With its multiple facets, the legal side of decarbonisation may not be highly visible, but it is strategically important – starting now

15 July, 2020
The challenges of climate change seem to be taking a back seat to economic stimulus. However the process of decarbonising the economy should begin to pick up steam given the ecological origins of the health crisis, the call from 12 countries (including France) to make the Green Deal “a roadmap to responding to the economic crisis”, and the publication on 23 April 2020 of the decree adopting France’s low carbon strategy for achieving carbon neutrality in 2050. Over the last months, legal provisions from multiple sources are converging toward this larger reality and have created a legal framework. The regulatory approach taken in France plays a significant part here, although very similar measures do exist in a number of European countries. Read more

Investments in Energy: The Case for Oil and Gas [In a Nutshell]

06 July, 2020
Joining William Powell and Joseph Murphy of Natural Gas World, Lewis McDonald discusses what the future now looks like in terms of investments in energy, namely oil and gas. Given the burgeoning global population, rising standards of living and climate goals, there has been a serious increase in awareness and concern in global climate change around the world. The environmental, social and governance (ESG) agenda is now at the top of many companies’ priorities though currently appearing to mainly affect companies in Europe and less so in Asia. Prior to the outbreak of the Covid-19 pandemic, ESG was the major issue being discussed in board rooms. With about 12,000 entities, together controlling around $14 trillion, divesting or wanting to divest from fossil fuels primarily based on consumer demand and consumer sentiment and where the laws and regulation are heading, we have seen rather a chilling effect on investment in the oil and gas sector – and the big question is ... where does it all go from here… Read more

Future Cities Series: Emissions down in lock-down ⁠– how can we lock-in the climate gains?

26 June, 2020
We are well into the pandemic and lockdown in many regions, so it is natural to ask the question, “when will this end and when will we return to normal”... The problem is, “normal” was not sustainable, in so many ways. Those of us in the energy industry particularly know that to be true. The “business as usual” scenario put out by the International Energy Agency in its 2019 World Energy Outlook does not make for happy reading. It had us on a crash course towards over three degrees of temperature increase due to carbon dioxide emissions from fossil fuel consumption. The IEA also has a “sustainable development scenario” which keeps us within the Paris limits of 1.5 degrees. The only problem is that, according to the OECD, we would need to spend €6.3 trillion per year globally in each of the next 10 years for us to get there. To give you a feeling for how much money that is, the total size of the global economy is estimated at around $86 trillion. And so the challenge seems virtually impossible. Read more

UK Government intending to establish UK Emissions Trading System (UK ETS) post Brexit

24 June, 2020
After Brexit, the UK Government intends to establish a UK Emissions Trading System ("UK ETS") as a key part of the plan to achieve the net zero target. Background At present, the UK participates in the EU Emissions Trading System ("EU ETS"). This is a cap and trade system which is designed to incentivise individual installations to reduce their greenhouse gas emissions year on year, by setting ever reducing caps on the emissions which each installation is permitted to emit in a given year. Each installation is required to surrender allowances in respect of its measured emissions in the relevant year. Historically many allowances were given to installations for free, but increasingly such allowances must be purchased. Installations which reduce their emissions below the cap will have excess allowances which they are able to sell, providing a further incentive to reduce emissions. The EU ETS is seen as a key part of EU legislation driving reductions in greenhouse gas emissions from the power sector, industry and flights within the EU. Read more

Brexit – The future of the UK-EU energy market: what the draft UK and EU agreements can tell us

18 June, 2020
On 18 March 2020, the European Commission published a draft text of the Agreement on the New Partnership with the UK (the EU’s “draft agreement”); a previous draft of which had been published on 12 March 2020. Following the third negotiating round on the UK exit from the EU on 15 May 2020, the UK published on 19 May 2020 draft legal texts of a comprehensive free trade agreement (the UK’s “draft CFTA”) and a suite of accompanying, but separate, draft international agreements, two of which were a draft agreement on energy (the UK’s “draft energy agreement”) and a draft agreement on civil nuclear (the UK’s “draft civil nuclear agreement”). These drafts had been shared with the Commission during the preceding weeks, but not the Member States. Read more

A revised MER UK Strategy: Implications for UK Oil & Gas Participants

17 June, 2020
Last month, the Oil and Gas Authority (the “OGA”) released a consultation paper (the “OGA Consultation”) setting out its proposals to revise the Maximising Economic Recovery Strategy for the UK (the “MER UK Strategy”). The OGA’s proposed revisions are potentially far-reaching and are aimed at positioning the UK’s oil and gas industry as a solution, rather than an impediment, to achieving the Government’s carbon neutrality targets. In this briefing we review five key changes proposed in the OGA’s consultation document, and consider their impact on participants in the oil and gas industry. The MER UK Strategy will be familiar to all participants in the industry.  Since March 2016, the MER UK Strategy has had as its core obligation a requirement to “take the steps necessary to secure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters”. The OGA Consultation, released on 6 May 2020, has been issued in the wake of the UK government’s introduction of legislation in June 2019 to achieve carbon neutrality by 2050 (the “Net Zero Target”). Read more

New Beyond Brexit Legal Guide section available: Energy regulation

10 June, 2020
The updated Energy regulation section of our Beyond Brexit Legal Guide is now available.
This provides a useful overview, including:
  • that the EU’s version of the draft trade agreement between the UK and the EU seems to be based on the concepts contained in the current arrangements for the internal energy market (IEM), while the UK’s proposal is centred around energy trade across interconnectors, cooperation with transmission system operators and the European Network of Transmission System Operators, and decarbonisation objectives;
  • after the transition period, introduction of custom procedures and tariffs on trade between the UK and the EU may impact the energy sector;
  • after the transition period, new access rules for all electricity interconnectors need to be approved in the UK and with the relevant EU Member State authorities...
Read more

WEBINAR: THERE IS NO FUTURE FOR FRONTIER EXPLORATION

02 June, 2020
Bertrand Montembault, a partner in the Paris office of Herbert Smith Freehills who has built particular experience in the oil & gas sector in Francophone Africa, will be moderating an Oil Council webinar on Thursday 25 June at 11:00 BST which will discuss “There Is No Future For Frontier Exploration”. To register for this event... Read more