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.

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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.