The author is the Chair of the UK’s Net Zero Review and former UK Energy Minister.
In the Net Zero Review published earlier this year, I urged the UK to respond to increased global competition on net zero with a clearer approach to green trade. There is no better place to start than to act on the outdated Energy Charter Treaty. This is a threat to the UK’s domestic net-zero ambitions and credibility abroad.
The Energy Charter Treaty is an investment treaty that dates back to the mid-1990s.Its original purpose was to promote european energy Investing in former Soviet countries after the fall of the Berlin Wall.
Today, however, the treaty is increasingly weaponized by fossil fuel companies, accusing governments of adopting climate policies. Italy is being sued for a ban on offshore oil drilling, the Netherlands for a coal phase-out, and Slovenia for a fracking ban.
An oil company that won £210m from the Italian government over restrictions on offshore oil drilling is a perfect example of the risks this outdated treaty is now exposing the UK as well. The company has earned six times his winnings over what it has spent on projects so far and may now use the winnings to finance new oil exploration.
Clearly, the treaty is ill-suited to the challenges of the 21st century. While it is pushing up the cost of the energy transition, it is slowing it down.
Surprisingly, when governments shy away from important new policies to avoid being sued, it can also have ‘chilling’ effects. climate change.
In April, stakeholders from the member states of the Energy Charter Treaty will meet to discuss possible reforms. But we already know the result. Modernization negotiations have failed.
This is because several European countries such as Germany, France, Spain and the Netherlands have decided to withdraw from the treaty because they have not reformed enough to bring it in line with the Paris Agreement.
Even the European Commission, which used to lead the modernization process, now supports a full exit from the EU.
Without support from the UK’s traditional allies in continuing the reform process, it will be impossible for the country to push for change on its own against the remaining less climate ambitious members.
Britain’s former position in favor of modernization is therefore no longer credible. Instead, we need to reach out to like-minded partner countries such as Germany, France and the Netherlands to initiate the process of jointly leading an orderly withdrawal from the treaty.
The UK government is already aware of the problem, with former Energy Minister Greg Hands saying:
I expect to see the same clarity from the new Energy Security and Net Zero offices and the newly enhanced Business and Trade Office.
The race to net zero is both a huge economic opportunity for UK business and jobs and an environmental imperative. All levers must be pulled to accelerate the transition to a green economy. It’s not about throwing sand into the gears with each step.
In the coming months, the government will respond to net zero reviews. Alongside ambitious plans, the UK must continue to demonstrate climate leadership by withdrawing from outdated treaties.
https://www.ft.com/content/98d3d302-116b-4835-8762-fb9f5a71e855 UK must leave Energy Charter Treaty