Analysis of International Energy and Climate Change Law Frameworks

This report delves into the intricacies of international energy and climate change law, emphasizing the environmental impacts of multinational companies within the energy sector. It addresses the evolution of the energy industry, from traditional sources to renewable alternatives, and highlights the globalization's influence on energy production and its consequences. The report examines the adverse effects of energy generation, including greenhouse gas emissions and their impact on local communities and the environment. It underscores the need for stringent national and international regulations to mitigate environmental damage and protect public health. The analysis covers the role of international organizations, environmental impact assessments, and various agreements and treaties aimed at fostering environmental protection and combating climate change. The report also explores taxation laws, court decisions, and the significance of technological advancements in reducing environmental footprints, concluding with a call for integrated legal approaches and the empowerment of regulatory bodies to ensure sustainable energy practices.

International Energy and Climate Change Law

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Table of Contents
Introduction......................................................................................................................................2
Globalization has changed the world we live in..............................................................................2
Issues in global energy sector..........................................................................................................3
Environmental Impacts of multinational companies through the activities undertaken by them in
energy sector....................................................................................................................................3
Need for strict laws at national and international levels..................................................................4
The Organization of the Petroleum Exporting Countries................................................................5
Enactment of International laws......................................................................................................5
Environmental protection- the major concern.................................................................................6
Environmental Impact Assessment (EIA).......................................................................................7
Various international laws for the protection of environment from adverse impacts of energy
generation........................................................................................................................................7
International organizations working for the protection of environment and people.......................8
Various agreements for the protection of environment from the adverse impacts of energy
generation........................................................................................................................................9
International environmental treaties for the protection of environment and climate change from
the impacts of the energy generation by multi-national companies..............................................10
Taxation laws for the multi-nationals engaged in energy sector...................................................11
Court decision................................................................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

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Introduction
In this present paper, we will discuss the protection provide by international law and redress
mechanisms for local communities which are affected by the adverse environmental and other
activities of multinational companies in energy sector. The energy industry is considered to be
very complicated especially due to the reasons like its international scope, due to the magnitude
of the sources of energy, the transactions that form a part of energy industry and due to its ever
evolving nature. Earlier the sources of energy like oil, coal, gas, and nuclear power were there
and were known as the traditional sources of energy. But recently some complementary sources
of energy have added on and thus have expanded the scope of energy industry and these
additional resources include solar, geothermal, wind, biomass, hydropower and hydrogen.
Generally the transactions which for a part of energy sector includes activities like bidding
arrangements to exploration, drilling, exploitation, transportation, marketing and many more.
There are various harmful gases which are exhausted by the energy sector that impacts on the life
of human in the local communities so the international law helps to protect the local
communities through providing various rights to the local community and it also provide some
limits to the energy sector in order to maintain the ecological balance of the universe.
Globalization has changed the world we live in
The globalization is mainly defined as the integration of an economy with the rest of the world
which enable to generate large market opportunities for the companies in order to generate high
revenue within the specific period of time but in the oil and gas sector after the globalization the
emission of harmful gases has been tremendously increased which impacts on the local
communities adversely. The globalization allows trading in other countries which has increased
competition in the market due to which environment is harming very badly.
Earlier the oil industry was dominated by the “seven sisters” who were considered as the major
oil companies around the globe. But now, many multi-national oil companies which work
independently have become strong players in the oil industry. There are many state oil
companies also which have been dominating the industry today in terms of reserves.
These economic players (mainly the Multi-national companies) generally operate their
businesses across the borders and have slowly achieved some power through which it is able to
exert a worldwide influence (Bang, 2010).

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It has been observed that these multi-national companies have a great impact on the lives of
people and the communities where they are operating. Sometimes, there is a positive impact by
the operations of these multi-national companies, but sometimes, there is an adverse effect of
these operations on people and community. If we talk about the positive impact, then it can be
measured in terms of creation of jobs in in the areas where these companies do their operations,
the lives of the people is improved with the use of new technology and finally the investment in
the community also provides for various benefits for the people living there. On the other hand,
if we talk about the adverse impacts of the operations of these multi-national companies then it
has been observed that with the increase in number of operations by these companies, there has
been a negative impact on the environment, the climate of the area where they carry out their
operations and which in turn impacts he health of the people and the overall community living
nearby those areas. A number of legislations have been made at the domestic level in order to
protect people, community and the environment as against the negative impacts of these
operations by these multi-national companies engaged in the energy sector. But unfortunately, all
these domestic legislations have found to be weak and poorly enforced and it has been observed
that there has been an increased exploitation of this weak and poorly enforced domestic
regulation which has caused a devastating impact on people and communities.
Issues in global energy sector
If we talk about the global electricity sector, then it has been observed that there are mainly three
major issues in it, which are namely; matching the supply with the increased demand, fighting
against the change in climate, and the phase of massive urbanization.
The demand in the global energy sector has been tremendously increases so the company needs
to produce more in order to supply as per the demand that leads to emit huge harmful gases
which disturbs the whole ecological balance of the universe so the global energy multinational
companies needs to take various initiatives in order to protect the environment from harmful
gases.
The emission of harmful gases by the multinational company’s impact on the environment sp the
companies need to fight against the change in climate. Another major problem is massive

