UK reviewing membership of energy treaty
The UK government confirms it will be reviewing its Energy Charter Treaty membership, and considering withdrawal if vital modernisation is not agreed.
- UK is reviewing its membership of the Energy Charter Treaty if member states do not reach agreement on modernised terms by November 2023
- warning comes after UK played a leading role in negotiating updated treaty, strengthening UK sovereignty in transition to cheaper and cleaner energy
- but protracted stalemate over whether to proceed with new terms means UK ministers are considering taking action to safeguard the UK’s green transition
The UK is reviewing its membership of the Energy Charter Treaty, Energy Minister Graham Stuart announced today (Friday 1 September), including whether the country will leave.
The treaty has historically provided protections for investors in fossil fuels – the UK’s future membership will depend on whether proposals for the treaty’s modernisation are adopted in November.
Last year the UK reached a landmark agreement to modernise the terms of the Energy Charter Treaty, maintaining its current benefits while supporting the transition to cleaner energy.
The modernised treaty, for which the UK has been a strong advocate, was supposed to have been adopted in November last year. It would have a much stronger focus on promoting clean, affordable energy, such as carbon capture, utilisation and storage as well as hydrogen and other renewables. It would also strengthen the UK government’s sovereign right to change its energy system to reach net zero and protect UK investors abroad.
However, several EU member states have decided to leave the treaty, leading to an impasse on modernisation. Ministers are therefore reviewing the UK’s membership of the Energy Charter Treaty to support the transition to cleaner, cheaper and home-grown energy sources, in a mission to bolster energy security.
Minister of State for Energy Security and Net Zero, Graham Stuart, said:
Rather than being stuck indefinitely with an outdated treaty, the UK wants to see an agreement on a modernised treaty as quickly as possible.
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.
Governments around the world are looking to boost their sources of home-grown energy, including with new clean technologies - and that is why the Energy Charter Treaty must be modernised. It is also why we are reviewing our membership, and will consider withdrawal, if that vital modernisation is not agreed.
The UK will continue to carefully consider the views of stakeholders in business, civil society and Parliament to inform the UK’s approach. The UK’s strong rule of law means it remains an attractive destination for investment in the energy sector regardless of its Energy Charter Treaty membership.
Notes to editors
The Energy Charter Treaty is a multilateral treaty signed in 1994 to promote international investment in the energy sector. See more information on the Treaty.
Members of the Energy Charter Treaty, including the UK, have been in negotiations since 2020 to modernise the treaty in line with modern international investment treaty practice and to reflect modern energy priorities. See details of the Agreement in Principle.
The modernised treaty has a stronger climate focus, clarifying that states can regulate to reach emissions reductions targets. It also includes new protections for green and low-carbon technologies, such as carbon capture and storage and hydrogen.
The UK has specifically tabled terms which mean new investments in all types of fossil fuels would lose protection under the Energy Charter Treaty 9 months after adopting the modernised treaty.
The UK has never faced an investor-state dispute under the Energy Charter Treaty that has proceeded to arbitration.