Will the UK ditch the ECT?

— European countries are racing to leave the Energy Charter Treaty. Is the U.K. next?

— A big annual review of world energy consumption dropped overnight and we’ve got the main findings.

— Your start-the-week round-up of net zero news from the weekend’s papers.

It’s Monday morning. Welcome to the new week and to POLITICO Pro Morning Energy and Climate UK. 

As always, please send all your thoughts, musings, tips and critique to Team MECUK: rharg[email protected]; [email protected] and [email protected]. Or talk to us on Twitter: @hargraver; @charliecooper8; @abby_wallace3

TREATY TENSIONS: Pressure is growing on the U.K. government to follow Germany, France and many other European countries in ditching a controversial international treaty that MPs and campaigners say has a “chilling effect” on climate action. 

Recap: The U.K., along with 50 other countries and the EU, is a signatory to the Energy Charter Treaty (ECT). The agreement dates from the 1990s when it was designed to protect Western energy investments in post-Soviet states — but a succession of EU countries have announced plans to drop the treaty. That’s because the ECT has exposed several governments to legal action from fossil fuel investors and producers, who have used its provisions to sue over climate policies that hit their profits.

Big week ahead: EU countries may be rushing for the exit but the U.K. has made no decision either way, instead waiting to see how a recent reform process plays out. But ministers are likely to come under renewed pressure this week, with the government’s former net zero czar Chris Skidmore preparing to put forward an ECT-shaped amendment to the Energy Bill. Campaigners are also waiting to see whether the Climate Change Committee, which advises the government, includes recommendations on the ECT in its annual progress report. That is due Wednesday.

Why campaigners loathe it: Skidmore told MECUK that the ECT had become “a noose around the necks of countries’ ambitions to decarbonize their energy and power supply.” He pointed to recent legal cases against the governments of the Netherlands and Italy. Amandine Van Den Berghe, a lawyer at advocacy group ClientEarth, said the ECT had “a catastrophic chilling effect” on governments’ climate action — and noted that Ireland is now facing its first ECT-related case. 

LD vs. ECT: Meanwhile, the Liberal Democrats have become the first of the big three parties to formally back a U.K. exit. Their climate and energy spokesperson Wera Hobhouse told MECUK the ECT was “antiquated” and “no longer fit for purpose.” The Lib Dems are calling for the U.K. to lead a global push that would replace the ECT with a Renewables Treaty aimed at supporting green energy investments.

Not so fast: Some experts are skeptical about calls to drop the ECT, though. James Manning, a former U.K. government investment negotiator who now works at FTI Consulting, noted that “more than a third” of investor-state dispute settlement cases under the ECT had been brought by investors in renewable energy. The treaty “could play an important role safeguarding the investments that are necessary for the transition to net zero,” he said. Oil and gas trade association Offshore Energies U.K. said the ECT was a matter for the U.K. government but noted that no cases had been brought in this country.

Where they stand: A government spokesperson said the U.K. had pushed for “modernizing” the ECT and that ministers “continue to assess the impact of the evolving situation in the U.K. to ensure the most appropriate outcome for the country.” A Labour spokesperson said the ECT was “clearly outdated and not fit for purpose — that is why so many countries are leaving it or calling for its fundamental overhaul.” The party would “set out a position ahead of the next election,” the spokesperson promised.

ENERGY BILL: There was no sign of the Energy Bill on parliamentary business papers for the week starting July 3. That suggests the bill, which completes committee stage this week, won’t be returning to the Commons chamber until the week commencing July 10.

ALSO IN THE COMMONS: The Financial Services and Markets Bill is back in the Commons today so that MPs can consider House of Lords amendments. One amendment — backed by the Green Alliance think tank, campaigners and financial institutions — requires regulators to take account of protecting nature as well as climate in their decisions.

INDUSTRY HELP DEADLINE LOOMS: At DESNZ, Energy Minister Amanda Solloway will be marking “one month to go” for energy-intensive industries and those running heat networks to apply for extra financial support via the government’s Energy Bills Discount Scheme.

GRID LATEST: National Grid is today launching a new public consultation on controversial plans for a 112-mile electricity transmission line between Norwich and Tilbury. The consultation will run for eight weeks and seeks local views on updated proposals for the infrastructure, which National Grid says will plug new offshore wind power into the grid and meet growth in demand for electricity as the country moves to net zero.

Politics of pylons: The project — which has sparked major resistance from local campaigners — is part of the company’s so-called “Great Grid Upgrade.” ICYMI, Charlie had this story last week on why pylon politics is here to stay.

**A message from SSE: Want to achieve a decarbonised power system by 2035? Then now is the time to be bold on carbon capture. SSE has projects ready to go. But urgent action is needed, right now. Find out more.**

UPGRADES NEEDED: The government must upgrade 6 million homes with energy efficiency measures in order to meet its target of a 15 percent reduction in energy demand by 2030, according to a report published later today.