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urbanization which needs to be considered by the company in order to maintain the ecological
balance of the society.
There have been various other issues which have adversely affected the environment like the
high emission caused by the operations taken to generate electricity. Thus, it has been believed
that these multi-national companies which are engaged in the generation of electricity must
employ low-emitting energy-generation technologies while carrying out their operations as this
will reduce the greenhouse gas emissions (Soltau, 2009). These technologies are already in
existence but still these problems with regards to energy generation are prevalent and the major
reason behind this is that the public policies and national legislations have not proved to be very
effective in protecting people and community and the environment as these multi-national
companies exploit these laws. Thus, there was a strong need for the willingness on the part
policy makers to encourage a large number of innovation programs so as to enable these
corporations to employ the latest innovative technologies which would help them to provide
greater good to the people and community rather than the bad.
Environmental Impacts of multinational companies through the activities
undertaken by them in energy sector.
The issue with the operations of these corporations engaged in the energy sector talks about the
regulation of emission of greenhouse gas (GHG). It has been observed by The International
Energy Agency that the global emissions needs to be reduced by 50% until 2050 in order to have
a 50% chance to control the increase in global temperature up to 2°C with respect to the turn-of-
the-century levels. Again these emissions are linked to the industrial sector as it has been
observed that almost two-thirds of global emissions of greenhouse gas (GHG) are consisting of
the carbon emissions which are directly linked to the energy sector. The greenhouse gases are the
most significant factor which leads to the climatic change due to the depletion of ozone layer
which creates global warming on earth due to which various diseases such as heart problem,
cancer, and other skin diseases are occurred within the specific period of time. According to the
OECD the multinational organizations needs to conduct various corporate social responsibilities
in order to minimize the negative impacts on economic activities on the environment which
provide various benefits to the multinational national organizations working in energy sector
such as improved business performance, gaining market access, communicating with

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stakeholders, and others. The energy companies which are operating in energy sector needs to
develop plan-do-check-improve plan in order to protect the environment from operational
activities. The plan should include environmental policy, environment aspects, legal
requirements, environmental, and managing programs in order to manage the operational
performance which helps to minimize the emission of harmful gases within the specific period of
time. There are other approaches such as risk assessment, risk management and risk
communication that can be used by the company in order to minimize the issues faced by the
companies in energy sector.
Besides this, another major challenge is the increased urbanization, as it has been recorded that
the cities have been accounting for about two-thirds of the global energy consumption today and
this is expected to increase up to three-quarters in the next 20 years. And in this sense, there is
definitely a risk of low supply of energy as compared to the demands but also they are
responsible for 70% of global energy-related, carbon dioxide emissions and thereby causing a
large majority of local air pollution (Anderson, 2011).
The IEA has argued that it has been expected that that the power sector among the overall energy
sector is responsible for 70% of the emissions and thus it is really necessary to reduce it in order
to limit the temperature increase to 2°C.
Need for strict laws at national and international levels.
It has been observed that now there is a need for more restrictive laws and standards to ensure
the highest safety of people and environment as there is a dual them of climate change and
energy. That means it has been observed that with the advancement and development of energy
sector, there is an increase in the adverse impact on the environment which had led to the
problem of climate change thereby affecting the people and the communities. There is a
difficulty in dealing with this dual theme and its cross-disciplinary aspects. Thus, in order to
solve these problems, an integrated legal approach is needed as there is an increased involvement
by the commercial entities in the emission trading and carbon finance, and also in the
development and transfer of technologies. And also the need is felt that the international
government bodies like, IAEA, WANO and WENRA must be given more power in terms of
controls, sharing, permitting and implementing the best practices to protect the people and

