The Department for Energy Security and Net Zero (DESNZ) has confirmed the UK is reviewing its membership of the Energy Charter Treaty (ECT).
According to DESNZ, the review was, in part, spurred by several EU member states leaving the treaty following proposed modernised terms of the ECT which they believed prolonged foreign investment in fossil fuels.
These proposals were put forward in June 2022 and saw the UK play a “leading role” in negotiating, said DESNZ
The UK government now fears a stalemate over whether to proceed with the new terms and so will review its membership should member states fail to reach an agreement on the new terms by November 2023.
DESNZ stated it backed the modernised terms due to its “stronger focus on promoting clean, affordable energy, such as carbon capture, utilisation and storage as well as hydrogen and other renewables”
This announcement follows 110 academics penning a letter to then energy security secretary Grant Shapps at the beginning of this year, calling for the UK to join Germany, France and the Netherlands in withdrawing from the treaty.
The letter also criticised the modernisation proposals for the treaty which DESNZ is advocating for, warning that they extend the protection for foreign investment in all fossil fuels and gas until 2033 and 2945 respectively under the ECT’s investor-to-state dispute settlement mechanism.
According to the letter these modernised proposals could mean the treaty is used to challenge the phase out of fossil fuels.
“Rather than being stuck indefinitely with an outdated treaty, the UK wants to see an agreement on a modernised treaty as quickly as possible,” said minister of state for DESNZ, Graham Stuart.
“In its current form, the Energy Charter Treaty will not support those countries looking to make the transition to cleaner, cheaper energy sources such as renewables – and could even penalise our country for being at the forefront of those efforts.
“Governments around the world are looking to boost their sources of home-grown energy, including with new clean technologies – and that is why the Energy Charter Treaty must be modernised. It is also why we are reviewing our membership, and will consider withdrawal, if that vital modernisation is not agreed.
“The UK will continue to carefully consider the views of stakeholders in business, civil society and Parliament to inform the UK’s approach. The UK’s strong rule of law means it remains an attractive destination for investment in the energy sector regardless of its Energy Charter Treaty membership.”
