EU Developments
Subscribe to EU Developments's Posts

International News: Spotlight on the Energy Industry

US RENEWABLES: INVESTMENT OPPORTUNITIES PERSIST IN UNCONVENTIONAL PLACES

Christopher Gladbach | Seth B. Doughty

Apart from a few challenges, the sellers’ market in renewable energy is accelerating under the Biden administration, leading international investors to seek opportunities in non-traditional investments. Read more.

—————————————————————————————————————————

THE US $2.3 TRILLION AMERICAN JOBS INFRASTRUCTURE PLAN

Elle Hayes | Dominique J. Torsiello | Carl J. Fleming | Ranajoy Basu

In March this year, US President Joe Biden unveiled the American Jobs Plan, the first of a two-part infrastructure package to revive the economy after the COVID-19 pandemic and the second stage of President Biden’s “Build Back Better” agenda. Read more.

—————————————————————————————————————————

RECENT DEVELOPMENTS IN THE SOUTH EAST ASIA RENEWABLES MARKET

Ignatius K. Hwang | Merrick White

Despite considerable challenges, South East Asia is pulling out all the stops to transition to primarily renewable energy in the coming years. Read more.

—————————————————————————————————————————

GREEN AMMONIA: AT THE INTERSECTION OF PETROCHEMICALS AND THE ENERGY TRANSITION

John Bridge | Parker A. Lee

As the world seeks to transition to a lower carbon economy, replacing traditional hydrocarbon-based transport fuels in the automobile, aviation, and shipping industries will be important. Read more.

—————————————————————————————————————————

CLEAN ENERGY EMPLOYERS ARE THE NEW TARGET FOR ORGANISED LABOUR

Ellen M. Bronchetti | Ron Holland | Saniya Ahmed

Employers in the clean energy sector should be prepared to consider how changes to the US labour landscape are likely to impact their workforce. Read more.

—————————————————————————————————————————

COMPETITION POLICY AND THE EUROPEAN GREEN DEAL: A PATHWAY TOWARDS CLEAN ENERGY AND ENERGY EFFICIENCY

Hendrik Viaene | David Henry | Karolien Van der Putten

EU competition rules—particularly State aid, merger control, and antitrust rules—are playing a key role in supporting the goals of the European Green Deal. Read more.

—————————————————————————————————————————

NOT YET THE END FOR HYDROCARBONS

Merrick White

There has there been significant activity in the Asian upstream market this year. Who is buying mature oil fields, and why? Read more.

—————————————————————————————————————————

ENGLISH HIGH COURT SANCTIONS RESTRUCTURING OF DTEK GROUP

Mark Fennessy | Sunay Radia | Alexander Andronikou

The recent restructuring of DTEK Group provides guidance regarding the English High Court’s position on challenges to the international effectiveness of schemes of arrangement and/or restructuring plans post-Brexit. Read more.

View the full issue here.




Five Key Takeaways from the Green Transportation Panel at the US and UK Climate Change Business Forum

On September 22, 2021, partner Edward Zaelke moderated a panel on green transportation at the US Embassy in London during the US and UK Climate Change Business Forum, Winning the Race to Zero: Journey to COP26. Panel guests included Richard Currie, Senior Director of Public Affairs for UPS; Jamie Heywood, Regional General Manager, Northern & Eastern Europe for Uber, a representative from a large e-commerce company and Lilli Matson, Chief Safety Health & Environment Officer for Transport for London. The discussion provided remarkable insights into how these three major companies and a forward-looking transportation agency of one of the world’s largest cities are approaching the climate challenge before them. A challenge that Philip T. Reeker, former ambassador of the Bureau of European and Eurasian Affairs, noted in his closing remarks, quoting a proverb, “If you don’t change course, you will likely get to where you are heading.” Steps to change course was the focus of this invitation-only conference and, in the area of green transportation, this panel left the audience with a number of key takeaways.

