Energy Law

On January 10, 2025, the U.S. Department of the Treasury and U.S. Department of State intensified sanctions against Russia with new measures targeting Russia’s energy sector. According to the Treasury Department’s press release, these measures are intended “to fulfill the G7 commitment to reduce Russian revenues from energy” and “substantially increase the sanctions risks associated with the Russian oil trade.”

The new U.S. sanctions include a determination by the U.S. Department of the Treasury authorizing the imposition of property-blocking sanctions against any person who is determined by the Treasury Secretary or Secretary of State (in consultation with one another) to operate or have operated in the Russian energy sector, and a determination issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) prohibiting—effective February 27, 2025—the provision of “petroleum services” from the United States or by a U.S. person to any person located in Russia. In addition, OFAC and the U.S. Department of State collectively designated for property-blocking sanctions more than 400 individuals, entities, and vessels from various countries involved in Russia’s energy sector, including two of Russia’s most significant oil producers and exporters—Public Joint Stock Company Gazprom Neft (“Gazprom Neft”) and Surgutneftegas, along with more than two dozen of their subsidiaries. The designations included more than 180 vessels, many of which are part of Russia’s “shadow fleet” of vessels involved in the trade of Russian oil, as well as several Russian energy executives, oil traders, oilfield service providers, and financial and insurance entities associated with Russia’s energy sector. The designations also covered two active Russian liquefied natural gas (“LNG”) projects and a Russian oil project.

On January 15, 2025, the U.S. Department of the Treasury and U.S. Department of State designated or re-designated under additional sanctions authority nearly 250 individuals and entities for property-blocking sanctions, including actors based in China.

OFAC also issued multiple general licenses related to the above designations, including a general license authorizing until February 27, 2025, transactions ordinarily incident and necessary to the wind down of transactions involving Gazprom Neft and Surgutneftegas, their designated subsidiaries, and entities that they own 50 percent or more, directly or indirectly, individually or in the aggregate, subject to certain conditions. In addition, OFAC revoked a general license that had authorized transactions with certain vessels subject to U.S. property-blocking sanctions due to their ownership, and amended two existing general licenses. One of these amended general licenses, General License 8L (which supersedes General License 8K), significantly narrows the scope of permissible energy transactions involving certain blocked financial institutions to include only wind-down transactions until March 12, 2025.

Continue Reading New U.S. and UK Sanctions, Including Related to Russia’s Energy Sector

On 18 November 2024, the International Energy Agency (“IEA”) published a detailed 163-page Report titled “Recycling of Critical Minerals: Strategies to Scale Up Recycling and Urban Mining” (the “Report”). The Report emphasizes the importance of recycling in securing the supply of essential minerals – such as copper, lithium…

Continue Reading Regulatory Insights from the IEA’s New Report on Recycling Critical Raw Materials

This note provides highlights of the UK’s recently released and remarkably sweeping Energy Security Bill.  If enacted, the Bill will have profound impacts on energy investments and the pace and scope of the energy transition in the UK.  Before detailing the Bill, some political context may be useful.

The Uxbridge …

Continue Reading UK Energy Policy – Hedging on the Energy Transition?

Various national competition authorities (“NCAs”) are continuing to consider sustainability arguments in competition cases. However, NCAs are increasingly diverging in their approach as to whether, and to what extent, they are willing to allow sustainability considerations in the competition law framework. This blogpost highlights a few recent developments in jurisdictions on both sides of the Atlantic.

Belgian approval of an initiative in the banana sector

On 30 March 2023, the Belgian Competition Authority (“BCA”) approved a sustainability initiative concerning living wages in the banana industry. This marks the first initiative based on sustainability grounds  approved by the Belgian NCA.

The IDH Sustainable Trade Initiative, a social enterprise working with various entities towards facilitating sustainable trade in global supply chains, and five Belgian supermarkets proposed a collaboration scheme aimed at closing the gap between actual wages and living wages in the banana sector. The collaboration will consist of meetings and discussions where the companies’ internal conduct will be assessed and further developed with the aim to better support living wages for workers in the participants’ banana supply chains.

The collaboration will involve the exchange of certain data and information which the BCA did not consider anticompetitive. The participants have committed to not set mandatory or recommended minimum prices and to not communicate any changes in costs relating to their supply chains. IDH will supervise the collaboration and any data shared will be verified by an independent third party.

