This blog post is based on the findings of a research article that will be published in the European Law Review in 2025. The article examines the friction between the right to property and the low-carbon energy transition in Europe and in EU law. It shows how the urgency of the low-carbon transition pushes for narrower scope and interpretation of the right to property through legal instruments that are adopted to pursue decarbonisation.

The right to property and the energy sector can conflict with one another

It is widely accepted that climate change requires societies to decarbonise radically and swiftly. This is an extraordinary challenge for legal systems. Law can be used to facilitate the transition process, but it also creates preconditions and restrictions on how the transition is pursued.

The right to property is an illustrative example of this. It is a fundamental right protected by not just Finnish constitutional law, but also EU law and international law. It protects everyone’s property and requires that no one should be deprived of their possessions. As with most fundamental rights, there are exceptions to the level of protection. Nevertheless, the conflicts in the energy sector are clear.

These conflicts that emerge in the nexus of the right to property and the energy transition are diverse. The energy sector is fundamentally dependent on physical infrastructure, such as power plants or electricity networks. They require large investments often years or even decades before any profits can be recovered. Once energy facilities are up and running, they must be in operation for decades to make a profit, which locks in the selected technologies for decades to come. Phasing out carbon-intensive energy activities, such as coal-based power production, is therefore slow and costly.

Legislative processes on the EU level do not recognize the conflict

There are numerous examples of friction and conflict between property and the energy transition. In 2021 for example, the European Commission proposed a new, more ambitious directive on the energy performance of buildings that would have required owners of all residential buildings to improve the energy efficiency of their properties by a certain deadline. This proposal would have required the owner of a residential building to invest in the property without those investments necessarily increasing property value. This could have amounted to the loss of property value.

It is clear that to meet the global climate commitments requires not only that all new buildings are constructed with higher energy efficiency standards but also that existing buildings are renovated. However, the way this is done invites difficult questions of property, which are not adequately addressed or acknowledged in the European Union.

For example, the fundamental rights assessment that was integrated into the proposed directive on the energy performance of buildings was extremely shallow. The proposal merely stated that it ‘is designed in respect of the right to property laid down in Article 17 of the Charter’. The proposal did not identify or acknowledge any conflicts with or restrictions on fundamental rights. It also did not mention any potential challenges or adverse effects of the proposal in general. This is remarkable in light of the potential effects of the renovation obligations and the fact that challenges to the right to property were already flagged by stakeholders in the process leading up to the original proposal.

Ways forward

The irrefutable urgency of the low-carbon energy transition pushes for a narrower scope and interpretation of the right to property through legal instruments that are adopted to pursue decarbonisation. However, the right to property can hinder or water down the legislative developments that are needed to decarbonise the energy sector.

Research demonstrates that a reinterpretation and clarification of the scope of property rights in the energy transition is inevitable to achieve the level of ambition necessitated by the climate urgency. This does not have to take place solely in the courts. In addition, the legislative design and the process leading up to the adoption of legislation can be a powerful tool to redefine how the friction between the right to property and the urgency of the decarbonisation process is balanced in decarbonizing societies. Furthermore, the EU should be more explicit about acknowledging the friction between the EU’s climate action and fundamental rights to ensure the legitimacy of the EU’s climate action and the resilience of member states’ constitutional traditions.