UK considers withdrawal from ‘outdated’ international energy treaty

The industry has laid out five major policy demands for the Government to ensure the nation achieves its net-zero by 2050 goal.

Energy Minister Graham Stuart formally announced the review on Friday (1 September), stating that efforts to modernise the treaty, led by the UK, have not been progressing as rapidly as hoped.

The Treaty was launched in 1991 and ratified in 1994. It provides a multilateral legal framework for international collaboration on the financing of energy infrastructure. Most finance, historically, has gone to fossil fuels – although there have been some smaller investments in energy efficiency, distribution and storage networks.

The UK reached an agreement with other Treaty participants last year to modernise the terms of the Treaty, adapting them to reflect the changing energy mix and the need for even faster change in the future. A specific request was a new clause to stop fossil fuels benefiting within nine months of the update.

Stuart has stated that the departure of several nations from the Treaty since then has “led to an impasse on modernisation”. Without stronger emissions reduction targets and targeted support for next-generation clean energy technologies, the UK will consider leaving the Treaty.

“Rather than being stuck indefinitely with an outdated treaty, the UK wants to see an agreement on a modernised treaty as quickly as possible,” said Stuart.

“In its current form, the Energy Charter Treaty will not support those countries looking to make the transition to cleaner, cheaper energy sources such as renewables – and could even penalise our country for being at the forefront of those efforts.”

Multiple departures

The EU launched a proposal for its member states to leave the Treaty in July. Within weeks, Portugal took the proposal on board and began its withdrawal. Spain, Germany and France had already pulled out in November 2022.

As with the UK, these nations have voiced concerns about the Treaty’s design and whether it is continuing to support the polluting energy sources that the EU wants to phase down to meet its climate targets.

The European Commission has called a mass exodus of European nations from the Treaty “inevitable” and “unavoidable” due to its conflict with binding EU Green New Deal targets.

The UK has not publicly set a timeline for making a decision on its future (or lack thereof) in the Treaty. The Government has stated that it will consult with businesses, policymakers and civil society before making any decisions. It is pushing for reforms to be agreed by the end of November.

Net-Zero Review Author Chris Skidmore has urged the Government to bypass these discussions and add a clause to withdraw from the Treaty to the Energy Bill, currently passing through the House of Lords. Skidmore has stated that the UK’s withdrawal “cannot come soon enough”.

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