On 30 August 2023, the UK announced it is reviewing its membership of the energy charter treaty (ECT) and will make a further decision if modernisation has not been adopted by November 2023.
The ECT is a multilateral agreement with 51 contracting parties, covering energy co-operation on trade, investment, transit, and energy efficiency. The ECT was signed in 1994 to promote international co-operation in the energy sector in eastern Europe and central Asia, following the break-up of the Soviet Union, with a particular focus on investment in fossil fuels.
The UK has been a strong advocate for modernising the ECT, recognising that the existing treaty is not aligned with modern energy priorities, international treaty practice and commitments on climate change. The UK and other contracting parties spent two years negotiating a modernised ECT and amendments were agreed in principle on 24 June 2022.
If adopted, the modernised treaty would have a stronger focus on promoting clean, affordable energy, including technologies like carbon capture, utilisation and storage (CCUS), hydrogen and other renewables. Modernised terms would also strengthen the UK Government’s sovereign right to change their energy system to reach net zero.
The decision to adopt the modernised ECT was paused in November 2022. This followed several EU member states, including France, Germany, Spain and the Netherlands announcing plans to withdraw, leading to an impasse on modernisation. In July 2023, the EU Commission called for a co-ordinated EU withdrawal. The EU is seeking a bloc-wide position this autumn, but upcoming European Parliament elections in 2024 raise the prospect of prolonged uncertainty.
The UK’s preference has been to modernise the ECT, but we must now prepare for the possibility that this will not be achieved. The UK is reviewing its membership, recognising its long-standing position that the unmodernised ECT is out of step with modern treaty practice and the UK’s energy priorities. This reflects our unwavering focus on energy security and net zero. The review will conclude by November and will carefully consider the views of stakeholders in business, civil society and Parliament to inform the UK’s approach.
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