  1. What’s abundantly clear is that UPS, Uber and many e-commerce companies are fully committed and have set aggressive goals to have their operations reach net zero carbon or carbon neutrality. For example, Uber seeks to electrify its fleet of vehicles in London by 2025 and in the United States by 2030. The e-commerce company on the panel is a significant purchaser of green power and seeks to achieve net zero carbon by 2040. UPS, which operates delivery vehicles and also runs a fleet of long haul trucks and its own airplanes, has set near-term goals of carbon reduction and a target of being carbon neutral by 2050.
  2. London is demonstrating a local commitment to climate change that can serve as an example for other cities around the world. Transport for London, which operates the “Tube” subway system (among its other duties), is the largest user of power in London and currently in negotiation for power purchase agreements for renewable power for its operations. In addition to encouraging use of its rapid transit system, the city bought electric buses, required that all new licensed cabs be electric, created clean air zones and congestion zones to encourage electric vehicles and greatly expanded the bike lanes on roadways throughout London.
  3. Uber, UPS and many e-commerce companies view vehicle electrification for local routes as a key to meeting their climate goals. Uber, with more than 45,000 private commercial drivers in the London area alone, is aggressively meeting the challenge. It has developed an “electric vehicle bank” for each of its drivers, where a portion of each fare goes into a savings account to help the driver replace its present vehicle with an electric vehicle. Uber customers can also request Uber Green at no additional charge. Additionally, since many of its drivers live in the suburbs where less than a third of them have off-street parking, Uber is working with the local government to create [...]

    Continue Reading



Key Developments in the Photovoltaic Sector in Italy

The regulatory framework for solar photovoltaic plants in Italy is constantly evolving. Plant owners, asset managers and investors need to stay informed in order to adapt to developments in this sector and avoid adverse outcomes. The following highlights the key updates in this market in the last 12 months.

Read the full article.




Italy withdraws from the Energy Charter Treaty

Italy is reported to have given formal notice to withdraw from the Energy Charter Treaty (ECT).

Rumours of Italy’s intention to leave the ECT had been circulating since last autumn. IAReporter now revealed that Italy has delivered its official notice of withdrawal in January 2015.

According to the journal, Italy’s decision to withdraw, is to save on costs associated with its membership. This is certainly an unusual justification for a developed country’s withdrawal from a multilateral investment protection treaty.

Pursuant to article 47 of the ECT, Italy’s withdrawal will take effect upon the expiry of one year after the date of notification, thus in January 2016. However, the provisions of the Treaty will continue to apply to investments made in Italy before such date for a period of further 20 years.

As a consequence:

  • With respect to past energy investments, investors can continue to bring their claims against Italy until January 2036. In particular, Italy’s withdrawal from the ECT does not prevent PV investors from bringing a claim for last year’s feed-in tariff cuts.
  • With respect to future energy investments, investors should (i) either ensure the investment is made before January 2016 or (ii) consider to structure the investment so as to obtain protection under a suitable bi-lateral investment treaty (BIT).



Italy: GSE Claims Reimbursement of FiT Payments from Conto Energia I Plant Owners

Owners of early generation Conto Energia I photovoltaic (PV) plants are currently receiving letters from the Gestore dei Servizi Energetici (GSE) announcing that it will adjust the Feed-in Tariff (FiT) downwards and claim reimbursement of, or set-off with, the excess payments it made in past years. An example of one of these letters is attached here.

Background

The Ministerial Decree of 28 July 2005 (the original version of the Conto Energia I) provided for an annual adjustment of the FiT to account for inflation. The Ministerial Decree of 6 February 2006 removed this adjustment for inflation with retrospective effect. This even applied to PV plants that had already qualified for the FiT under the original version of the Conto Energia I.

At first instance, in 2008, the Administrative Court of Milan and the Highest Administrative Court (Consiglio di Stato) ruled the Ministerial Decree of 6 February 2006 null and void, stating that it violated not only the general principle of legal acts not being retroactive (Article 11 of the preliminary provisions of Civil Code), but also the general principles of certainty of laws and legitimate expectation of the citizens (Regional Administrative Court of Milan, Sez. IV, 10 November 2006 n. 2125, as confirmed by Cons. Stato, Sez. VI, 4 April 2008 no. 1435). Based on these rulings, the GSE continued to publish the inflation-adjusted FiT rates for early generation Conto Energia I plants year by year until 2012.