Similar initiatives concerning the banana sector  have been proposed in Germany, the Netherlands and the UK. The German NCA has already approved the proposed initiative. Neither the Belgian nor the German NCA considered the initiatives in question to infringe competition law. There is, however, a fine line between such agreements falling in or outside the scope of competition law, and potentially amounting to an infringement. For example, clauses which lead to non-negligible price increases for end-consumers could raise questions and potentially be considered to have anticompetitive effect. It can therefore be expected that that NCAs will periodically monitor the implementation of such initiatives.

Continue Reading Sustainability Agreements: Potential Divergence between Authorities

Funding incentives under the U.S. Inflation Reduction Act of 2022 (IRA) to transition to a clean energy economy are unleashing opportunities for key U.S. allies and partners around the world. In particular, tax credits exceeding 10% of the price of average electric vehicle (EV) sold in the United States are leading to new investments in Mexico and Canada, and have triggered high-level political negotiations from U.S. partners such as the European Union and Japan.

IRA Tax Credits for EV Critical Minerals and Battery Components

Under the IRA, EVs and batteries produced in North America (including Mexico and Canada) may qualify for significant tax breaks. Partial tax breaks are also available for EVs with batteries utilizing critical minerals extracted or processed in countries with which the U.S. has a free trade agreement (FTA).

As we previously discussed in greater technical detail, the IRA amended the Clean Vehicle Credit under section 30D of the U.S. tax code to provide a $7,500 consumer tax credit for the purchase of a qualified vehicle such as an EV. This consists of $3,750 for vehicles meeting the “critical minerals” requirements and $3,750 for those meeting the “battery components” requirements.

  • Under the critical minerals requirements, a share of critical minerals contained in the battery of a qualified vehicle must have beenextracted or processed in the U.S. or in a country with which the U.S. has an FTA, or recycled in North America. The applicable share is at least 40 percent for vehicles placed in service in 2023, and increasing by 10% per year until reaching 80% for vehicles placed in services after 2026.
  • Under the battery components requirements, final assembly must have occurred in North America and the percentage of the value of the components contained in such battery that were manufactured or assembled in North America must be equal to or greater than the “applicable percentage,” i.e., “60% for 2024 and 2025 vehicles, and going up 10% per year till past 2028 at 100%.”
Continue Reading Global Spotlight: the IRA’s Implications for Key U.S. Allies

The United Nations annual climate change conference—officially known as the 27th Conference of the Parties to the UN Framework Convention on Climate Change (“UNFCCC”), or COP27 for short—held in Sharm el Sheik, Egypt, finally concluded early Sunday morning, more than 24 hours late.

COP27 was held amidst the ongoing Russian war in Ukraine and the consequent economic turmoil, including Europe’s scramble to secure non-Russian gas. It was previewed by a UNFCCC report which concluded that on its current trajectory the world faced warming of between 2.5 and 2.9 degrees Celsius by the end of the century, and accompanied by a new report from the International Energy Agency’s 2022 World Energy Outlook which concluded that the world needed to spend at least $4 trillion annually to tackle climate change from now until 2030.

Against this challenging backdrop, COP27 was never going to be straightforward. But those difficulties were compounded by divisions between developing and developed world over the priorities that should form the focus for COP27. Those divisions manifested themselves most clearly in tensions before, during, and at the conclusion of the Conference over the issue of “loss and damage.” This acrimony overshadowed almost all other aspects of the COP, which will nonetheless be viewed as historic for being the first COP to not only place the loss and damage issue on the official agenda, but for its creation of a separate fund to compensate countries most impacted by climate change. But loss and damage aside, the broader picture that emerged from COP27 was one of lost opportunities to adopt more ambitious and accelerated climate mitigation commitments in response to the dire scientific warnings about the impact of rapid global warming on the planet. In particular, efforts calling for a phase down of all fossil fuels were ultimately unsuccessful in the Summit’s final agreement and highlighted the mismatch between the pace of global emissions reduction commitments and that which is needed to avoid the most disruptive climate impacts.

Continue Reading COP27: A Flawed though still Consequential Climate Summit

On 6 October 2022, the Council of the European Union adopted a Regulation on an emergency intervention to address high energy prices (the “Regulation”).  The Regulation was published in the Official Journal of the European Union on 7 October. The Regulation has three main elements:

  1. A requirement to reduce electricity consumption by 5% in peak hours;
  2. A measure to return the excess revenues or profits of energy companies to the individual Member States; and
  3. The allocation of proceeds to customers to alleviate retail electricity prices and an extension to Small and Medium-sized Enterprises (SMEs) of the categories of beneficiaries of a possible Member State intervention in the retail price.

