A recent discussion with one of my partners, Paul Sheridan, who deals with environmental law, gave me some food for thought which I wanted to share with you.
At one time, environmental law was all about liability for pollution. Then it was all about protecting habitats and environmentally sensitive areas. Those things haven’t gone away, but these days, environmental lawyers are increasingly being asked to advise on much wider issues.
Much of the latest legislation impacting the energy industry is “environmental”; however, it is designed to protect not just individual environments, but our entire planet. The legislation requires the electricity generator or the building developer or the oil producer to achieve a certain aim, but it doesn’t tell them how to achieve it.
The argument is that the market is the best placed to decide how the generator achieves generation of a certain amount of clean energy; or the building developer achieves zero emissions from its buildings; or the oil producer acquires sufficient emissions certificates to match its carbon emissions.
This means the job of the lawyer is more rewarding. Instead of saying, “you can’t do that”, we have more creative work to structure transactions to satisfy the requirements of the various mechanisms.
Whatever your view of the climate-change debate and the UK Government’s response to it, it is a fact that production of energy from traditional sources is failing to keep up with energy demand, and prices are rising.
As a response to the convergence of the environmental legislation and the economic pressures of rapidly rising energy prices, we are going to see a revolution in the market for clean technology.
You will all be aware of the way in which the combination of the internet, cheap computing power and broadband have radically altered the way in which we conduct our businesses and live our lives over the past decade.
You can now download videos through your phone line, make phone calls on your computer and use your electricity cables to receive broadband, and before we know it, new houses will be set up so that you can switch the oven on from the office and check what is in the fridge while in the supermarket.
What I’m not sure I, or most of us, have yet quite come to grips with is that the results of this “clean-tech revolution” are likely to be even more radical.
In 10 years’ time, will we be plugging in our electric car by the supermarket door (and unlike my local supermarket, there will be a door to prevent heat loss from the building roofed with solar panels) while those still burning biodiesel have to park miles away?
Will our shopping trolley automatically calculate the carbon footprint of our purchases as we fill it?
I can’t even begin to imagine the technologies that we may be applying in the energy industry directly to ensure that we produce and use energy, from whatever source, in the most efficient way.
The key question is who will be developing all this technology that is undoubtedly going to revolutionise our lives over the next few decades?
Nicholas Stern has described the failure to address climate change as “the greatest market failure the world has ever seen”, but many people also believe that it presents an enormous market opportunity.
If he is correct in his main conclusions that 1% of global gross domestic product (GDP) per annum is required to be invested in order to avoid the worst effects of climate change, and that failure to do so could risk global GDP being up to 20% lower than it otherwise might be, then both the failure and the opportunity are clear, but are we seeing it or is all the innovation going to come from the US, China and India?
Scotland has a proud history of inventors – here is another opportunity. Huge amounts of investment money are available for those with good ideas for clean technology.
It’s a tall order when resources are already strained to provide the services needed by the oil and gas sector today, but the energy industry in the UK needs to reinvent itself.
People may have scoffed at “Beyond Petroleum” when BP used it as a marketing phrase, but perhaps, as so often, it was ahead of the game. Many oil and gas companies have expanded into the renewables sector and some of the service sector companies have followed suit – Ross Deeptech is an obvious example.
We have coming up in May at All-Energy the UK’s largest renewable energy exhibition – maybe we should all be going along to seek some inspiration.
Penelope Warne is head of energy at Cameron McKenna LLP
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