UK forced to pull out of major energy deal after European Union infighting

Rishi Sunak and Ursula von der Leyen

Britain has blamed EU infighting for scuppering a bid to reform a post-Cold War energy treaty meant to protect fossil fuel investments.

The Government said the UK was withdrawing from the Energy Charter Treaty (ECT) after efforts to modernise it ended in stalemate.

Established in the 1990s when the world energy system was heavily dominated by fossil fuels, the controversial treaty enables foreign companies to challenge energy policies which they say threaten their investments, using secretive arbitration courts.

It was originally designed to boost international energy investment, but a number of western European countries have faced costly legal challenges over reducing their reliance on fossil fuels and encouraging renewables.

Britain’s withdrawal comes amid continued deadlock in Brussels, with current EU Council presidency holder Belgium urging government delegates at a meeting earlier this week to quickly endorse an EU-level withdrawal, according to a diplomatic source cited by Euronews.

The source told the publication the outcome was “a shared frustration” over the European Commission’s refusal to come up with a proposal which would have allowed member states that stay in the ECT to vote on its modernisation and remain inside.

The European Commission insists the EU’s single market rules make it legally impossible for some countries to remain while others and the EU as a whole, pull out.

Britain’s Department for Energy Security and Net Zero said efforts to modernise the treaty to better support cleaner technologies had led to stalemate among European countries.

The UK has joined France, Germany, Spain and the Netherlands in withdrawing from the agreement.

Graham Stuart MP, Minister of State for Energy Security and Net Zero, said: “The Energy Charter Treaty is outdated and in urgent need of reform but talks have stalled and sensible renewal looks increasingly unlikely.

Graham Stuart leaves a Cabinet meeting in London

“Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalise us for our world-leading efforts to deliver net zero.

“With £30billion invested in the energy sector just since September, we continue to lead the world in cutting emissions, attracting international investment and providing the strongest legal protections for those who invest here.”

Shaun Spiers, Executive Director of environmental think tank Green Alliance, added: “Civil society organisations and parliamentarians from all political parties have been clear that the Energy Charter Treaty is an out-of-date agreement and undermines our efforts to tackle climate change.

“We welcome the UK’s decision to leave, which will strengthen global efforts to roll out cheap, clean renewable energy.”

Shadow climate minister Kerry McCarthy said that the UK is in an “urgent global fight” against the climate emergency.

She added: “We cannot allow fossil fuel companies to stop democratically elected governments from taking strong climate action.

“Labour has long argued the Energy Charter Treaty is clearly outdated and not fit for purpose – it is good the Government have finally taken the step to leave it.”

But she criticised the Government for failing to deliver the clean power Britain needs and claimed only Labour can cut bills and make Britain a clean energy superpower, tackling the climate crisis with good jobs for our country.