Youseph Farah and Malakee Makhoul
European Union oil and gas companies occupy a significant share of the extractive industry, and have a significant global reach. While this can bring benefits for communities by creating wealth and jobs, adding value and providing services, sometimes corporate activity can have an adverse effect on people and the environment. When this happens, the people whose human rights have been affected often seek reparation, and expect the company to be held to account. Victims have increasingly sought a remedy in the home state of the parent company either in relation to its direct acts or the unlawful conduct of its subsidiary in the host state. Whilst there are some isolated success stories, evidence suggests that victims choosing court litigation within the EU or in other home states such as the US, continue to face factual and legal challenges associated with court litigation. We place the debate within the EU’s commitment to business and human rights. The European Commission has endorsed the ‘United Nations Guiding Principles on Business and Human Rights’ (UNGPs), and has committed to supporting their implementation, encouraging companies to adhere to internationally recognised human rights, guidelines and principles. In relation to the oil and gas sector, the European Commission issued a non-binding ‘Oil and Gas Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights’, advising on how to implement the corporate responsibility to respect human rights in daily business operations. The chapter argues that, for several reasons, the ‘Oil and Gas Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights’ does not go far enough in improving the access to remedy. Specifically, this chapter advocates that due to the unique legal and business structure of oil and gas companies’ engagement, for those victims of business-related human rights violations in the oil and gas sector, unilaterally binding alternative dispute resolution processes may complement a state’s duty to offer an effective access to a remedy for victims of business-related human rights violations, and improve the effectiveness of the UNGPs. Keywords: United Nation Guiding Principles on Business and Human Rights, UNPGs, European Union law, Oil and Gas Sector Guide, access to justice, access to effective remedy, Alien Tort Statute, unilateral binding arbitration, non-judicial grievance mechanisms, alternative dispute resolution.
The transition to low-carbon energy systems is the pivotal political economy issue for the EU, as it stands in the nexus of energy, politics and markets. With power markets developing into dynamic energy system integrators, smart grids emerge as the all-powerful structures that can help achieve the EU’s three principal energy security goals, namely sustainability, security of supply and affordability. Smart grids integrate renewable sources at the upstream level, advance overall renewable generation, including self-generation, enable energy efficiency and conservation, and promise to achieve low carbon security and hedge against the volatility of international energy markets. On the other hand, smart grids call for high upfront investments and the establishment of functional markets that necessitate large-scale citizens’ engagement, incentivization and education, as well as bridging the voluminous gap between textbook economics and the economy’s actual workings. Moreover, while realizing the transition to constantly balanced power loads by means of demand response management is highly promising, it may also generate a handful of adverse results. This chapter aims to critically discuss the trade-offs involved in the roll-out of smart grids and the existent barriers. In doing so, it provides a clear overview of the current state of the art, and suggests future research pathways.
Kim Talus and Pami Aalto
Energy has been at the core of the EU project since the beginning. However, a legal basis for EU action in this area was only created with the Lisbon Treaty. Article 194 TFEU now provides for objectives of EU energy policy and a framework to enact EU-level regulation in this area. This chapter examines the vertical division of competences between EU and its Member States. While the primary focus of the chapter is on the interpretation of the Treaty on the Functioning of the European Union and Article 194 in particular, the chapter also discusses questions relating to multilevel governance in the context of EU energy policy.
As has been recently demonstrated by the ‘Panama Papers’ and ‘Bahamas Leaks’ scandals, corruption is rife in our societies. Quoting Kofi Annan’s opening statement to the United Nations Convention against Corruption of 2004: ‘It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organized crime, terrorism and other threats to human security to flourish’. The origins of this social plague may be traced back to the outset of human civilization. However, it appears that this kind of unethical behavior is particularly rampant in the energy sector. This chapter will introduce the topic of corruption and analyze the reasons behind the fact that, almost unexpectedly, over the course of the last two decades corruption has gradually moved from the margins to the center of the international political stage. Then, the chapter will try to explain why, in the energy sector, such a criminal phenomenon has traditionally been wildly rampant, with extremely dramatic effects. Finally, the chapter will offer a vivid depiction of a recent tale of dishonesty, which is emblematic of the way in which corrupt practices are commonly perpetrated within the energy industry.
Guy Block and Elvira Saitova
The chapter analyses major changes in the EU legislation related to electricity and gas markets. After presenting the liberalisation process of the electricity and gas markets in the EU, the chapter examines recent developments that are aiming to adapt the current market rules to new market realities and concludes with the key challenges of the future.
József Feiler and Peter Vajda
This chapter departs from an assessment of the ‘energy trilemma’ – that is, energy security, energy equity and sustainability – and places it in the context of environmental economics and the internalisation of external costs. It briefly touches upon the two main approaches in EU environmental law that address these concerns, namely command and control measures and market-based instruments. It assesses the imperative of an energy transition and puts forward certain proposals for future research with the aim of achieving the much needed mainstreaming of the environmental and climate topic into international energy law and policy as well as economic law and governance.
The zonal entitlements and functional rights and obligations of the United Nations Convention on the Law of the Sea (UNCLOS) govern access to offshore energy resources and transit of energy resources via international shipping. Ongoing technological developments are deepening the nexus between the oceans and energy, placing increased pressure on the law of the sea in the management of overlapping activities and the resolution of disputes. These developments include: increasing energy-related pollution, in the forms of oil pollution, inadequate disposal or abandonment of offshore platforms and greenhouse gases from international shipping; the deployment of marine renewable energy installations; the discovery of previously unknown resources in the Exclusive Economic Zone, continental shelf and Area; and efforts to exploit the energy resources of the Arctic. In addition, energy considerations constitute a significant feature of ongoing disputes over maritime territory, such as in the Eastern Mediterranean. UNCLOS offers a robust frame for regulating these novel conditions. The European Union has an important role to play as a policy innovator and leading contributor to the development of international oceans law.
The EU faces some major energy policy choices, and a need to move away from fossil fuels, with nuclear energy and renewables often being presented as solutions, but also as polar opposites, in effect defining different pathways forward. Taking a wide view, this chapter explores this polarity, asking if these two options are indeed mutually exclusive. It concludes that, although some hybrid mixes may be possible, in many ways they are technically incompatible, and also reflect differing views on how society should develop. Those views will shape any specific prescriptions for energy technology research, development and deployment, although technological development and practices may influence what is deemed to be possible and desirable. Given that context, some research issues are outlined.
Jan Schmitz, Kai Menzel and Fabian Dittrich
Economists agree that a tax on externalities is one of the most efficient means to internalize the social cost of environmental pollution. However, the political reality in democracies has revealed complications in the rate-setting exercise. Without the willingness of voters to bear their full individual share of the social costs through taxation, rates are nearly always too low to fully internalize even the lowest estimates of the social costs of environmental damage and climate change. Furthermore, in its currently applied versions, such a tax acts as a regressive form of taxation, since energy expenses relative to disposable income are higher for low-income households than for higher-income households. The solution we propose to these two problems is straightforward: the entire revenue of energy taxation shall be given back to voters. Doing so on a per capita basis, reimbursing to each household the average amount of the energy tax paid, leaves the incentive structure of the taxation setting intact. Under such a setting, the payable energy tax is higher the more energy is consumed, while after reimbursement the average household bears no tax burden at all. Only households with above average energy consumption pay net energy taxes, low energy households would receive a net transfer. Energy savings continue to pay off individually, because the individual household can save energy (and lower tax payments) with the reimbursement remaining untouched. In the political realm, this should allow for much higher energy tax rates.