Campaigners Applaud UK Exit From 'Climate-Wrecking' Energy Charter Treaty

The United Kingdom's decision to exit a 30-year-old fossil fuel-friendly treaty will "untie a straitjacket" on the country's ability to ensure a just transition toward renewable energy, said one campaign group on Thursday.

Officials announced that after two years of negotiations regarding a modernization of the 1994 Energy Charter Treaty (ECT)—which allows fossil fuel companies to sue governments over profits lost due to climate policies that reduce the use of coal, oil, and gas—the U.K. will leave the treaty due to a stalemate.

The U.K., which plans to achieve net-zero fossil fuel emissions by 2050, helped broker a deal in 2022 that would have included protections for a transition to renewable energy sources while maintaining the ECT's investor-state dispute settlement (ISDS) mechanism, which permits the fossil fuel lawsuits.

"The Energy Charter Treaty is outdated and in urgent need of reform, but talks have stalled and sensible renewal looks increasingly unlikely," said Graham Stuart, the energy security and net zero minister for the U.K. "Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalize us for our world-leading efforts to deliver net zero."

Social justice group Global Justice Now noted that Britons "up and down the country have campaigned tirelessly" to end the U.K.'s participation in the treaty.

"Huge congratulations to all the campaigners who have pushed so hard for this for so long," added Fossil Free Parliament. "The Energy Charter Treaty was a major barrier to the progress of a just transition. Good riddance!"

An estimated 60% of decisions by tribunals set up by the ECT favor fossil fuel companies, and the treaty has allowed energy companies to sue the Netherlands for $2.6 billion to compensate for their losses stemming from the Dutch government's planned coal phaseout. A U.K. company also sued Italy for $237 million for banning it from drilling an oil field in the Adriatic Sea.

"The ECT is now a dead man walking, and only those profiting from the destruction of our planet will mourn its passing," said Cleodie Rickard, trade campaigns manager for Global Justice Now. "However, the mechanism in the ECT which made it so deadly—the investor-state dispute settlement provisions—lives on in a number of other treaties... With ISDS's legitimacy crumbling, now is the time to scrap this system."

The U.K.'s decision comes three months after more than 200 civil society groups called on U.S. President Joe Biden to dismantle the ISDS mechanism within the Americas Partnership for Economic Prosperity (APEP), a trade agreement between the U.S. and 11 countries in Central and South America and the Caribbean.

Nine E.U. member states have recently withdrawn from the ECT, including France, Spain, and the Netherlands.

On Tuesday, E.U. energy ministers held a technical meeting on a proposal for all 27 member states to exit the treaty en masse; an agreement could be reached on the plan by next month.

"As it stands, the treaty is not in line with the E.U.'s energy and climate goals and with the E.U.'s investment policy and law," a spokesperson for the European Commission toldThe Guardian. "Despite the commission's successful negotiating efforts with international partners to update the treaty, it was not possible for member states to find the necessary majority to approve the modernized treaty. We therefore proposed that the E.U., its member states, and Euratom withdraw from the ECT in a coordinated and orderly manner."