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UK exits from ECT deal

The UK is withdrawing from the Energy Charter Treaty (ECT), which allows fossil fuel firms to sue governments over their climate policies. The treaty allows fossil fuel investors to sue states for lost profit expectations in an opaque corporate arbitration system set up to protect fossil fuel investors in former Soviet economies in the 1990s.

The UK's energy security and net zero minister, Graham Stuart, stated that the ECT is outdated and in urgent need of reform: "Remaining a member would not support the transition to cleaner, cheaper energy and could even penalise the UK for its world-leading efforts to deliver net zero."

Treaty protections for new energy investments will cease in one year when the withdrawal takes effect. It is unclear whether continuing cases such as the UK-listed Ascent's €500m (£428m) ECT suit against Slovenia will be affected. The shadow climate change minister, Kerry McCarthy, said that the UK must not allow fossil fuel companies to stop democratically elected governments from taking strong climate action.

The ECT is the world's most litigated investment agreement, and the UK's continued presence within it has raised fears of "climate-wrecking lawsuits" if the government manages to pass its offshore petroleum licensing bill, which aims to jack up UK oil and gas extraction.

More than 54 countries are still listed as ECT signatories on the treaty organisation's website, but many have already exited or plan to do so after the failure of modernisation talks.

Original source: The Guardian



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