Germany is exiting the Energy Charter Treaty, Economy Minister Robert Habeck announced on Wednesday.
"The Energy Charter Treaty has proven itself in the past to be an obstacle for change," Habeck said.
Germany's coalition government announced plans to leave the treaty on November 11. Italy, France, Poland, the Netherlands and Spain have also announced their withdrawal.
Why is Germany withdrawing from the treaty?
The treaty, which has more than 50 signatories, was designed to secure energy supplies. It has been criticized for hampering efforts to reduce the use of fossil fuels, as it creates grounds for compensation for the closure of plants.
Deputy leader of the parliamentary group of the Greens in the German Bundestag, Julia Verlinden, said that the treaty was "absurd."
"In times of climate crisis, it is absurd that companies can sue for lost profits from fossil investments and compensation for coal and nuclear phase-outs," she said.
Franziska Brantner, parliamentary state secretary at the Economy Ministry, said early in November that the decision was part of Berlin's commitment to "constantly aligning our trade policy with climate protection." Other EU states that have left the treaty say that it is incompatible with their commitments to the 2015 Paris accord.
Withdrawal to take 20 years
The agreement contains a clause which binds members to its provisions for 20 years in the event of a withdrawal, which Germany's economy minister called "bitter news."
Habeck said that the withdrawal means that Berlin will not participate in a process to reform the treaty. The EU has so far failed to get other members to agree to proposed amendments.
The European Parliament recently voted to ask the bloc's executive branch to coordinate a withdrawal of member states from the agreement.
sdi/jcg (Reuters, dpa)