U.K. Withdraws from Energy Charter Treaty After Failure to Modernize

Oil rig in Cromarty, UK

(Credit: Unsplash)

by | Feb 26, 2024

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The United Kingdom has decided to withdraw from the Energy Charter Treaty, a 1994 agreement meant to facilitate and protect investment in fossil fuels.

After warning of its withdrawal in September 2023, the U.K. made the final decision after the signatories failed to adopt a modernized treaty that would account for more updated energy priorities and climate commitments. Despite two years of negotiations and an agreement to modernize, the treaty reportedly still lacks a clear route to making notable changes. The U.K. claims that the treaty does not align with its net-zero and energy-security commitments.

“The failure of the modernization process means the Treaty is no longer fit for purpose,” said Graham Stuart, minister for Energy Security and Net Zero, in a recent statement. “The Treaty means British taxpayers could bear unfair financial risk as the Government implements the necessary policies to secure the U.K.’s energy supplies and decarbonize.”

According to a report from The Guardian, the controversial treaty allows fossil fuel firms to sue governments over their climate policies. Specifically, the treaty’s investor-state dispute settlement provisions contain potential for conflicts of interest and abuses of power that may thwart climate progress and side with fossil fuel and mining industries.

Additional countries have also left the treaty, including Italy, France, Germany, Poland, Luxembourg, Spain, the Netherlands, Slovenia, Denmark, and Portugal.

U.K. Turns to Nuclear Investment for Domestic Energy Supply

At the beginning of this year, the U.K. released an outline for ambitious nuclear energy development, including plans to increase the energy source by four times in order to improve its domestic energy security and work towards net zero.

Since then, the U.K. has announced an agreement with Westinghouse and Community Nuclear Power to deploy small modular reactors, expected to begin commercial operation in 2030. The nation also recently announced a new partnership with the Canadian Nuclear Laboratories to develop technologies used for nuclear fusion energy.

Despite notable efforts to build up its clean energy portfolio, the country has also come under scrutiny for continued fossil fuel development. According to an AP report, the government recently approved an oil and gas project in its North Sea, arguing that such projects are needed to bolster domestic energy security and to control costs for consumers, although much of the oil and gas will be sold and shipped overseas. U.K. officials reportedly claim oil and gas will be needed on their path to net zero along with renewable energy investment.

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