German cabinet approves exit from Energy Charter Treaty

BERLIN (Reuters) -Economy Minister Robert Habeck on Wednesday announced Germany’s withdrawal from the Energy Charter Treaty, as growing dissatisfaction with the agreement in Europe casts doubt over its future.

“The Energy Charter Treaty has proven itself in the past to be an obstacle for change,” Habeck said following a cabinet meeting during which ministers approved the move.

The parties that make up Germany’s coalition government signalled the move earlier this month, which follows in the footsteps of Italy, France, the Netherlands and Spain, among others.

The treaty, which has more than 50 signatories including the European Union, was designed to secure energy supplies and grants protection to companies investing in the energy industry.

But in recent years it has been criticised for slowing the world’s exit from fossil fuels, in part by creating grounds for fossil fuel users to claim compensation when they are forced to shut plants.

Germany has committed to winding down its coal and gas industries, even as it scrambles for alternatives to throttled Russian energy supplies, in a bid to become carbon-neutral by 2045.

The country’s withdrawal will take time, given the treaty contains a sunset clause binding departing members to its provisions for 20 years.

Habeck called this “bitter”, but said it would not stop Berlin from making good on its plan to leave.

He also said this meant Germany would no longer participate in a reform process, in which the European Union has so far failed to get member states to agree on proposed amendments to the treaty.

With no consensus in sight, the European Parliament recently voted to ask the European Commission to coordinate a withdrawal of all EU member states from the treaty.

(Reporting by Rachel MoreEditing by Paul Carrel and Mark Potter)