Thursday, 1 December 2016

OPEC Decision to cut production - legal background

On 30 November 2016 OPEC held its 171st meeting in Vienna, Austria. It decided, for the first time since 2008, to cut-down on its oil output. Over the coming 6 months the cartel wants to produce 1.2 million barrels of oil less per day, compared to current output. The new limit on total OPEC output shall be 32.5 million barrel per day. Implementation of the new deal shall start on 1 January 2017.
(http://www.opec.org/opec_web/en/press_room/3912.htm) In this short piece some background information on the decision and  its legal basis is provided.

Wednesday, 23 November 2016

28th European Energy Law Seminar

The Dutch Energy Law Association announced today that the upcoming 28th round of the European Energy Law Seminar will be held on 23 and 24 January 2017 in Hampshire Hotel - Babylon The Hague, Netherlands.


The European Energy Law Seminar is jointly organized by the Dutch Energy Law Association NEVER, the Groningen Centre of Energy Law and the Scandinavian Institute of Maritime Law, University of Oslo. The seminar brings together European energy law professionals and scholars with those from neighbouring countries, like Norway. It is an opportunity to keep up to date on latest EU energy law developments, gain insights into emerging issues and exchange experiences with colleagues.
 
The finalized programme and all further details will be available asap at the Association`s  website www.never.nl. Registration will be possible via that website.
 

 

Monday, 14 November 2016

President Elect Donald Trump - Blackbox Energy?

Slowly the dust is settling after a hard-fought campaign to become next President of the United States. Donald Trump won that race for the White House - but what will his energy and climate policies look like and is he able to implement his ideas? In this short piece some of the pillars of his climate and energy policies are assessed and their legal feasibility discussed.

Thursday, 10 November 2016

Germany is fundamentally changing its Renewable Energy Law

On 8 July 2016 resolved the German parliament Bundestag the EEG-Novelle 2017. This amendment to the German Renewable Energy Law (Erneuerbare Energien Gesetz EEG) introduces major changes to the current system. The main alterations are as follows.

Tuesday, 1 November 2016

Is UK shale gas policy about to change?


Recent developments indicate that  implementation of  the UK –government`s pro-shale gas policy is being accelerated. In December2012 the administration of then Prime Minister David Cameron decided to lift a pre-existing moratorium on shale gas extraction http://www.decc.gov.uk/en/content/cms/news/wms_shale/wms_shale.aspx . As a reaction,  Scotland joined Northern Ireland in putting into place a moratorium on shale gas extraction.

In England, however, shale gas extraction is encouraged by the executive. In order to overcome resistance of local councils towards one particular technical component of shale gas extraction, hydraulic fracturing or `fracking`, Whitehall put into place a number of tax-incentives.  Councils may, inter alia, keep 100 per cent (as opposed to the hithereto 50 per cent) of business rates (in effect property taxes) that they collect from shale gas sites.[1] This right could be worth up to 1.7 million pound per year per site.[2] That move has been labelled by Gordon/McHeigh/Paterson as an `apparent attempt to encourage English authorities to approve fracking applications`.[3] There have been indications that the policy works. For instance,  North Yorkshire Council in May 2016 gave the green light for the first exploratory works to be carried out at a shale gas site in England.[4]

Despite this punctual success, legal scholars warned that councils overall `continued to hesitate before approving fracking applications (…)`.[5] The UK government is now apparently on the brink of changing its `carrot` to a `stick`-approach. According to the Guardian,  Communities secretary Sajid Javid just accepted an appeal by the shale gas company Cuadrilla against an earlier decision of Lancashire council to reject  plans to frack. This means exploratory fracking of four wells in the area is now possible. The council cited visual impact and noise when it turned down the company’s two planning applications to frack on the Fylde last year, but a month later Cuadrilla submitted an appeal https://www.theguardian.com/environment/2016/oct/06/uk-fracking-given-go-ahead-as-lancashire-council-rejection-is-overturned. It remains to be seen whether this is a one-off decision. According to the NGO `Frack Off`, several other applications for exploratory shale gas drilling could be subjected to the same procedure in the future www.frack-off.org.uk/locations .