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community due to the adverse climate change that has resulted from activities of energy sector. It
was also felt that in order to make the nuclear power as competitive, there is a need that the
industrial operators must be carried on in such a way that they are able to control the costs as
well as duration of the construction so that less harm is caused to the environment for a longer
time.
It is also observed that laws must be made in order to ensure that all the multi-national
companies which are engaged in the generation of energy must employ the latest technology
which aims at generation of energy without harming the people and environment. It is seen that
these technologies can make a major difference with respect to the protection of people and
environment. It has been observed in Sweden that almost 90% of electricity comes from nuclear
and hydro plants, and it emits less than seven tons of carbon dioxide per capita, where almost 11
tons of emission is produced in Denmark and Germany and the reason is that Sweden is having
strict laws which requires the hydro plants to use the advanced technologies which ensures less
production of carbon dioxide (Searchinger, 2009).
The Organization of the Petroleum Exporting Countries
There was a significant development in the energy industry with the formation of the
Organization of the Petroleum Exporting Countries (OPEC) in the year 1960. OPEC is a
permanent inter-governmental body which currently consists of its five founding states: Iran,
Iraq, Saudi Arabia, Kuwait and Venezuela, along with the other joining members, namely; Qatar,
United Arab Emirates, Libya, Algeria, Ecuador, Nigeria and Angola. This organization is
currently based in Vienna, Austria.
OPEC was initially formed with a purpose of preventing a sudden fall in the prices of crude oil
which resulted due to the discovery of huge new reserves. But later the role of OPEC was made
more significant, as it was then used to encourage the renegotiation of international oil
agreements, and also for engaging in cartel pricing of oil (Schipper, 2014). The mission of
Organization of the Petroleum Exporting Countries which is an intergovernmental organization
is to coordinate and unify the petroleum policies of the sixteen member countries in order to
ensure the stabilization of oil market which enable to secure an economic, efficient, and regular
supply of petroleum to its target audience and also ensures that the steady income will be

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received by the producers and high return is received by the investors who are investing in
petroleum industry. The Organization of the Petroleum Exporting Countries organization is also
working towards the national sovereignty over natural resources and it has also set the
production target for the member nations in order to protect the natural resources as well as the
environment of the country.
Enactment of International laws
Besides the laws at national level, various international laws have also been enacted in order to
control and monitor the functioning of multi-national companies which are engaged in the
energy sector. These laws provide for the regulation of the energy sector with regards to the
protection of economic and intellectual property which is adversely harmed by the activities of
the companies engaged in energy sector and these laws also make it mandatory for some
companies to develop those technologies which provide for mitigating the environmentally
damaging emissions.
Various energy laws are also enacted for governing the use and taxation of energy, covering both
the sources of energy, that is, the renewable and non-renewable energy. These laws includes the
case laws, rules, statutes, regulations which are related to energy. On the other hand, there are
various energy policies also which covers the policy and politics of energy.
Energy law includes the provisions of law which covers the oil, gasoline and also the taxes on
extraction. These energy laws also provides the provisions for the extraction, and licenses for
acquiring the ownership rights related to the extraction of both oil and gasoline.
Environmental protection- the major concern
The main concern of these international laws is to protect the environment form the adverse
effects of the emissions which are produced by the activities and operations that are carried out
by various multi-national companies in order to generate energy. This is mainly because this
adverse impact on environment results in climate change on a global level which in turn hampers
the people and various other communities. The main purpose of these laws is thus to provide for
protection to people and environment form the negative impacts of the activities undertaken by
the energy sector.

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Electrical energy is considered as the engine for the purpose of socio-economic growth and
development. It is believed that it comes from various sources namely; Fossil fuel (coal,
petroleum and natural gas), solar energy, hydropower, wind energy, nuclear energy, geothermal
power, biomass, biofuel, etc. Neither of these resources are considered as ideal resource as the
ideal resource is chosen by depending on the type, scale, nature and location of the project which
is taken up for the development of a particular energy source, and this development of energy
through various processes brings in some benefits as well as some negative impacts on the
environment. Most of the benefits and negative impacts accrue to the environment while carrying
on the operations of exploration, conversion, production, transportation (Transmission),
conversion and distribution (Becken, 2014).
Exploration and production of petroleum can be carried out on- and or off-shore. Both of them
may have a number of positive and negative impacts on the environment. Some of positive
impacts include employment opportunities, expansion and or improvement of health services,
roads, electricity, revenues and business opportunities while the negative impacts include local
detrimental impacts to soils, surface and ground waters, and ecosystems. These impacts can arise
from related activities such as site clearance, construction of roads, tank batteries, brine pits and
pipelines, and other land modifications necessary for the drilling of exploration and production
wells and construction of production facilities. Positive impacts should be enhanced while
negative impacts should be minimized.
Thus, it has been observed that environment protection is the primary concern for our society.
And in this, the major role is of the government where it is required to set standards for the
protection of environment and also to ensure that individuals and organizations do not violate
those standards. It has also been observed that the government, community organizations and the
energy industry as a whole are also working jointly as partners for protection of our environment
and thereby protecting our future generations.
Environmental Impact Assessment (EIA)
Environmental Impact Assessment (EIA) is considered as a planning tool which is used to assess
the environmental impacts of the activities undertaken by the corporations engaged in the energy