The insulation dearth: The report from Scottish Power and conservation charity WWF found that only 1.1 million homes are covered by current insulation policies, while a further 1.5 million need heat pumps.

Bills bills bills: It also found that homes fitted with clean technologies — think electric car chargers and solar panels — could save up to £2,300 per year on their bills. 

Quote: “Insulating millions more homes is vital for the government to meet its energy efficiency target and could benefit households to the tune of hundreds of pounds every year,” said WWF’s Head of Climate Isabella O’Dowd.

IN THE WEEKEND PAPERS: In case you missed it, Energy Secretary Grant Shapps was interviewed in the Telegraph on Saturday, where he reaffirmed the government’s plans to U-turn on a hydrogen levy and insisted that the net zero transition need not cost taxpayers a lot of money.

Bills backlash: But some of his colleagues are still worried about costs. In the paper’s Sunday edition, Jacob Rees-Mogg, a former energy secretary, railed against government plans to reintroduce £170 in green levies on energy bills from July. The government told the Sunday Telegraph that it is acting because overall household costs are coming down.

No coal law: The paper also reports that ministers have decided not to legally ban coal power generation in Britain. The government had planned to outlaw coal from October 2024 but now says that, as generators are already committed to a phase-out, it is “not necessary to legislate to deliver this commitment.”

Renewables: Today’s Telegraph carries a look at the woes of the offshore wind sector, touching on themes that will be familiar to MECUK readers: spiraling costs, sclerotic planning rules and shrinking subsidies.

Yet more from the Telegraph: The paper is really leaning into the net zero-skeptic argument. After former Brexit supremo and darling of the Tory right David Frost argued in its pages that the U.K. should delay its net zero target, it followed up with a leader column arguing that Sunak, Shapps et al are taking a “bizarrely punishing approach” by sticking with the legally-mandated 2050 deadline. The Tories should instead “create a new dividing line in British politics” and argue that they’re “prioritizing cheap energy and reliable supplies,” the leader said.

XR FUNDER TELLS XR TO STOP: Meanwhile, the Sunday Times reported that U.S. entrepreneur Trevor Neilson, a founder of the Climate Emergency Fund which has backed Extinction Rebellion and Just Stop Oil, now fears that some protesters’ tactics have become “disruption for the sake of disruption” and counterproductive to the cause. Legislation like the Inflation Reduction Act in the U.S. shows that the climate is now firmly on the agenda of world leaders, Neilson argued, adding: “Blocking bridges is a lot easier than building bridges, and that is what we need to do if we are going to succeed.”

BP OR NOT BP: The Statistical Review of World Energy was published overnight. This is the same annual report put out by BP since 1952 — but responsibility now lies with the sector’s professional membership body, the Energy Institute .

Findings: The report found that global energy-related emissions and fossil fuel consumption were up last year, despite renewables growing as a share of the global energy mix.

First, some good news:  The new-build capacity of wind and solar power grew to record levels, the report found, and represented a combined 12 percent share of power generation in 2022. Solar power output increased 25 percent; wind power was up 13.5 percent. In total, renewables met 84 percent of net electricity demand growth last year, the report said. 

Plugging the gap: Renewables also had a larger role to play in new energy consumption than gas. While global primary energy consumption grew by 1 percent, gas fell by 3 percent while renewables grew by 13 percent. 

But but but … This wasn’t enough to offset the dominance of fossil fuel consumption, which remained at 82 percent.

Missing Paris targets: “Despite further strong growth in wind and solar in the power sector, overall global energy-related greenhouse gas emissions increased again. We are still heading in the opposite direction to that required by the Paris Agreement,” said Juliet Davenport, president of the Energy Institute, ominously.

ZOOM IN: Setting aside the global figures, Mark Williams, senior analyst at the trade body EnergyUK, told MECUK that the U.K. had made good progress on rolling out renewables compared to other countries with a similar grid mix, but warned we “need to go a lot further.”

Quote: “That’s [progress] just in electricity,” he said. “The big thing I think people don’t speak about perhaps as much is the rest of energy … The petrol we put in our cars, the gas we put in our boilers. We are yet to make as much progress in the U.K. in those spaces as we have in electricity.”

Got to catch up: Williams added: “We need to electrify transport and heating and we also need to have much much more energy efficiency, particularly in housing. That’s somewhere where, particularly compared to Europe, we are a long way behind.”

**A message from SSE: Time to be bold. Carbon capture and storage is key to helping Britain reach net zero.  Because when the wind isn’t blowing and the sun isn’t shining, we need flexible low-carbon technologies to decarbonise our power system, enabling us to deliver cleaner, cheaper and more secure homegrown energy, level up our industrial heartlands and protect and create jobs in communities across the country. The UK has made a start on carbon capture and storage, but needs to move faster and further if we are to achieve a decarbonised power system by 2035. SSE has carbon capture projects ready to go in Scotland and the Humber, but time is running out. Actions, not ambitions will secure our energy future.  SSE. We Power Change. Find out more.**