Leaving the Energy Charter Treaty has “untied a straitjacket” on UK’s ability to bring about just transition, campaigners say
A protester with an Exit the Energy Charter Treaty placard on the climate justice demonstration in London

Leaving the Energy Charter Treaty has “untied a straitjacket” on UK’s ability to bring about just transition, campaigners say

Date: 22 February 2024
Campaigns: Trade

Today’s announcement that the UK will leave the Energy Charter Treaty has “untied a straitjacket” on the UK’s ability to enact a just transition, campaigners have said.

The Energy Charter Treaty is an investment agreement between 50 countries which allows companies to use a system of secret courts where they can sue governments over policies that would affect their future profits.

Fossil fuel companies have used the ECT, the most litigated investment treaty in the world, to sue governments for billions over climate policies. Recently, EU, Germany and Denmark were sued under the treaty by an oil firm over a windfall tax they alleged harmed their profits.

A number of UK civil society organisations have campaigned as part of a wider European movement against governments’ membership of the ECT. Last year Global Justice Now, Friends of the Earth, War on Want and 350.org handed in a petition of 120,000 signatures to Downing Street calling for a UK exit from the Energy Charter Treaty.

The government cited repeated failures to modernise the treaty as its reason for leaving, citing the “failure of efforts to align it with net zero”. Last September the UK government set a deadline to consider withdrawal if member countries did not reach agreement on reforming the treaty by November 2023.

The UK’s climate watchdog – the Climate Change Committee – and the All-Party Parliamentary Group for the Environment have both previously recommended withdrawal. An increasing number of MPs across parties had highlighted the issue in parliament, with Conservative ex-Net Zero tsar Chris Skidmore calling for exit as early as last March.

The UK will join eleven countries including Germany, France and Denmark who chose to exit the treaty, who cited risks to their climate commitments. This comes as more countries are expected to leave as the European Union plans its exit.

The treaty is protected by a 20-year sunset clause, meaning that normally even upon exit, projects in member states would be liable for litigation for 20 years. However, leaving the ECT in coordination with other exiting parties can neutralise this, campaigners and experts have said.

Cleodie Rickard, trade campaign manager at Global Justice Now said:
“By leaving the Energy Charter Treaty we have taken away one of fossil fuel companies’ most used weapons to deter or punish climate action. Doing so has untied a straitjacket on our current and future capacity to enact the just transition we desperately need.

“Today’s win is testament to years of cross-country campaigning and collaboration – taking a seemingly obscure trade agreement and demonstrating the grave threat it posed to both the planet and public purse. The ECT is now a dead man walking, and only those profiting from the destruction of our planet will mourn its passing.”

“However, the mechanism in the ECT which made it so deadly – the investor-state dispute settlement provisions – lives on in a number of other treaties, including the pacific trade deal. With ISDS’ legitimacy crumbling, now is the time to scrap this system which is unfit for securing a just and secure future.”

Liz Murray, head of Scottish campaigns at Global Justice Now said:
“Today’s announcement that the UK will leave the climate-wrecking Energy Charter Treaty is a huge win for the climate in Scotland and beyond – and testament to the tireless work of campaigners across the country placing pressure on politicians day after day. Now that the Scottish Government is free from the fear of being sued by fossil fuel giants for essential climate action, they should seize the opportunity to push ahead with a just green transition to clean energy with truly ambitious policies.”