[1] Jill Morgan `Sustainability and stakeholder participation: shale gas extraction in the United Kingdom` in John C Dernbach and James R May (eds.) `Shale Gas and the Future of Energy Law and Policy for Sustainability` (Edward Elgar Publishing, Cheltenham, 2016) 150 (hereinafter: Morgan); Greg Gordon and Aileen McHarg and John Paterson `Energy Law in the United Kingdom` in Martha M Roggenkamp et al. (eds.) `Energy Law in Europe` 3rd edition (Oxford University Press, Oxford 2016) paragraph 14.30 (hereinafter: Gordon/McHarg/Paterson).
[2] UK Government `Local Councils to Receive Millions in Business Rates from Shale Gas Developments` 13 January 2014 available at: http://www.gov.uk/government/news/local-councils-to-receive-millions-in-business-rates-from-shale-gas-developments  [accessed 10/June/2016].
[3] Gordon/McHarg/Paterson paragraph 14.34.
[4] Josh Halliday, The Guardian `North Yorkshire Council backs First UK Fracking Test for Five Years` available at http://www.theguardian.com/environment/2016/may/23/north-yorkshire-council-backs-first-uk-fracking-tests-for-five-years?CMP=fb_gu [accessed 10/June/2016].
[5] Gordon/McHarg/Paterson paragraph 14.34.

Tuesday, 25 October 2016

Balticconnector gets Go-Ahead - improving energy security or waste of subsidies?

The European Commission announced on Friday 21 October that a first bi-directional gas pipeline will be built between Finland and Estonia. According to the EU, the offshore gas-pipeline between
the two states will end `gas isolation` of Finland by connecting it to the continental European network and increasing the security of gas supply and solidarity in the region, see: http://europa.eu/rapid/press-release_MEMO-16-3476_en.htm




Although the pipeline will be build by the Estonian TSO Elering http://gaas.elering.ee/en/balticconnector/, the EU is footing 75 per cent  of the bill, because the project would not be commercially viable without massive EU support. The money is coming from the EU`s `Connecting Europe Facility Energy (CEF-Energy), http://ec.europa.eu/inea/en/connecting-europe-facility/cef-energy.  According to  the EU, Finland is going to profit the most, as its current `gas isolation` from the European market would be tackled and its energy security improved: http://europa.eu/rapid/press-release_IP-16-3470_en.htm



This line of reasoning, however, lends itself to controversy. Given the fact that Estonia is still totally dependent on Russian imports to meet its demand for natural gas the claim that energy security in the region will get a substantial boost appears to be questionable. Even though Estonia recently underwent efforts to diversify its gas supply-structure by buying gas from neighbouring Lithuania, the Ministry of Foreign Affairs of the Republic of Estonia concedes that Lithuania itself is importing the gas from Russia, see: http://vm.ee/en/newsletter/estonian-dependence-russian-gas-past-says-elering-chief . However, as a bottom line Finland is gaining access to the wider European gas market, but whether or not this advantage justifies a €187 million grant for works (75 per cent of total costs of the pipeline) by the EU remains to be seen. The Press release of the EU is reproduced below:

Germany ceases Gas-Imports from the Netherlands by 2029


The German government decided to end the current practice of importing Dutch gas by 1 October 2029, according to the German energy regulator Bundesnetzagentur  http://www.bundesnetzagentur.de/cln_1421/DE/Sachgebiete/ElektrizitaetundGas/Verbraucher/NetzanschlussUndMessung/UmstellungGasbeschaffenheit/UmstellungGasqualitaet-node.html (German language version only). This decision requires a switch of the German gas infrastructure away from the use of Low calorific Gas (L-Gas). Currently almost 5 million gas customers in Germany are using L-Gas, whereas all  other German customers are being supplied with High calorific Gas (H-Gas) from Norway, Russia and Great Britain. The use of L-Gas is still widespread in the German state of Lower Saxony (where the biggest part of German domestic  gas production is taking place) and along the border with the Netherlands.

