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Energy Security and Net Zero Minister Graham Stuart said: “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.”
Since 2001, nearly 160 legal actions based on the ECT have been brought by investors claiming their investments had been damaged by green policies such as renewable-energy subsidies, and seeking compensation from governments.
Leo Mercer, policy analyst at the Grantham Research Institute on Climate Change, told the BBC: “[The treaty] was designed to protect energy companies from sudden policy decisions that undermine their investments.
“However, it has been abused by the oil and gas industry over the past few years… to the detriment of British consumers.”
In recent years, countries implementing climate-change strategies have tried to exclude fossil-fuel companies from being able to take legal action.
But after more than 15 rounds of negotiations, signatories were unable to agree when this should happen.
And the UK’s withdrawal follows that of France, Spain and Germany, who worried the ECT would see them facing legal action from all sides – companies claiming they had breached the treaty and green organisations claiming they were not fulfilling their climate commitments.
In 2009, Germany faced a $1.9bn (£1.5bn) claim by Swedish energy company Vattendal, after delays for permits to operate a coal-fired power station.
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