South Africa

UK walks away from 1994 energy treaty

energy crisis

In a move to bolster its commitment to achieving net zero emissions, the United Kingdom has officially announced its withdrawal from the Energy Charter Treaty (ECT) after efforts to update it to align with net zero objectives failed.

The decision was revealed by Energy Security and Net Zero Minister Graham Stuart on Thursday.

As the world grapples the effects of climate change and a need to balance with increasing energy demands, the UK has walked out on the ECT citing it as outdated and a barrier to the country’s energy goals.

History of Energy Charter Treaty

The Energy Charter Treaty, established in 1994, was designed to facilitate international investment in the energy sector, predominantly favouring investors in fossil fuels.

However, proposals to modernise the treaty to accommodate cleaner energy technologies have encountered significant obstacles during months of negotiations among European countries, leading to an impasse.

Stuart had previously signalled the UK’s intention to review its membership of the ECT if efforts to reform it were not successful.

However, Thursday’s announcement sees the UK joining nine EU member states, including France, Spain, and the Netherlands in withdrawing from the treaty.

Energy Charter Treaty barrier to cleaner energy sources

Stuart said the ECT, in its current form, hinders rather than supports the UK’s transition to cleaner and more affordable energy sources. The decision to withdraw reflects the government’s commitment to fostering a conducive environment for investment in renewable energy while ensuring energy security.

“The Energy Charter Treaty is outdated and in urgent need of reform but talks have stalled and sensible renewal looks increasingly unlikely.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,” Stuart said in a statement.

The failure to reach a consensus on updating the ECT follows years of discussions, with a breakthrough achieved in 2022 when the UK played a pivotal role in brokering an agreement to modernise the treaty. However, opposition from key EU member states thwarted the adoption of the modernised ECT, prompting the UK’s decision to withdraw.

Industry hails Energy Charter Treaty departure

Green Alliance executive director Shaun Spiers welcomed the UK’s departure from the treaty, asserting that the ECT undermines global efforts to combat climate change.

Spiers emphasised the importance of transitioning to clean renewable energy sources to address the climate crisis effectively.

“We welcome the UK’s decision to leave, which will strengthen global efforts to roll out cheap, clean renewable energy,” he said.

Despite withdrawing from the ECT, the UK said it remained committed to attracting investment across various energy technologies, including renewables like wind power and hydrogen. The government also pledged support for UK investors operating abroad, ensuring fairness and sustainability in its energy policies.