The signatories of this declaration gather investors in the energy sector, who share the conviction that the rule of law principle underpinning investor protection is one of the European Union’s key advantages in the global competition for quality investments. All too often, this principle has failed investors in recent years.
While the industry acknowledges the need to adjust regulatory frameworks over time to respond to declining technology costs and market developments, retroactive changes are a misguided answer and erode investor confidence in the EU energy infrastructure sector where costs are sunk from the moment of the investment and there is very limited ability to improve profitability thereafter. Accordingly, investors in the space have no choice but to expect long-term regulatory stability for renewable energy plants. Thus any regulatory change should be concerted, non-retroactive, non-discriminatory, and avoid any legal gaps that would undermine investor certainty.
The renewable energy sector has provided many examples of sharp policy reversals since 2011. These range from retroactive tariff cuts for existing investments in Spain, Romania, the Czech Republic, Greece, and Italy, to abrupt policy reversals and rapid withdrawal of support to projects under construction or development in Finland and Poland. The EU’s lack of action in these cases has led investors to bring legal claims in national courts, and increasingly in international arbitration under the Energy Charter Treaty (ECT) which was created and spearheaded by the EU in the 1990s. 50 investor – state disputes have been recorded in the last three years under the Energy Charter Treaty (ECT), with Spain alone facing more than 25 lawsuits.
