Uib.no UNIVERSITY OF BERGEN Development of Energy law Legal Challenges Professor Ernst Nordtveit Faculty of Law Insert «Academic unit» on every page: 1.

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UNIVERSITY OF BERGEN

Development of Energy lawLegal Challenges

Professor Ernst Nordtveit

Faculty of Law

uib.no

Introduction

• As an introduction to the workshop and the cooperation we are about to build between our institutions in energy law I will point out some of the legal challenges we are facing in development of the energy sector.

• It is important to discuss what law can – an cannot – do in relation to energy and to analyse what impact different forms of legal regime will have for the energy sector

• The legal challenges are linked to the challenges in providing the society with energy at a reasonable cost, without destroying the environment and other factors outside the legal system, but also to “internal” challenges in designing the legal system is a challenge.

Faculty of Law

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Energy, Economic Growth and the Environment

• Our modern standard of living are based on an increasing consumption of energy

• Energy is the basis for economic growth• Energy demand pr. capita is growing and the

World population is growing• The use of carbon based energy is creating global

climate change• How can we structure energy distrubution and the

energy market in order to achieve more non carbon based energy production and more effective use of energy?

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Energy Consumption and Growth

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Energy for a Growing Population

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World Energy production

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Is Oil coming to an end?

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Everything is Energy and Energy is Everything

• Our ability to produce energy, whithout exhausting the resources or damaging the environment or contribute to global warming will decide our future

• Russia and Norway are energy prodducers and exporters

• Gives these countries a special role and responsibility in providing energy, but also in governance of energy resources

• The management of the energy resources is a crucial factor in the economic and social development of our societies

• The regulatory system for production and distribution of energy will be of great importance for effective production and distribution of energy and for the economic diversification in our countries

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Energy law as legal discipline

• Legal questions related to production and distribution of energy– Access to Energy Resources– Production of energy– Organization of the Energy Market– Distribution of Revenue from Energy production– Natural resource management– Environmental issues relating to Energy production and

consumption

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Challenges related to the energy sources?

• Our main energy resources are hydrocarbons (oil, natural gas and coal)

• Nuclear energy does not contribute to global warming, but is controversial, especially after the Fukushima accident

• Renewable energy (hydro-power, wind, waves, thermal and solar energy) are not yet sufficient

• Natural gas are becoming more and more important (also shale gas), but also this is a fossil fuel that contributes to global warming

• Development of new energy resources are necessary but will take time. We need incentives to creativity and innovations

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International Energy Agency (IEA) Scenarios for 2035

• Gas overtakes coal before 2030 and meets one quarter of global energy demand by 2035 –demand grows by 2% annually, compared with just 1.2% for total energy

• Non-OECD countries account for 80% of demand growth –China alone makes up nearly 30% of global growth & uses as much gas as the EU by 2035

• Total electricity demand increases 70% by 2035, underpinned by a near doubling of gas-fired generation

• Trade in natural gas between major regions doubles to over 1 tcm by 2035, with Australia becoming a leading LNG supplier

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New infrastructure and market development is necessary in order to secure access to Energy

• Investments in production and distribution infrastructure is estimated to 6 trillion dollars pr year worldwide

• A functioning market for transport and sale of gas and electricity necessary to secure low prices and effective allocation of resources

• The energy market is dependent on transport capacity and a market organisation capable of connecting buyer and sellers and communicating market information so that the resources always can be directed where they are most needed and most valuable - and the consumer can obtain lowest possible price.

Faculty of Law

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The double challenge

• Good management of existing resources• Effective distribution and use of the energy resources• Energy resources as basis for economic and social

development• Legal development as a contribution to the necessary

transition from to a carbon neutral energy production and consumption

• A green energy sector?• Development of new legal models or institutions?

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What are the possible legal responses?

• Environmental problems has to a great extent been met by regulatory measures. Public decisions, prohibitions, concession rules, plans etc.

• To some extent effective, but involves high costs. Risk of policy failure

• Establishing institutional arrangements leaving more decisions to individuals, within a framework with incentives to protect the environment is an alternative, to traditional regulation

• Is the UNCLOS a sufficient legal basis for meeting the changes in the Arctic?

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Faculty of Law