Published: August 2016Contents
i) What are the hot topics?
There have been significant efforts to reduce greenhouse gases, important infrastructure development needs and continued low oil and gas prices. There have also been divergent positions on existing and future nuclear power generation, and further liberalisation of the energy sector.
ii) Tell us about any key legal developments – recent or pending – and their international impact.
With respect to climate change efforts, 177 countries signed the Paris Agreement and 17 countries have ratified the Paris Agreement, which will enter into force after at least 55 countries representing at least 55 per cent of the global greenhouse gas emissions ratify the Agreement. Even prior to the effectiveness of the Paris Agreement, significant carbon reduction efforts are taking place, such as increased development of renewable resources, as well as energy efficiency and demand reduction measures.
There are significant energy sector regulatory reforms in many countries. Italy has opened up distribution systems to retail competition and trading, and has seen the widespread introduction of smart meters. Portugal will complete its transition to competition in the energy markets by the end of 2017. South Africa is liberalising its generation sector through a massive procurement programme from independent power producers. Australia is in the midst of restructuring its electricity sector through retail competition. Japan is seeking full retail competition this year, as well as the unbundling of the transmission sector from the generation sector, and is seeking to achieve similar reforms (retail competition and unbundling) in the gas sector. Korea announced a new energy plan to deregulate energy markets and mitigate the monopoly power of the majority state-owned utility company by, among other things, encouraging customer-side generation projects.
iii) What are the biggest opportunities and challenges for practitioners and clients?
Low oil and gas prices continue to have adverse effects for the United Arab Emirates, Mexico, Angola and Nigeria. Exploration and production activity have slowed in the United States because of current oil and gas prices, and low gas prices have led to increases in coal plant retirements. Since the relaxation of certain US and international sanctions against Iran, Iran is now looking to attract US$200 billion in investment in its oil and gas industries over the next five years, which may be challenging with today’s low oil and gas prices. China is also looking for assistance with shale exploration in the Sichuan Basin, with mixed levels of interest from potential investors. Mexico has also sought to eliminate some of its regulatory uncertainty as a way to attract new investors.