In a parallel proceeding, however, the Consiglio di Stato decided not to follow its own 2008 decision and submitted the question to the Plenary Chamber. In May 2012, the Chamber ruled the opposite of the Consiglio di Stato’s 2008 decision and confirmed the legitimacy of the retrospective abolition of the inflation adjustment relating to early generation Conto Energia I plants. The Consiglio di Stato argued that the Ministerial Decree of 6 February 2006 did not actually modify a previous legal provision but only interpreted it in a different, and acceptable, manner (Cons. Stato, A.P., 4 May 2012, no. 9).

It took until 26 March 2013 for the GSE to react to the Plenary Chamber’s reversal of the Consiglio di Stato’s decision. On that date, it released the news bulletin, in which it stated it would no longer adjust the Conto Energia I FiT rates in line with inflation. The GSE did, however, continue to pay the increased rates that had already been generated by the inflation adjustments.

Current Situation

The GSE has now sent out the letters referred to above, informing early generation Conto Energia I plant owners that the GSE will i) readjust the FiT to its original amount, prior to any adjustment for inflation, and ii) claim reimbursement of, or set-off with, all excess payments made until now. The GSE also invites recipients of these letters to submit comments and observations within 10 days.

There are a number of questions that can be legitimately raised with respect to the GSE’s latest [...]

Continue Reading




Italian Decree on the Cut of Incentives for Photovoltaic Plants Enters into Force

by Carsten SteinhauerSabine KonradAnna VescoArne Fuchs and Riccardo Narducci

On 25 June 2014, Law Decree no. 91 /2014 (the “Decree”) regarding among others “urgent measures … for the limitation of costs applied to electricity prices” has entered into force. The Parliament has now 60 days to confirm and convert the Decree into law—possibly with amendments—or to repeal it. A repeal is unlikely, considering that these measures are politically strategic to the Renzi Government, which has invested its credibility in the reduction of electricity bills for small and medium-sized enterprises through a reduction in the annual cost of PV incentives. Please click here to read the full article.




Council of Europe adopts MiFID II

by Simone Goligorsky and Robert Coward

In October 2011, the European Commission released a proposal to amend and extend the Markets in Financial Instruments Directive (MiFID), referred to as MiFID II. The MiFID II proposals consist of revisions to MiFID, along with the introduction of the Markets in Financial Instruments Regulation (MiFIR).

Whilst MiFID sought to increase competition and consumer protection, the purpose of MiFID II is to make financial markets more efficient, resilient and transparent and to improve investor protection, with the reform being driven by commitments made by the EU to tackle less regulated and more opaque parts of the financial system at the G20 summit in Pittsburgh in 2009.

MiFID II will impose a series of changes, including, inter alia:

  • creating of a new type of trading venue, the organised trading facility (OTF);
  • extending the scope of products and activities that are subject to regulation;
  • prohibiting the use of inducements for discretionary asset management and ‘independent’ advice;
  • introducing stricter corporate governance requirements; and
  • extending market transparency and transaction reporting requirements.

On 13 May 2014, the Council of the European Union announced that MiFID II had been adopted, following on from the adoption of MiFID II in April 2014 by the European Parliament. Both MiFID II and MiFIR are expected to be published in the Official Journal of the European Union in the second quarter of 2014 and will, for the most part, become applicable 30 months later. It is expected that the European Securities and Markets Authority (ESMA) will publish a discussion paper on the technical standards shortly. Following the responses to the discussion paper, ESMA will publish a consultation paper on draft technical standards later in 2014 or early in 2015. Market participants are encouraged to respond both to the discussion paper and the consultation paper.