According to the German energy regulator Bundesnetzagentur gas production in the Netherlands and Germany is in steep decline and a switch to countries supplying H-Gas is required to meet German demand http://www.bundesnetzagentur.de/SharedDocs/Downloads/DE/Allgemeines/Bundesnetzagentur/Publikationen/service/UmstellungLGas.pdf?__blob=publicationFile&v=3 (German language version only).
With a view to making the switch, German energy companies and the Bundesnetzagentur claim that the end-consumer will not be affected. They are pointing towards § 19a Energiewirtschaftsgesetz. According to sentence one of this paragraph, the companies have to bear the costs of switching from L-Gas to H-Gas.

However, the paragraph also entails a second sentence, which establishes that the costs of changing from L-Gas to H-Gas do not merely have to be borne by the users of the particular grid where the switch is taking place. Instead, the costs have to be re-allocated amongst all gas grids in Germany. This might result in higher tariffs for gas transportation and such price-increases might then be passed-on to German gas customers. Thus, the end-consumer in the whole of Germany could ultimately pay the bill.

Wednesday, 19 October 2016

Urgenda Foundation v The Netherlands (C/09/456689 / HA ZA 13-1396) - Case Comment

Much has been written about the infamous Urgenda-case, in which the Urgenda Foundation successfully challenged the Dutch government to adopt more stringent climate policies. http://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBDHA:2015:7196
For the first time a court forced a government to amend its climate change goals. The district court of The Hague found the current government`s approach insufficient to reduce the Dutch share in global emissions. The appeal of the government is still pending.

I wrote a little piece on one particular aspect of the verdict, the interplay between the precautionary principle and climate change policies.

Sunday, 16 October 2016

Almost 200 countries agree to ban the use of hydrofluorocarbons (HFCs) under Kigali Amendment to Montreal Protocol on Substances that Deplete the Ozone Layer

The United Nations Environment Programme (UNEP) announced earlier today that nearly 200 countries struck a landmark deal  to reduce the emission of a powerful greenhouse gas, hydrofluorocarbons (HFCs), in a move that could prevent up to 0.5 degrees celsius of global warming by the end of this century, see: http://www.unep.org/newscentre/Default.aspx?DocumentID=27086&ArticleID=36283&l=en

UNEP claims that:
`The amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer endorsed in Kigali today is the single largest contribution the world has made towards keeping the global temperature rise "well below" 2 degrees Celsius, a target agreed at the Paris climate conference last year.
"Last year in Paris, we promised to keep the world safe from the worst effects of climate change. Today, we are following through on that promise," said UN Environment chief Erik Solheim.
"This is about much more than the ozone layer and HFCs. It is a clear statement by all world leaders that the green transformation started in Paris is irreversible and unstoppable. It shows the best investments are those in clean, efficient technologies."
Commonly used in refrigeration and air conditioning as substitutes for ozone-depleting substances, HFCs are currently the world's fastest growing greenhouse gases, their emissions increasing by up to 10 per cent each year. They are also one of the most powerful, trapping thousands of times more heat in the Earth's atmosphere than carbon dioxide (CO2).
"The faster we act, the lower the financial costs will be, and the lighter the environmental burden on our children," said President of Rwanda Paul Kagame.
"That begins with a clear signal that change is coming and it is coming soon. In due course, new innovations and products will allow us to phase out HFCs even faster, and at lower cost."
The rapid growth of HFCs in recent years has been driven by a growing demand for cooling, particularly in developing countries with a fast-expanding middle class and hot climates. The Kigali amendment provides for exemptions for countries with high ambient temperatures to phase down HFCs at a slower pace.
"It is not often you get a chance to have a 0.5-degree centigrade reduction by taking one single step together as countries - each doing different things perhaps at different times, but getting the job done," said US Secretary of State John Kerry.
"If we continue to remember the high stakes for every country on Earth, the global transition to a clean energy economy is going to accelerate."
Phase down schedule
Following seven years of negotiations, the 197 Montreal Protocol parties reached a compromise, under which developed countries will start to phase down HFCs by 2019. Developing countries will follow with a freeze of HFCs consumption levels in 2024, with some countries freezing consumption in 2028.
By the late 2040s, all countries are expected to consume no more than 15-20 per cent of their respective baselines.
Financing and alternatives to HFCs
Countries also agreed to provide adequate financing for HFCs reduction, the cost of which is estimated at billions of dollars globally. The exact amount of additional funding will be agreed at the next Meeting of the Parties in Montreal, in 2017. Grants for research and development of affordable alternatives to hydrofluorocarbons will be the most immediate priority.
Alternatives to HFCs currently being explored include substances that do not deplete the ozone layer and have a smaller impact on the climate, such as ammonia or carbon dioxide. Super-efficient, cost effective cooling technologies are also being developed, which can help protect the climate both through reducing HFCs emissions and by using less energy.
The Kigali Amendment comes only days after two other climate action milestones: sealing the international deal to curb emissions from aviation and achieving the critical mass of ratifications for the Paris climate accord to enter into force.´

