Routledge Handbook of Energy Law

Tina Hunter, Ignacio Herrera, Penelope Crossley, Gloria Alvarez, Tina Hunter, Ignacio Herrera, Penelope Crossley, Gloria Alvarez

• Publisher: Routledge
• Year: 2020
• ISBN:
  9780429835063
• Edition: 1
• Topic: Diritto
• Subtopic: Teoria e pratica del diritto

The Routledge Handbook of Energy Law provides a definitive global survey of the discipline of Energy Law, capturing the essential and relevant issues in Energy today. Each chapter is written by a leading expert, and provides a contemporary overview of a significant area within the field.

The book is divided into six geographical regions based on continents, with a separate section on Russia, an energy powerhouse that straddles both Europe and Asia. Each section contains highly topical chapters from authors who address a number of core themes in Energy Law and Regulation:

• Energy security and the role of markets

• Regulating the growth of renewable energy

• Regulating shifts in traditional forms of energy

• Instruments in regulating disputes in energy

• Impact of energy on the environment

• Key issues in the future of energy and regulation.

Offering an analysis of the full spectrum of current issues in Energy Law, the Routledge Handbook of Energy Law is an essential resource for advanced students, researchers, academics, legal practitioners and industry experts.

Chapter 12 of this book is freely available as a downloadable Open Access PDF at http://www.taylorfrancis.com under a Creative Commons Attribution-Non Commercial-No Derivatives (CC-BY-NC-ND) 4.0 license.

PART I
Introduction

1

INTRODUCTION TO THE ROUTLEDGE HANDBOOK OF ENERGY LAW

Tina Soliman Hunter and Ignacio Herrera Anchustegui

1 Introduction

The importance of energy is beyond question. Indeed, few things are as indispensable as energy. As an energy source, no single fuel is more indispensable than petroleum. As noted by prominent political economist Edward Morse, petroleum has proven to be the most versatile fuel source ever discovered, situated at the core of the modern industrial economy.¹ With such versatility has come inevitable growth – increasing growth in the consumption of oil, economic growth fuelled by the consumption of oil (and now gas) and population growth on the back of the ‘Green Revolution’.² Our reliance on petroleum has come at great costs – political, economic and, most of all, environmental. There is little doubt that the unbridled consumption of hydrocarbons over the last century, from coal to oil to gas, has brought about changes in the climate of the Earth. These climatic shifts, combined with concerns over nuclear energy after the 2009 Fukushima nuclear accident, and technological developments in the field of competitive renewable generation of energy have prompted a shift from the consumption of hydrocarbons to low-carbon energy as society becomes more electrified.

While there are numerous monographs studying different forms of energy, technologies, legal challenges, problems or comparative solutions, this Handbook is different. Rather than examining legal aspects related to energy from a source perspective, we have decided to approach the analysis of energy regulation from a geographical perspective. This approach has been undertaken since many issues are confined to regions, rather than sectors. For example, as noted by the BP Statistical Review of Energy, the Asia-Pacific region has the highest consumption of hydrocarbons (oil, gas and coal) of any region in the world.³ By considering existing and emerging energy issues on a regional basis, we are able to highlight regional perspectives and unique issues, as well as place them within a global context.

1 Edward Morse, ‘A new political economy of oil’ (1999) 53(1) Journal of International Affairs, 1–29, 2.

2 The ‘Green Revolution’ denotes the large increase in the production of crops, especially cereal crops, as a result of the application of artificial fertilisers derived from petroleum products. This revolution commenced in the 1950s, with the global impact occurring during the 1960s..

3 BP, BP Statistical Review of World Energy (2019), 10, https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf

This unique approach enables us to present a truly worldwide contribution to energy law, illustrating that different regions experience different issues when it comes to the regulation of energy. While some continents, such as Europe, North America and Australia, are more focused on challenges posed by new technologies and energy forms – such as demand side management solutions in electricity markets, disputes over the most efficient regulation of energy markets and competition in them or the impetus given to low-carbon energy forms or non-conventional hydrocarbon sources – other areas, such as Latin America, Russia and the Middle East, remain focused on issues relating to petroleum extraction, state intervention and resource ownership. This however, is not to say that new technologies and low-carbon energy forms are not of importance in these jurisdictions. Although, as demonstrated in this book, these issues are important, the regulatory focus on new technologies in these regions tends to differ, conditioned by the traditional hydrocarbon-based sources. This tension between hydrocarbon-based forms of energy based on the extraction of oil and gas with new low-carbon energy sources is prompted mainly by the political and economic will of many countries to limit climate change and implement less polluting energy forms pursuant to international obligations, such as the Paris Agreement.⁴ As the Age of Hydrocarbon Man gives way to the Age of Electricity Man, new regulatory and socio-legal challenges arise. This volume seeks to capture such challenges in this, the era of energy transition.