MiFID II is being introduced in a climate of wider regulatory reform, and implementation will overlap with numerous other legislative changes, including the Capital Requirements Directive IV, the proposals for Benchmarks regulations, the European Market Infrastructure Regulation and the Market Abuse Directive II. Given this comprehensive spread of regulatory reform, and the magnitude of commercial and operational impacts that MiFID II will have, successful implementation will require early involvement and a thorough impact assessment.




EMIR Trade Reporting Requirements Come Into Effect 12 February 2014

by Prajakt Samant and Simone Goligorsky

Following the European Securities and Markets Authority’s (ESMA’s) approval and registration of the first four trade repositories (TRs) in November 2013, counterparties to all types of over-the-counter (OTC) and exchange-traded derivatives contracts will be required, from 12 February 2014, to report certain details of their trades to a registered or recognised TR.

All counterparties, even those exempt from the clearing obligation, should take note that they will not be exempt from the reporting obligation. To facilitate the process, counterparties will, however, be permitted to delegate trade reporting requirements to third parties or their respective counterparties.

Background

The reporting obligation forms part of the requirements imposed by the EU Regulation on OTC derivative transactions, central counterparties (CCPs) and TRs (Regulation 648/2012), also known as the European Market Infrastructure Regulation or EMIR. EMIR aims to establish within the European Union the G-20 leaders’ commitment to improve transparency in derivatives markets, mitigate systemic risk and prevent market abuse.

The primary obligations imposed by EMIR relate to clearing, reporting and risk mitigation of derivatives trades. Such obligations are imposed on both financial counterparties (FCs) and non-financial counterparties (NFCs), to varying degrees.

Whilst the scope of these obligations is aimed at EU entities, non-EU entities should not ignore EMIR’s territorial application, as they may still be caught by its requirements. In particular, a non-EU entity may be required to comply with obligations under EMIR where either its trading counterparty is established in the European Union, or the derivatives transaction has a direct, substantial and foreseeable effect within the European Union.

The Reporting Obligation

Despite a request from ESMA that the reporting obligation in respect of exchange traded derivatives be delayed by one year, in order to give market participants sufficient time to put in place the necessary systems and procedures, the reporting obligation will come into full effect on 12 February 2014.

Under Article 9 of EMIR, all counterparties to all derivatives contracts and CCPs are required to report particular details of any derivatives contract they have concluded, modified or terminated (including lifecycle events such as give-ups and partial terminations), to a TR. ESMA guidance suggests that, in respect of terminations, a report is only required to be made where termination takes place on a date different to that originally provided for in the relevant contract.

Whilst the clearing and risk mitigation obligations are restricted to OTC derivatives contracts, the reporting obligation applies to all derivatives contracts, irrespective of whether they are traded on-exchange or OTC. In addition, although the clearing obligation only applies to FCs and non-financial counterparties that exceed the relevant clearing threshold (NFC+s), the reporting obligation also applies to non-financial counterparties below the clearing threshold (NFC-s). The clearing threshold, as prescribed in the technical standards to EMIR, differs depending on type of derivative contract. The clearing thresholds are as follows:

  • Credit derivatives: €1bn in gross notional value
  • Equity derivatives: €1bn in gross notional value
  • Interest-rate, currency and commodity derivatives: €3bn in gross notional [...]

    Continue Reading



Agreement Reached on Revised European Rules for Markets in Financial Instruments

by Prajakt Samant and Simone Goligorsky

The European Commission announced on 14 January 2014 that the European Parliament and Council had reached an agreement in principle on revised rules for markets in financial instruments (MiFID II). Under the revised regime, limits will be placed on taking financial positions in commodity derivatives, with a view to preventing market abuse and helping to restore investor confidence following the financial crisis.

Background

The current Markets in Financial Instruments Directive (MiFID) governs the provision of investment services in financial instruments and the operation of stock exchanges and multilateral trading facilities (MTFs). MiFID has long been regarded as not being fit for purpose—both in light of the fallout from the financial crisis and the evolution of international financial markets—hence the Commission’s proposals to revise the regime.

