Energy Charter Treaty

Selaine Saxby Excerpts

Tuesday 21st March 2023 Westminster Hall

[Chris Skidmore]

The hon. Lady is absolutely right: the sooner we get out, the sooner we are not under the cosh. However, when it comes to looking at the mitigation circumstances for the 20-year rule, France, Germany, Italy and the Netherlands have all signalled their intention to withdraw from the energy charter treaty. As I will explain later, the EU as a bloc will now potentially decide to withdraw from the energy charter treaty, although it will obviously take time to gather agreement and the UK can therefore lead on making a concerted effort to get all the countries to withdraw. If they do, that potentially creates a mechanism by which some of the disputes are unable to be taken forward in certain areas, such as the wider European area; there could be an opportunity to demonstrate how the overall potential liability can be cut by over 60%.

As the hon. Member for Llanelli (Dame Nia Griffith) has made clear, the risks of the status quo could hold the UK open to future challenge. The status quo cannot continue, because continued membership of the energy charter treaty risks having a chilling effect if Governments back away from new policies in order to avoid being sued—a danger that UN climate experts specifically warned about in the IPCC report. The UK Government have already recognised the problem, with the then Energy Minister, my right hon. Friend the Member for Chelsea and Fulham, saying:

“The UK cannot support an outdated treaty which holds back investment in clean energy and puts British taxpayers at increased risk from costly legal challenges.”

I hope to see the same clarity from the new Department for Energy Security and Net Zero, as well as from the new, beefed-up Department for Business and Trade.

[Selaine Saxby (North Devon) (Con)]

I thank my right hon. Friend for securing today’s debate on such an important topic. Does he agree that the creation of a new Department gives us the opportunity to expedite the decisions that we desperately need to take, particularly in the light of yesterday’s IPCC report and his own excellent report? We have to work towards net zero; otherwise, we will hit “not zero”.

[Chris Skidmore]

Absolutely. The UK has demonstrated continued leadership time and again, and I was the first Energy Minister to sign net zero into law. We became the first G7 country to do so, beating France by one day. We must collaborate, and I am proud that we have now seen a huge number of countries commit to net zero. I think we are the first country globally to ensure that we have a Department for net zero, which must also be welcomed. I thank the Government for demonstrating leadership on this issue, but let us extend that leadership by not just changing the words on a plaque on a wall in a Department; let us ensure that the new Department can boldly show leadership by coming out and demonstrating to other countries that it is willing to act. Then others will follow.

There are now serious moves, both here in the UK and elsewhere across Europe, to leave the energy charter treaty as a matter of political priority. It is clear that any chance of reforming the treaty is over. The modernisation talks proposed last year have failed, because several European countries, including Germany, France, Spain and the Netherlands, have decided to leave the treaty due to reforms not going far enough to bring it in line with the Paris agreement. Even the European Commission, which previously led the modernisation process, has announced plans for a full EU withdrawal from the treaty.

Without support from the UK’s traditional allies in favour of the continuation of the reform process, it will be impossible for the UK to push through reforms on its own against the remaining, less climate-ambitious energy charter treaty countries. The UK’s previous position of supporting modernisation is therefore no longer credible. Instead, the UK needs to reach out to like-minded partner countries, such as Germany, France and the Netherlands, to begin the process of co-leading an orderly withdrawal from the treaty.

In February, a group of experts wrote to the Energy and Net Zero Secretary, calling on the UK to quit the energy charter treaty. Today, 15 Members of Parliament from the all-party parliamentary group for the environment—I see a number of those colleagues in the room, representing four different parties—have written to the Minister for Energy Security and Net Zero, my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), to make it clear that withdrawal from the ECT is now the best option for the UK in the future. The letter states that there is now an overwhelming case for taking action to leave the treaty unilaterally, especially given that many European countries have left and the EU as a bloc has publicly announced its withdrawal.

First, the letter makes it clear that

“The ECT is undermining efforts to achieve net zero due to costly legal action from fossil fuel companies, and the so-called “regulatory chill” effect, which causes governments to refrain from adopting climate policies. This view is supported by the Intergovernmental Panel on Climate Change”.

Secondly,

“The ECT makes the UK less attractive for clean energy investments as instead of serving the interest of clean energy and sustainable technology companies, it creates a policy landscape that is tilted against clean energy, and which exposes UK finances to huge litigation risk.”

Thirdly,

“The Treaty modernisation process has failed, with major signatories like Italy, Germany, and France preferring to leave the Treaty.”

And fourthly,

“The UK can regain control by co-leading a coordinated Treaty exit by working with like-minded partners such as Germany and France. This would help put the UK at the centre of decision-making on the next phase of ECT discussions, rather than waiting for an EU-led strategy to re-emerge.”

Not only is the letter signed by Members from across the House, but the wider principle of leaving the energy charter treaty is backed by climate and clean energy non-governmental organisations. I have already mentioned a number of them, including the Green Alliance, Global Justice Now and ClientEarth. There is also the Aldersgate Group, chaired by the former Prime Minister, my right hon. Friend the Member for Maidenhead (Mrs May).

As the former Energy Minister who signed the UK’s legal commitment to achieve net zero by 2050 into law, I know too well the challenges that the Minister faces, having sat in his position in the past. Politics has always been about priorities, and no doubt he will be told that there are other priorities that the Government must face. Some will seek to delay; others will claim that it is just too difficult. It was no different when I was seeking to persuade other Departments to agree to net zero. History judges us all on the priorities that we make and the future that we seek to create. Sometimes that future is unknown and unknowable, but that should not prevent us from taking action now to achieve it.

If someone had told me back in 2019 that 90% of the world’s GDP would have signed up to a net zero target just three years on, I simply would not have believed it. Change comes at us fast sometimes, and there is no faster change than climate change. I know of no one serious about achieving net zero who would back the UK’s remaining in the energy charter treaty. Indeed, the reality is that continued membership of the ECT and continued commitment to net zero are not compatible. We face a choice between defending our fossil fuel commitments of the past or delivering our net zero commitments for the future. Our continued membership of the energy charter treaty is not only unsustainable, but simply indefensible. The time has come to pick a side. I urge the Minister to choose net zero and commit to the UK’s withdrawal from the energy charter treaty.