an Economic Activity in the Energy Sector is precisely the facet of the ECT definition, which may fail to deliver a clear answer as to whether such growth technologies will be considered covered investments for the purposes of the ECT, and thus attract the broad substantive protections it offers. The article concludes by making some provisional suggestions for how the provisions circumscribing the concept of investment may be amended to ensure that the ECT is ready to embrace energy transition.
This paper will be part of the TDM Special Issue on the "Modernisation of the Energy Charter Treaty (ECT)" - More information here https://www.transnational-dispute-management.com/news.asp?key=1713