Energy Charter Treaty

(Limited Text - Ministerial Extracts only)

Tuesday 21st March 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

It is a pleasure to serve under your chairmanship, Mr Gray, and to respond to my right hon. Friend the Member for Kingswood (Chris Skidmore) on such an important and pertinent topic. Thanks to his work in passing net zero legislation into law, and through his work on the review, the UK is committed to tackling climate change at home and internationally through our ambitious net zero targets and our international climate agreements, including the Paris agreement. I want to assure him of my personal commitment to achieving those goals, which I hope he knows already.

In an earlier intervention, the hon. Member for Strangford (Jim Shannon) raised energy security in Northern Ireland. I urge him to hotfoot it back to this Chamber at 2.30 this afternoon when the hon. Member for Upper Bann (Carla Lockhart) has a debate very much focused on Northern Ireland and energy security for farmers. I look forward to seeing him there and we can continue our discussion.

The energy charter treaty was signed in 1994. It was originally designed to provide stability and certainty for those participating in cross-border trade and investment in the energy sector, particularly for investors operating in states with a less stable rule of law. It currently applies to more than 50 contracting parties. As my right hon. Friend the Member for Kingswood rightly says, the world and the energy sector have changed significantly since 1994, and there is wide recognition that the energy charter treaty has not kept pace.

Britain has long accepted that to remain relevant the energy charter treaty needs to be updated to reflect the current energy landscape. In its unmodernised form, it is focused on trade and investment in fossil fuels. Although renewables are in scope, it does not cover modern energy technologies such as hydrogen or carbon capture and storage. That is exactly why His Majesty’s Government have been such keen supporters of modernising the treaty; I dispute the characterisation from the hon. Member for Brighton, Pavilion (Caroline Lucas) that we are in any way complacent.

We have spent two years negotiating to align the treaty with today’s changing energy priorities and investment treaty practices, as well as international climate commitments, such as the Paris agreement. We took a leading role in pushing for additional safeguards for the sovereign right to introduce measures such as net zero and a flexible mechanism to allow parties to phase out investment protection for fossil fuels. To be clear, there were challenges to overcome in the renegotiation. It is a multilateral treaty across more than 50 states, each with different priorities on energy and climate. The UK was able to secure coverage for modern technologies, and provisions to ensure a stronger environmental, labour and climate focus.

[Chris Skidmore]

This is a factual question: who is the Minister going to negotiate with in a modernisation programme, when none of the European countries, including Germany, France, Spain, the Netherlands and Italy, will be in the room? Logically, there is no opportunity to discuss modernisation, because no one wants to discuss it. The Minister’s speech may have been written before the decisions taken by the EU last week or the week before were made public, but it is simply not logically possible to follow the pathway that the Minister is suggesting. It might have been possible last year, but it is certainly not anymore.

[Andrew Bowie]

I was not suggesting a pathway forward; I was giving a brief history of how we have got to the stage we are at. If my right hon. Friend hangs fire for two seconds, I will explain where we are going next.

Despite efforts to update the treaty, which the EU had supported us on, when it came to the final moment the European Union and its member states were unable to endorse adoption of the modernisation at the energy charter conference in November. That was unexpected and a great disappointment to those, including member states and the UK, that were championing modernisation. As such, several EU member states have now announced their intention to withdraw. We expect a decision on modernisation to be rescheduled when enough contracting parties are in a position for a vote to take place.

We must carefully assess the impact of the evolving situation to understand how best to take forward our priorities in relation to the treaty. Since the conference in November, the Government have monitored the public positions of other contracting parties, engaged with official-level negotiators from those parties, conducted further assessment and considered the views from stakeholders across business, civil society and Parliament. We are building all that information, engagement and analysis into an assessment, underway right now, of how the UK should respond to the current situation in the energy charter treaty. We will keep the House informed of any relevant developments as soon as we are able.

Whatever the final decision on our membership or the future of the treaty, the UK remains committed to addressing the urgent need for climate action at home and abroad. As such, I sincerely thank my right hon. Friend the Member for Kingswood for raising the issue.

[Caroline Lucas]

I wonder whether the Minister recognises that there is an urgency to this. I appreciate that he is listening to lots of different voices, but if we are left on our own because all like-minded countries have left, we risk becoming stranded and unable to leave with the protection that would have come from a co-ordinated departure with our EU colleagues. Will the Minister consider that as he plots the way forward?

[Andrew Bowie]

I thank the hon. Lady for her intervention; of course, that is being considered. As I said, an assessment of the UK’s position in regard to the treaty is being undertaken right now, and as soon as a decision has been taken we will update the House. The issue is important and pertinent, and I thank my right hon. Friend the Member for Kingswood for bringing it to the Chamber today.

Question put and agreed to.