In 2022, negotiations between the UK and EU to modernize the treaty hit a stalemate. The UK government has announced its withdrawal from the Energy Charter Treaty (ECT) after failing to align it with net zero emissions plans. The UK will join nine EU member states, including Spain, France, and the Netherlands. Minister of state for energy security and net zero, Graham Stuart, stated that the treaty, signed in 1994, was “outdated and in urgent need of reform.” He cited that remaining a member would not support the country’s transition to cleaner, cheaper energy, and could penalize world-leading efforts to deliver net zero.
Initially meant to integrate Western and former Soviet nations’ energy markets, the ECT includes legally-binding instruments to facilitate global energy trade and stimulate foreign direct investments in the sector. In response to the UK’s withdrawal, a senior policy adviser at E3G, Eunjung Lee, stated, “This treaty was written to protect the incumbents – the fossil fuel industry – and has held back the transition to clean energy. Its demise cannot come fast enough.”
Faced with the stalemate, the UK warned in September about its plans to leave the ECT. Months of negotiations between European states led to an impasse, after four EU countries blocked the modernized text of the document. In July 2023, the European Commission adopted proposals to withdraw the EU and the European Atomic Energy Community from the ECT due to its contradiction with the bloc’s energy and climate goals.
The UK’s decision to withdraw was fueled by businesses and civil society, which pushed for the withdrawal from a charter that “undermines” the transition to net zero, according to the Green Alliance. The alliance said the UK will “strengthen global efforts to roll out cheap, clean renewable energy.” Government policies brought forward in the Net Zero Strategy set out plans to decarbonize all sectors of the UK economy by 2050, including phasing out petrol and diesel vehicles by 2035 and oil and gas boilers in existing buildings by 2035.
Ministers have committed billions to fund the transition. Critics of the government’s green ambition argue that Britain will need fossil fuels for decades to prevent blackouts and that a halt on oil and gas development will starve the UK of energy. The Department for Energy Security and Net Zero claims that Britain will remain an “attractive destination for investors across all energy technologies” and will support investment in North Sea oil and gas as part of the transition to net zero. The UK’s withdrawal from the ECT will take effect in a year, removing protections for new investments after this period.