2 months ago
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Twelve months after the UK/Ireland Nuclear Free Local Authorities urged government ministers to pull out of the discredited Energy Charter Treaty, Energy Minister Graham Stuart has finally announced that the UK will do so.
The NFLAs wrote to then Energy Secretary of State Grant Shapps on 13 February 2023 urging him to ‘finally shake itself free of the shackles of the ECT’. The Energy Charter Treaty was originally conceived to support fossil fuel investment, and through its provisions, fossil fuel companies can, and do, sue any signatory state seeking to curtail their activities to meet their international obligations to tackle climate change under the Paris Agreement. Such legal actions have netted in excess of $100 billion for fossil fuel companies, which are already making obscene amounts of profit in a market of sky-high energy prices, and the threat of punitive damages has deterred some nations from taking action.
In February 2023, NFLA Chair Councillor Lawrence O’Neill said: “The Energy Charter Treaty represents a financial headache and a legal hindrance to the UK moving towards becoming a net zero state. This Treaty gives carte blanche to the producers of dirty energy to get their hands on yet more public money. The fossil fuel industry already receives massive subsidies at the expense of taxpayers: it is patently wrong that they are able to penalise taxpayers more through applying for damages at Energy Charter Treaty tribunals. The NFLAs believe that it’s well past time the UK got out!”
In April, we received a reply from newly appointed Nuclear Minister Andrew Bowie which ended with a jaunty Yours Aye, but in summary said Nay to pulling out of the ECT. Minister Bowie wrote that the UK was a ‘strong advocate for modernisation’ of the treaty and, despite a lengthy postponement in convening a review conference, the government was sticking at it.
To our relief, after a further twelve months delay, government ministers have finally conceded that it is indeed ‘well past time the UK got out!’ with an announcement made by the Department of Energy Security and Net Zero on 22 February:
https://www.gov.uk/government/news/uk-departs-energy-charter-treaty
The withdrawal process will still take approximately 12 months to complete. Germany, the Netherlands, Poland, Slovenia, and Spain have already left the ECT.
In the announcement, Minister of State Graham Stuart said: “The Energy Charter Treaty is outdated…Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalise us for our world-leading efforts to deliver net zero”.
Exactly as we said, but at least it is better later than never. And to the Energy Charter Treaty, we say Good Riddance!
Ends://… For more information, please contact the NFLA Secretary Richard Outram by email to richard.outram@manchester.gov.uk
Notes for Editors
The original letter sent to Secretary of State Grant Shapps on 13 February 2023 read:
Monday 13 February 2023
The Rt. Hon. Grant Shapps MP,
Secretary of State for Energy Security and Net Zero
C/o cnrdcorrespondence@beis.gov.uk
Dear Secretary of State,
The UK / Ireland Nuclear Free Local Authorities wish to lend their support to the 110 leading academics in the fields of economics, environmental protection, law and politics who last week called upon the UK Government to withdraw from the Energy Charter Treaty.
This legal instrument clearly acts as a mechanism by which fossil fuel operators can recover substantial monetary damages from member governments who are responsibly implementing their obligations under the Paris Agreement to take active measures to reduce carbon omissions as part of the drive to mitigate climate change.
It is a means for producers of dirty energy to sue the ‘pants off’ states parties for to date, oil, gas and coal companies have been awarded $100 billion through Energy Charter Treaty tribunals.
We are now in the middle of an energy ‘crisis’, a crisis in which these same companies impose wallet-busting charges upon financially stretched customers whilst shamefully reporting obscene levels of profits from business activities that are destroying our world. What possible justification can there be to continue to offer them a route to sequester any more public money?
Secretary of State, the NFLA believes that, for as long as we remain a states’ party, the European Charter Treaty represents both a financial headache and a legal hindrance to the successful discharge of your duties in the pursuit of Net Zero as the leading UK Minister.
Germany, the Netherlands, Poland, Slovenia and Spain have all recently withdrawn from the Energy Charter Treaty.
Secretary of State, is it then not time for the UK Government, which exited the European Union stating that it wished to be free of the political interference of Brussels, to finally shake itself free of the shackles of the ECT?
We would welcome your comments in response to this letter. Please reply by email to NFLA Secretary richard.outram@manchester.gov.uk
Thank you. Yours sincerely,
Councillor Lawrence O’Neill,
Chair, UK / Ireland NFLA Steering Committee
The letter received from Andrew Bowie on 29 March 2023
The UK will leave the Energy Charter Treaty (ECT) after the failure of efforts to align it with net zero, the government has announced today (Thursday 22 February).
Signed in 1994, the Energy Charter Treaty was designed to promote international investment in the energy sector, historically providing protections for investors in fossil fuels. Proposals to modernise the ECT better to support cleaner technologies have been subject to months of talks between European countries, resulting in a stalemate.
Energy Security and Net Zero Minister Graham Stuart announced in September 2023 that the UK would be reviewing its membership of the ECT if plans to update it were not adopted.
Today, the UK joins 9 EU member states, including France, Spain and the Netherlands, in withdrawing from the treaty. The decision will support the UK’s transition to net zero and strengthen its energy security.
Minister of State for Energy Security and Net Zero, Graham Stuart, said:
The Energy Charter Treaty is outdated and in urgent need of reform but talks have stalled and sensible renewal looks increasingly unlikely.
Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalise us for our world-leading efforts to deliver net zero.
With £30 billion invested in the energy sector just since September, we continue to lead the world in cutting emissions, attracting international investment and providing the strongest legal protections for those who invest here.
Discussions around reform of the Energy Charter Treaty have gone on for several years. After 2 years of negotiations, in 2022, the UK helped broker a landmark agreement to modernise the ECT. This would have maintained its current benefits, while supporting the transition to cleaner energy by extending protections to renewables like carbon capture, utilisation, and storage (CCUS) and hydrogen.
However, this led to an impasse and the modernised ECT, which should have been adopted in November 2022, was rejected by 9 EU member states. This included France, Germany, Spain and the Netherlands – all of whom decided to withdraw. The European Parliament elections in 2024 mean modernisation could now be delayed indefinitely.
After considering the views of businesses, industry and civil society, ministers will now instigate the UK’s withdrawal, which will take effect after one year, removing protections for new investments after this period.
Shaun Spiers, executive director, Green Alliance said:
Civil society organisations and parliamentarians from all political parties have been clear that the Energy Charter Treaty is an out-of-date agreement and undermines our efforts to tackle climate change. We welcome the UK’s decision to leave, which will strengthen global efforts to roll out cheap, clean renewable energy.
Meanwhile, the UK remains an attractive destination for investors across all energy technologies, with government continuing to support investment in the North Sea oil and gas as part of the transition to net zero, alongside the drive towards renewables, such as wind power and hydrogen. The government is also committed to ensuring fairness for and support for UK investors operating abroad.
