Following two years of negotiations, the UK has reached a “landmark” agreement to modernise the terms of the Energy Charter Treaty (ECT).

The treaty – which provides the framework for international trade and investment in energy – was drafted and first published in 1994 when fossil fuels dominated power generation. As such, as the UK increasingly transitions its energy sector to net zero, it had become outdated, leaving the country vulnerable.

Announced today (24 June), the modernised treaty is designed to maintain the current benefits but add new legal protections for taxpayers and investors, as well as reduce the risk of potential costly legal challenges.

It follows several EU countries facing such challenges over reducing reliance on fossil fuels and growing their renewable industries, the government noted. For example, the Netherlands is currently facing a challenge over its phase out of coal, which could cost its citizens £1.1 billion (US$1.4 billion) as they cover the cost of stranded coal assets. Similar challenges have arisen in Italy, Poland and Slovenia.

The modernised treaty has been agreed following negotiations between 53 contracting parties, and is set to be signed in November 2022. It has a much stronger focus on promoting clean, affordable energy, protecting the government’s right to change the energy system in the pursuit of decarbonisation.

Read more: Current+

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