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sector and by assessing the environmental impacts it also provides for the achievement of better
and informed planning of these activities which would not impact the environment negatively.
The process of Environmental Impact Assessment (EIA), includes the screening of environment
and its scoping and also the assessment and identifying the negative impacts on the environment
and thus trying to identify the measures to mitigate such negative impacts and then monitoring
and evaluating those measure.
Thus, it can be said that whenever the EIA process is conducted, the relative measures should be
proposed in order to enhance the benefits and also to mitigate the adverse impacts at each stage
of the different energy projects (Tietenberg, 2016).
Various international laws for the protection of environment from
adverse impacts of energy generation
There are a number of laws which have been enacted on the international level in order to protect
the people and environment form the adverse impacts of the activities undertaken by various
multi-national companies.
 1972 Stockholm Declaration on the Human Environment (UN)
 1981: United Nations Conference on New and Renewable Sources of Energy, GA Res
36/193
 1987: World Commission on Environment and Development
 1992 Rio Declaration on Environment and Development (UN)
 Agenda 21
 World Summit on Sustainable Development (WSSD), 2002
 Sustainable Energy for All (SE4ALL) initiative, by 2030
 Climate regime- 1992 UN Framework Convention on Climate Change (UNFCCC)
 GHG inventories
 National or regional measures to mitigate climate change
 Art 2(1)(a) – non-exhaustive list of non-binding policy options
 Endorsement by IPCCC.
 Only 15% of emissions
 Top-down approach

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International organizations working for the protection of environment
and people
 IRENA
 OECD
 IEA
 UN Agencies and programs
 UN-Energy
 UN Environmental Program (UNEP)
 UN Development Program (UNDP)
 World Bank- International political fora / conferences
 G8
 International Energy Forum
 World Future Energy Summit
 World Council of Renewable Energy established in 2001 (Mission: «be a global voice for
 Renewable energy»)
 REN 21- Non-governmental organizations (NGOs):
 Renewable Energy and Energy Efficiency Partnership (REEEP)
 Renewable Energy Policy Network for the 21st century
 Coalition within the renewable energy sector
 International Renewable Energy Alliance (REN Alliance)
 Relevance of WTO rules:
 Negative obligations imposed on the conduct of states.
 Affects the manner states draft national renewable energy policies.
 Multilateral trade rules particularly relevant.
 The WTO legal framework: the WTO Agreements
 Historical development
 GATT 1947
 Uruguay Round and Marrakech Agreement
 1994 WTO Agreement
 General architecture of the agreements

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 WTO Agreement = an umbrella agreement establishing the WTO
Various agreements for the protection of environment from the adverse
impacts of energy generation
 1994 General Agreement on Tariffs and Trade (GATT)
 Agreement on Sanitary and Phytosanotory (SPS Measures)
 Agreement on Technical Barriers to Trade (TBT)
 Curbing unfair marketing practices: The Agreement on Anti-Dumping Practices (ADP)
and on the Agreement on
 Subsidies and Countervailing Measures (SCM)
 Trade Related Investment Measures (TRIMs Agreement)
 General Agreement on Trade in Services (GATS)
 Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)
 Agreement on Government Procurement (GPA): plurilateral agreement
PROTECTION AND DISPUTE REDRESSAL
Besides protection, these international laws also provides for a mechanism for Dispute
settlement. Some of these laws are as follows:
 A well-functioning dispute settlement mechanism Compulsory Under the responsibility
of the Dispute Settlement Body. Panel and Appellate Body reports are binding on the
parties to the dispute. Its processes includes Consultations, WTO panels (ad hoc), and
appeal to the Appellate Body (standing). Its decisions must be implemented within a
reasonable period of time, possible sanctions.
 Transparency review mechanism. Where there is a duty to inform the WTO and fellow-
members of specific measures, policies or laws through regular reviews of individual
countries’ trade policy conducted by the WTO.