Thank you to all those who contacted me about the Energy Charter Treaty (ECT).
In February 2024, the Government announced that the United Kingdom would leave the treaty. I understand that under the terms of the ECT, the Government is required to give a one-year notification of withdrawal. Treaty protections will no longer apply to new investments made after this period.
I welcome this step, which has also been taken by other nations. In my view, the ECT is a major barrier to effective international action to tackle the climate crisis, with energy companies using the treaty’s investor-state dispute settlement (ISDS) provisions to challenge plans to move to net zero.
In particular, where companies can claim their investments in fossil fuel extraction are being damaged by government intervention, they have been using the ECT to sue for damages or use the threat of lawsuits to deter governments from acting. We have seen, for example, the case of RWE suing the Netherlands for €1.4 billion over the phase-out of coal and of UK oil company Rockhopper, which won a case against Italy over a ban on offshore drilling.
Once the withdrawal of the UK from the treaty takes effect it will ensure that such lawsuits cannot be brought against the British Government. This is welcome progress on an important issue.