CEPMLP@40 Seminar - Global Energy and Resources Transition: Trends, Challenges and Response

On 22nd and 23rd May, CEPMLP celebrated its 40th anniversary with a two-day Seminar “Global Energy and Resources Transition: Trends, challenges and response”. The seminar brought together 174 delegates including alumni, students, and professionals from over 45 organisations across the globe to debate the future development and policy implications of global energy and resources transition.

In his opening remarks, Professor Peter Cameron welcomed the delegates by giving a brief account of the achievements over the Centre’s 40 years history. He also highlighted the strategies for the next 40 years which aims at positioning CEPMLP as the pre-eminent centre in energy and natural resources law and policy research and education.

KEYNOTE: The keynote speech was delivered by CEPMLP alumnus and Honorary Professor, Dr Sun Xiansheng, Secretary General of International Energy Forum. In a presentation titled Opportunity, Uncertainty and Risk: A comparison of Outlooks, he compared the outlooks made by IEA and OPEC and concluded that the share of fossil fuels in global energy mix will range between 57% and 79% even in 2040.

The first day of the seminar then proceeded with three plenary sessions with themes on Riding on oil price cycles, Regulatory and legal challenges in trading gas, and Transiting to a low carbon economy.

In the session “Riding on oil price cycles”, Professor Paul Stevens, Emeritus Professor of CEPMLP and Distinguished Fellow of Chatham House argued that the old business model for international oil companies is not sustainable and the outlook for oil prices is likely to remain “lower for longer”. Graham Kellas, Senior Vice President of Wood Mackenzie reviewed the evolving fiscal petroleum policies over the last 40 years and argued that setting competitive terms will be critical for success and must reflect prospectivity. Judith Aldersey-Williams, partner from CMS, discussed opportunities and challenges in UK’s offshore oil and gas industry and emphasised the importance of collaboration and innovation for maximising production from a mature basin.

Natural gas will play an important role in transiting to a low-carbon economy. The keyword for the session “Regulatory and legal challenges in trading gas” is transition. Mike Fulwood, Director, Global Gas and LNG, Nexant, spoke about the changing pricing and contracting patterns in the LNG market. He believes that portfolio contracts will be the norm in the new market environment together with shorter duration contracts and we might see the UBERization of LNG. Professor Paul Griffin, Honorary Professor of CEPMLP and Advisor of White & Case, explored English law in the global LNG business and made an analogy between marriage and international LNG sales and purchase agreement. Geert Greving, Head of Public Relations, GasTerra, discussed the new market structure after liberalisation and driving forces of the relevant natural gas market with reference to Netherlands. Margot Loudon, Deputy Secretary General of Eurogas, on the other hand, provided an overview on the development of internal gas market in EU and assessed areas where the third package is working well and areas not working well and highlighted some of the uncertainties going into the future. 

The first day of the seminar concluded with a session “Transiting to a low carbon economy” during which Nicholas Buckworth, Global Head of Finance, Shearman & Sterling, presented an overview of the changing face of financing energy infrastructure and concluded that a full suite of financial instruments required to facilitate investment in infrastructure, at different stages of the project life cycle and across the entire risk-return spectrum. This was followed by Professor Raphael Heffron (Queen Mary University of London) who argued that there was too much rhetoric but little mentioning of legal pathways to achieve the energy transition. Tara Schmidt, Principal Consultant of ERM, analysed the financial challenges and opportunities in transiting to a low carbon economy. She specifically emphasised on the pressure on energy companies to assess and disclose climate-related financial risks in the context of financial disclosures established by the G20 Financial Stability Board.

Two streams of parallel sessions continued on the second day. Parallel Session 1 had three sessions respectively on seabed mining and offshore boundary issues, regulating mining and a roundtable discussion on the impact of Brexit on energy markets. Parallel Session 2 ran as a workshop with six academics from different universities presenting their working papers.