Saturday, 15 October 2016

Livestream ICSID Case Vattenfall v Germany (ICSID Case No. ARB/12/12)

The International Centre for the Settlement of Investment Disputes (ICSID) is currently engaged in hearings in the case Vattenfall v Germany. ICSID is providing a livestream of the hearings: https://icsid.worldbank.org/apps/ICSIDWEB/Pages/News.aspx?CID=211&ListID=74f1e8b5-96d0-4f0a-8f0c-2f3a92d84773&variation=en_us
This arbitration is concerned with the aftermaths of Germany´s decision to phase out nuclear power. The company Vattenfall argues that the way in which the German government implemented that decision amounts to expropriation. The case is primed to be groundbreaking and will set an important precedence on the leeway of a state to phase out nuclear power and the resulting financial damages for companies.

New Article ´Shale Gas Extraction, Precaution and Prevention: A Conversation on Regulatory Responses´

My colleague Leonie Reins and me just wrote an article on shale gas extraction and its regulation under the precautionary and the preventive principle. The article may be accessed via: http://authors.elsevier.com/a/1TogH7tZ6ZbhGy
Shale gas in the EU and its Member States faces increasing attention from a regulatory perspective. Questions about the role of law regarding the development of shale gas extraction in Europe are being asked. The role of law within science, as Laurie et al. suggest, involves an important decision: “whether the law is an enabler or a prohibitor of technologies” (Laurie, G., Harmon, S.H., Arzuaga, F., ‘Foresighting Futures: Law, New Technologies, and the Challenges of Regulating for Uncertainty’ 4 Law, Innovation and Technology 1 (2012), 1–33, at 10), At best, the law should promote the development of a technology without unduly compromising the protection of society and the environment from consequences of uncertainties and potential threats of an associated technology (Laurie, G., Harmon, S.H., Arzuaga, F., ‘Foresighting Futures: Law, New Technologies, and the Challenges of Regulating for Uncertainty’ 4 Law, Innovation and Technology 1 (2012), 1–33, at 10). The principles of precaution and prevention are the two main tools of European law, which shall help to strike a balance between enabling and prohibiting the development of an emerging energy technology like shale gas extraction. This article departs from the perspective that law at EU level is imposing control on the management of “known” risks via the preventive principle. Regarding “uncertainties” or “unknowns”, decision makers are legally obliged to be guided by the precautionary principle. This paper discusses the two environmental law principles – precaution or prevention – and contemplates which of them would be most apt for guiding the regulation of shale gas extraction in Europe. It concludes that regulation on shale gas extraction could be based on either of these principles for different reasons.

Welcome

Welcome to this blog on energy and climate law. Its aim is to share new developments in the said fields and to make knowledge on energy and climate law accessible. Please feel free to comment and/or get in touch.