UK Mulls Quitting Fossil Fuel Pact as Clean Energy Update Stuck

The United Kingdom is reviewing its membership in the Energy Charter with a view to pulling out due to an impasse in adopting a modernized version promoting clean energy.

The pending reform of the treaty, which took effect April 1998 and last had an update in 2015, was supposed to have been adopted November 22, 2022, according to information on the treaty's official website.

The new version would "exclude investment protection for fossil fuels" at the discretion of member governments "considering their individual energy security and climate goals", according to a summary on the website. The full text has yet to be made available, the site saying an editorial and legal review is pending.

The modernized charter would also ensure member parties' right to regulate for "the protection of the environment, including climate change mitigation and adaptation, protection of public health, safety or public morals", the official summary states.

"Moreover, the Contracting Parties shall not encourage international trade and investment in energy by lowering their respective environmental and labor protection laws and standards", it says.

"The Contracting Parties reaffirmed their commitment to clean energy transition, promotion of low-carbon technologies in energy trade and investment, and cooperation in implementing climate change-related policies, where appropriate", the summary says.

The UK government said in a recent statement it "is reviewing its membership of the Energy Charter Treaty if member states do not reach agreement on modernized terms by November 2023".

"The treaty has historically provided protections for investors in fossil fuels – the UK’s future membership will depend on whether proposals for the treaty’s modernization are adopted in November", said the statement on the government website.

Members began negotiations 2020 for reform in line with modern energy priorities and last year reached an agreement in principle.

"The modernized treaty has a stronger climate focus, clarifying that states can regulate to reach emissions reductions targets", the UK statement said. "It also includes new protections for green and low-carbon technologies, such as carbon capture and storage and hydrogen.

"The UK has specifically tabled terms which mean new investments in all types of fossil fuels would lose protection under the Energy Charter Treaty 9 months after adopting the modernized treaty".

But the adoption of the modernized charter has been stalled due to the pullout of several European Union countries, the statement said.

France, Germany and Poland have submitted notifications of withdrawal from the charter effective December 8, 21 and 29 this year respectively, according to the latest press release on the treaty's website. "The Secretariat is not aware of any other notification of withdrawal from the ECT [Energy Charter Treaty] being received by the Depositary", the news release said.

UK Energy Security and Net Zero Minister Graham Stuart said in the government's statement, "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 penalize 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 modernized. It is also why we are reviewing our membership, and will consider withdrawal, if that vital modernization is not agreed".

The government statement said the views of businesses, civil society and lawmakers would be taken into consideration in deciding the way forward about the UK's membership.

"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", the government assured.

The treaty has 53 signatories and contracting parties including the EU and the European Atomic Energy Community. Most members are European and Central Asian countries. Major oil economies in the Middle East have not signed up, though Yemen is a member. The treaty also excludes leading economies the USA and China, but Japan is a signatory.

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