In the session “Seabed mining and offshore boundary issues”, Professor Pieter Bekker of CEPMLP and Robert van de Poll (Fugro) discussed the importance of resolution of international boundary disputes for augmenting deep water oil & gas production. They argued that private companies cannot become parties in international boundary disputes and neutrality must be preserved in dispute resolution. Dr Catherine Banet from University of Oslo emphasised on the growing importance of Article 82 of UNCLOS, principle of environmental protection, and dedicated framework for seabed mining within the national jurisdiction.

The effective governance of mining sector plays a significant role in mining. John Hobbs, Formerly WWF Director – Extractives Sector, now Independent International Advisor presented that mining alone doesn’t account for global adverse ecological impacts and attitude of responsible mining is evolving as an integral part of the business. Peter Leon, Partner and Co-Chair of the Africa Practice, Herbert Smith Freehills, spoke about the “lack of consensus to mine” as the biggest challenge in developing mineral resources in Africa. He highlighted the importance of meaningful buy-in and collaboration by the private sector, the state and other stakeholders in successful implementation of African Mining Vision (AMV), a continental policy framework, which adopted by the 54 countries in 2009. While speaking on the risks and crisis concerning human rights in mining, Stephane Brabant, Partner and Co-Chair of Africa Practice, Herbert Smith Freehills, emphasised on compliance of stakeholders to the local & international regulations. Addressing issues on informal and illegal mining has been challenging and leaders are still working to address those issues were the conclusion of the presentation made by Cecilia Gonzales Guera of Estudio Grau who spoke from her Peruvian experience on emerging trends in mining law and governance.

The roundtable on “the impact of the Brexit on the energy market” saw thought provoking discussions on the issue. Professor Peter Cameron emphasised on building human capacity in academia and the industry, which is already facing challenges due to ongoing losses in Skilled Technical resources. Colin Johnson of Charles River Associates spoke on the potential of “No Agreement” which could lead to the extensions and further uncertainty to the Energy Transition Agenda. Professor Raphael Heffron (Queen Mary University of London) and Dr Francesco Sindico (University of Strathclyde) discussed the potential opportunity to build academic and technical Skills in a “No Agreement” situation which could then be transferred to meet the needs during Energy Transition Agenda. Professor Peter Cameron in his concluding remarks highlighted that the impact on foreign student intake and the uncertainty that Brexit brings is being discussed at the High Levels of the UK Government.

The energy economics workshop featured six presentations with an overarching theme on “Energy Markets and Development”. Dr Gerhard Towes (University of Oxford) reported the results from an econometric study examining the effect of giant oil and gas discoveries on foreign direct investment in developing economies using a project-level dataset and documented a large increase in non-extraction FDI in the 2 years following a giant discovery. Dr Radek Stefanski (University of St Andrews) discussed the implication of government resource misallocation on welfare and aggregate productivity by constructing a model with a productive government sector and optimal government employment in resource-rich countries. Niko Jaakkola (Ifo Center of Munich) examined the cyclical behaviour in natural resource taxation and investment by constructing a rational expectations model and demonstrated that the cycles result from governments' inability to commit to future taxes and firms' inability to credibly exit a country indefinitely.

Dr Marc Gronwald (University of Aberdeen) examined the link between the EU ETS and the Kyoto Flexible Mechanisms and explained the observed price spread with a model combining outside offset value and probability of binding import. Dr Robert McComb from Texas Tech University discussed empirical findings from a study investigating the relationship between the employment, entry and exit of the remediation/abatement industry at the US census tract-level and a set of co-variates, including income. Last but not least, Dr Ariel Bergmann (University of Dundee) reported a questionnaire and choice experiment investigating the preferences of private (household) small investors in renewable energy projects and companies through internet based crowdfunding platforms.  The findings indicate that financial literacy of those who previously engaged with crowdfunding was higher than the general public and willingness to consider and possibly use crowdfunding increased as financial literacy increased.

The sessions were chaired respectively by Drs Janet Xuanli Liao, Xiaoyi (Shawn) Mu, Ariel Bergmann, Sergei Vinogradov, Elizabeth Bastida, Rafael Macatangay, and Anita Schiller.