The Regulation’s market intervention is exceptional (albeit in response to an extraordinary geopolitical market disruption).  It will have widespread positive and negative impacts for energy market sellers and buyers.  These circumstances may provoke a range of disputes, transaction (re)structurings or additional compliance obligations that will require expert advice and understanding of the details of the Regulation.

Reduction in electricity consumption

EU Member States will endeavour to reach an overall 10% reduction in electricity consumption by all consumers.  The benchmark against which that reduction will be measured is the average of gross electricity consumption in the corresponding months of the reference period, i.e. from 1 November to 31 March in the five preceding years, starting from 2017.  In addition, in order to reduce retail prices and improve supply security, Member States are obliged to deliver a 5% reduction of electricity consumption during peak hours, (defined as the hours of the day where day-ahead wholesale electricity prices are expected to be the highest; gross electricity consumption is expected to be the highest; or gross consumption of electricity generated from sources other than renewable sources is expected to be the highest).  These measures will apply from 1 December 2022 until 31 March 2023.

Continue Reading EU Emergency Action on Energy

On October 5, 2022, the U.S. Environmental Protection Agency (“EPA”) announced its plan to streamline the typical review process for Mixed Metal Oxides (“MMOs”), including certain cathode active materials, which are key components in electric vehicles’ lithium-ion batteries, as well as clean energy generation and storage technology, including wind turbines…

Continue Reading EPA to Streamline the Review Process for Certain EV and Clean Energy Chemicals

In a series of prior blog posts, we previously highlighted the historic implications of the Inflation Reduction Act (IRA) for the U.S.’s international climate commitments, as well as for private companies navigating the energy transition.  Shortly after our series published, the Senate passed the IRA on Sunday August 7th with only minor modifications to the bill’s $369 billion in climate and clean energy spending.  Today, the House passed the IRA without any further changes, and soon hereafter President Biden is expected to sign it into law. 

However, this is only the beginning of the road; the IRA will have sweeping implications beyond the four corners of its pages.  In the coming months and years, we expect to see intense jockeying over agency rulemakings that will shape the IRA’s implementation, as well as determine its ultimate success as an energy policy.  

I. Congressional Permitting Reform

As an initial matter, it seems Congress has not finished its work revamping the nation’s climate and energy laws.  As part of his agreement to support the IRA, Senator Joe Manchin (D-WV) announced that “President Biden, Leader Schumer and Speaker Pelosi have committed to advancing a suite of commonsense permitting reforms this fall that will ensure all energy infrastructure, from transmission to pipelines and export facilities, can be efficiently and responsibly built to deliver energy safely around the country and to our allies.”  While the exact contours of this legislation are not currently known, Senator Manchin’s office recently released a legislative framework, which includes proposals to, among other things:

Continue Reading House Passes Inflation Reduction Act, Marks a New Era for Climate Policy

On 30 May 2022, the European Union (“EU”) adopted the revised Regulation on guidelines for trans-European energy infrastructure (No. 2022/869) (the “TEN-E Regulation 2022”), which replaces the previous rules laid down in Regulation No. 347/2013 (the “TEN-E Regulation 2013”) that aimed to improve security of supply, market integration, competition and sustainability in the energy sector. The TEN-E Regulation 2022 seeks to better support the modernisation of Europe’s cross-border energy infrastructures and the EU Green Deal objectives.

The three most important things you need to know about the TEN-E Regulation 2022:

  • Projects may qualify as Projects of Common Interest (“PCI”) and be selected on an EU list if (i) they fall within the identified priority corridors and (ii) help achieve EU’s overall energy and climate policy objectives in terms of security of supply and decarbonisation. The TEN-E Regulation 2022 updates its priority corridors to address the EU Green Deal objectives, while extending their scope to include projects connecting the EU with third countries, namely Projects of Mutual Interest (“PMI”).
  • PCIs and PMIs on the EU list must be given priority status to ensure rapid administrative and judicial treatment.
  • PCIs and PMIs will be eligible for EU financial assistance. Member States will also be able to grant financial support subject to State aid rules.
Continue Reading The European Union adopted new rules for the Trans-European Networks for Energy