UK urged to quit treaty that ‘puts fossil fuel interests before climate action’

Countries will decide whether to adopt a new modernised version of the Energy Charter Treaty at a conference on Tuesday.

A number of countries have faced costly legal challenges over reducing their reliance on fossil fuels (Jane Barlow/PA) (PA Archive)

The UK should follow other European countries in pulling out of a treaty that lets fossil fuel giants sue governments over their climate policies, campaigners have urged.

The controversial Energy Charter Treaty was established in the 1990s when the world energy system was heavily dominated by fossil fuels and enables foreign companies to challenge energy policies that threaten their investments, using secretive arbitration courts.

A number of countries have faced costly legal challenges over reducing their reliance on fossil fuels and boosting renewables, including the Netherlands, which has faced a 1.4 billion US dollar (£1.18 billion) challenge over its phase-out of coal.

Parties to the treaty, including the UK, will decide at a conference on Tuesday whether to adopt a modernised version of the agreement, which has a stronger climate focus and clarifies that states can regulate to reach emissions reductions targets.

But a number of European countries, including the Netherlands, France, Germany and Poland, have said they are quitting the treaty and campaigners want the UK to follow suit.

Environmental legal charity ClientEarth’s lawyer Amandine Van Den Berghe said:  “It’s only a matter of time before the controversial Energy Charter Treaty is abandoned in Europe.

If it is to be a real climate leader, the UK needs to stand with its climate allies in Europe and withdraw from this treaty

Amandine Van Den Berghe, ClientEarth

“Germany, France, Spain, the Netherlands, Slovenia and Poland have announced their withdrawal from the treaty and the European Union’s push to reform it is currently failing abysmally.

“This proves that, on the mainland at least, political will is finally turning against one of the biggest obstructions to the energy transition that exists today.

“The UK really shouldn’t be left behind this movement,” she urged.

“If it is to be a real climate leader, the UK needs to stand with its climate allies in Europe and withdraw from this treaty that puts fossil fuel interests before climate action.”

She warned staying in the treaty would make the energy transition harder, slower and more expensive, as climate action the UK takes that impacts a fossil fuel company’s investments could be met with costly legal challenges.

The UK Government has said it has tabled terms in the modernised version of the treaty that specify that new investments in all fossil fuels would lose protection once it came into force, and protection for existing investments in fossil fuels would end 10 years later.

The Government is closely monitoring all developments in the Energy Charter Treaty and taking these into account in its own interaction with the modernisation process

Government spokesperson

Officials said the UK will continue to protect investments in “efficient abated gas power” which has the ability to capture and store carbon emissions.

But otherwise, overseas investors in new North Sea oil and gas will not be able to make legal claims against the UK under the treaty, the Government says, although it has continued to support new investment in fossil fuel extraction with the announcement of up to 100 new licences in recent months.

Coal will lose its protections from October 1, 2024, the date when its role in energy generation in the UK will cease.

A Government spokesperson said: “Contracting parties to the Energy Charter Treaty will decide whether to adopt the modernised Energy Charter Treaty at the Energy Charter Conference on November 22.

“The Government is closely monitoring all developments in the Energy Charter Treaty and taking these into account in its own interaction with the modernisation process.”