This chapter introduces the global energy regime today, and the challenges arising now, in the present, but also in the future. Therefore, it will first provide an outline of the current energy landscape. It will consider the origins of Hydrocarbon Man, and the Age of Hydrocarbons, before demonstrating how the Age of Electricity Man is imminent. It will conclude with a consideration of the contents of the book, outlining what each of the regional sections will be considering.

2 The energy landscape

Today’s energy landscape is complex. In the last decade, the use of gas as a source for heating and electricity generation has grown markedly.⁵ Certainly in the post-war era there was a focus on the use of oil, as outlined in section 3 below. However, this new millennium has been characterised by the use of gas, a most versatile fuel. And in the decades to come the trend seems to shift from gas to society electrification, as we discuss in section 4. Gas can be used directly for heating, the generation of electricity or, in combination with other energy sources, such as coal or renewable energy to ‘boost’ the energy.

Such a shift from oil to gas has seen a shift in geopolitical power. From the 1960s, the rise of the Organization of the Petroleum Exporting Countries (OPEC), both as an entity and market participant, has delineated a shift in the ‘power’ of control. Whereas oil production in foreign lands was once the domain of large international oil companies (the ‘Seven Sisters’),⁶ nationalism in the 1950s and 1960s saw many states take control over production of their oil resources. Most notable of these was Saudi Arabia, with the total nationalisation of its oil operations by the 1980s. Many other nations, such as Mexico, Venezuela and Bolivia, have followed suit, with varying degrees of success. This meant that OPEC grew to dominate the control of oil, particularly during the last three decades of the twentieth century.

4 Paris Agreement of 12 December 2015.

5 For instance, global demand for gas increased 4.6 per cent in 2018 alone, with the US leading this growth as it switches from coal to gas for the generation of electricity. See the International Energy Agency (IEA), ‘Growing demand for gas’ (2019), https://www.iea.org/gas2019.

6 The current ‘Seven Sisters’ (of which there are now four due to mergers) are: BP (former Anglo-Iranian Oil Company); Chevron (comprised of Gulf Oil, Texaco and Standard Oil Company of California); Royal Dutch Shell; and Exxon-Mobil (former Standard Oil company of New Jersey, then Exxon, and Standard Oil company of New York, later Mobil).

A seemingly simple combination of existing technologies (horizontal drilling, hydraulic fracturing and three-dimensional seismic modelling) by non-conventional pioneer George Mitchell in the early 2000s created a tectonic shift in petroleum production resulting in a shift in the energy landscape. As a consequence of this technological coupling, the shale petroleum (both oil and gas) industry was born.⁷ With it came two epochal changes. First, was the availability of abundant, cheap gas in the US. This enabled changes in many sectors, fuelled a new wave of US manufacturing and was the basis upon which Donald Trump was able to push for his policy of ‘America First’. Secondly, and most importantly, the development and growth of shale oil and shale gas has meant that the US has shifted from being a net energy importer to not only being self-sufficient, but also a net energy exporter. This has shifted the energy geopolitical landscape to one where the US is top dog, and the former dominant force, Saudi Arabia, is no longer the largest energy producer or exporter.

This rise in the power and importance of the US as an energy giant has caused a realignment in approaches to oil in the Middle East. As this chapter is being written, oil facilities in Saudi Arabia are being bombed, forcing the planned Initial Public Offering (IPO) of 5 per cent of Saudi Aramco to be changed to just about 1.5 per cent and which has been received by investors with less enthusiasm than expected. What is of major interest here is not so much the bombing of the oil facilities and the attribution of blame, but the fact that Saudi Arabia is seeking to sell part of the world’s largest company, Saudi Aramco. The idea that there will be a partial privatisation of Saudi Aramco is incredible, given decades of public focus on Saudi self-determination. However, as oil resources decline, and global energy sources shift to include low-carbon energy, it is clear that Saudi Arabia needs to effect change. Such change is outlined in the new Saudi Vision 2030, which envisages growth in the economy through industrial diversification and support in the renewable energy sector,⁸ and the privatisation of government services, including Saudi Aramco.⁹

At a time when oil-associated power is shifting, climate change is contributing to another shift –from hydrocarbon-based energy to low-carbon energy. Recognition of the existence and impact of climate change has been slow. Some movement towards low-carbon energy sources has been significantly developed in the wake of the 2009 Fukushima nuclear accident in Japan. In response to the accident, several countries, particularly Germany, sought to divest themselves of nuclear energy as a source, looking to low-carbon energy sources to fill the energy gap. This move towards low-carbon energy was supported by the European Union’s (EU’s) third energy package, which sought to increase the percentage of renewable energy in the energy mix, as well as improve energy efficiently, which continues with the 2018–2019 EU ‘Clean Energy Package’.

Recently, Greta Thunberg, and her Extinction Rebellion movement, has significantly raised global awareness of the risks associated with climate change. In espousing four interwoven themes (humanity is facing an existential crisis, perpetuated by the current adult gen...