Energy Charter Treaty

Caroline Lucas Excerpts

Tuesday 21st March 2023 Westminster Hall

[Chris Skidmore]

If the hon. Gentleman looks at the details of the treaty, which I will come to, he will see that it does not create a level playing field for competition. It is weighted in favour of fossil fuel interests. He knows full well, given his interest in clean energy, how Northern Ireland could become a future green energy powerhouse. It wants to ensure that it can continue to build onshore wind turbines, with a huge opportunity for providing green hydrogen. The challenge the energy charter treaty provides to the UK, and Northern Ireland as a proud member of the UK, is that it takes those potential clean and renewable investments and weights them disproportionately against existing fossil fuel commitments that no other country wishes to make. That is a challenge that we need to deal with.

The charter is a relic from a bygone age, which should have long been recognised as serving an obsolete purpose that still places its dead hand across all states that signed it three decades ago, preventing climate investments and, worse, prioritising inexcusable investments in oil and gas, even when the countries themselves do not wish to make them. The energy charter treaty has effectively become a Magna Carta for fossil fuels, and it is being weaponised by fossil fuel companies to sue Governments for introducing climate policies.

Recently, Italy was sued for its ban on offshore oil drilling. The Netherlands has been sued for its coal phase-out law. Several companies have taken the Dutch Government to court for their decision to phase out fossil fuels by 2030, claiming damages of €3.5 billion. Slovenia has also been sued for its fracking ban

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the right hon. Gentleman agree that there is a danger of complacency in the Government’s current approach? When I have asked questions on this issue of the investor-state dispute settlement mechanism, the Minister has replied, “Well, there has never been a case against the UK, so it is not a problem.” The examples the right hon. Gentleman has just given show why it is such a problem. In the Italian case, the Government were sued for six times the amount the oil company ever invested in the project. Does he agree that there are real risks here and that we should not be complacent just because we have not yet had a UK case?

[Chris Skidmore]

Absolutely. The other risk, which I will come on to in a moment, is the chilling effect. We do not know, or are unable to quantify, the investments that could be coming to the UK but for the fear that the energy charter treaty will again place its dead hand on those investments. Withdrawal from the energy charter treaty provides the certainty, clarity, continuity and consistency—the four Cs—that the net zero review outlined as part of a mission-based approach to long-term certainty. We cannot have long-term certainty for investment in future renewable projects or take decisions potentially shutting our fossil fuel investments unless the energy charter treaty is removed. It is critical that we provide that future certainty if we want those additional investments and the opportunities offered by that inward wall of capital that is waiting to be spent. As the hon. Lady mentioned, an oil company winning £210 million from the Italian Government over their restriction on offshore oil drilling is a perfect example of the risk to which this outdated treaty now exposes the UK. She mentioned that the company won six times the amount it had ever spent on the project, and those winnings are now likely to be fed back into financing new oil exploration.

Most worrying are the continued binds that the energy charter treaty places on signatory countries to prioritise and protect private foreign investments ahead of the democratic rights of elected Governments. Through investor-state dispute settlements, Governments who wish to do the right thing by the citizens who elected them and to tackle climate change to meet their net zero commitments are having their hands shackled by the energy charter treaty, imprisoning what should be free nations and leaving them bound by undemocratic regulations that are fought over by fossil fuel lawyers in courts. At a time when the UK should be taking back its sovereignty, and when it is seeking to demonstrate its energy sovereignty, the energy charter treaty, with its use of these unacceptable ISDSs, should be a prime example of legislation that we must recognise as being at the top of any lists of Brexit freedoms. Surely the UK Government should, can and must take action now to restore our energy freedoms.

--- Later in debate ---

[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.