UK ditches 'incredibly flawed' treaty that lets fossil fuel companies sue governments

The UK is withdrawing from a controversial treaty that allows fossil fuel giants to sue governments over their climate policies.

Campaigners in Spain took aim at the Energy Charter Treaty before it withdrew in 2022. Pic: AP

The decision comes after campaigning and pressure by green groups and follows similar moves by Spain, France, Germany and the Netherlands.

The government said the UK was withdrawing from the Energy Charter Treaty after attempts to modernise it had ended in stalemate.

It enables foreign companies to challenge energy policies that threaten their investments, using secretive arbitration courts.

The treaty was set up in the 1990s when energy systems were more reliant on fossil fuels, and was designed to encourage international energy investment.

But it means countries reducing their reliance on fossil fuels and boosting clean power have come up against costly legal challenges.

The government department for energy security and net zero said it had wanted the treaty to be modernised so that it better supported green power.

Minister Graham Stuart said: “The Energy Charter Treaty is outdated and in urgent need of reform, but talks have stalled and sensible renewal looks increasingly unlikely.

“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.”

Shaun Spiers, executive director of the environmental thinktank Green Alliance, called the Energy Charter Treaty an “out-of-date agreement” that “undermines our efforts to tackle climate change”.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.”

Kierra Box, campaigner at Friends of the Earth, said: “Leaving this incredibly flawed treaty is a brilliant win for our environment and the climate, and a sensible move as European governments exit the agreement in ever greater numbers – citing risks to their sovereignty and climate progress.”

Labour’s shadow climate minister Kerry McCarthy agreed with the government’s move, saying: “We are in an urgent global fight against the climate emergency. We cannot allow fossil fuel companies to stop democratically elected governments from taking strong climate action.”

But she criticised the government for failing to unblock onshore wind in the UK.

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