In the wake of major changes in financial markets through new trading products and practices, coupled with issues relating to the price volatility of commodity derivatives, it was decided that a revision was required in order to, according to the Commission, increase the efficiency, resilience and transparency of protection for investors.

Agreed Revised Rules

The Commission has identified the following as the key elements of the agreed text of MiFID II:

  1. The introduction of a market structure framework to close existing loopholes, in order to ensure trading is undertaken on regulated platforms and to increase equality between Regulated Markets and MTFs. Under the revised regime, it is proposed that, inter alia, shares should be subjected to a trading obligation, certain investment firms should be authorised as MTFs, and an organised trading facility (OTF) should be created as a venue for trading non-equity instruments, such as derivatives and bonds.
  2. The creation of position limits for commodity derivatives by national competent authorities on the basis of calculation methodologies/technical standards set by the European Securities and Markets Authority (ESMA), in order to strengthen supervisory regulation and prevent market abuse. There will be a hedging exemption for positions held by, or on behalf of, a non-financial entity, that are objectively measurable as reducing risks directly related to the commercial activity of the non-financial entity.
  3. The establishment of transparency for non-equity markets and increased equity market transparency. Under MiFID II, the use of reference and negotiated price waivers for equities will be capped and the transparency regime will be broadened to include non-equities. New rules will also require trading venues to make pre- and post-trade data available on a commercial basis.
  4. Increased competition for the trading and clearing of financial instruments. The revised rules will facilitate access to trading venues and central counterparties (CCPs) and include the introduction of transition periods for smaller trading venues and new CCPs.
  5. The introduction of rules and controls relating to algorithms used in relation to high frequency trading. Under the new rules, algorithmic traders will be required to be regulated and subject to liquidity controls.
  6. Increased investor protection through client asset protection, product governance, other organisation requirements and conduct rules. The agreed text of MiFID [...]

    Continue Reading



United Kingdom Government Confirms Change to Sustainability Criteria for Biomass

by Caroline Lindsey

The Department of Energy and Climate Change (DECC) in the United Kingdom published its response to its “Consultation on proposals to enhance the sustainability criteria for the use of biomass feedstocks under the Renewables Obligation (RO)” on 22 August 2013 (the Response). The original consultation was published on 7 September 2012.

In the Response, the UK Government confirms that it will proceed with its proposals to revise the content and significance of the sustainability criteria applicable to the use of solid biomass and biogas feedstocks for electricity generation under the Renewables Obligation (RO). The RO is currently the principal regime for incentivising the development of large-scale renewable electricity generation in the United Kingdom. Eligible electricity generators receive renewables obligation certificates (ROCs) for each megawatt hour (MWh) of renewable source electricity that they generate. Biomass qualifies as renewable source electricity, subject to some conditions.

Changes to the criteria

The sustainability criteria associated with the RO is broadly divided into greenhouse gas (GHG) lifecycle criteria, land use criteria and profiling criteria. There will be changes to all of the criteria, but the significant changes relate to the first two criteria, and will take effect from 1 April 2014.

In general terms, the GHG lifecycle criteria are designed to ensure that each delivery of biomass results in a minimum GHG emissions saving, when compared to the use of fossil fuel. The savings are measured in kilograms (kg) of carbon dioxide equivalent (CO2eq) per MWh over the lifecycle of the consignment (sometimes referred to as “field or forest to flame”). The UK Government has confirmed that all generating plants using solid biomass and / or biogas (including dedicated, co-firing or converted plants and new and existing plants) will be on the same GHG emissions trajectory from 1 April 2020 (200 kg CO2eq per MWh). In the meantime, new dedicated biomass power will be placed on an accelerated GHG emissions trajectory (240kg CO2eq per MWh). All other biomass power will remain on the standard GHG emissions trajectory (285kg CO2eq per MWh) until 1 April 2020.

Changes to the land use criteria will also be introduced. In particular, generating plants using feedstocks which are virgin wood or made from virgin wood will need to meet new sustainable forest management criteria based on the UK Government’s timber procurement policy principles.

The land use criteria set out in the European Union (EU) Renewable Energy Directive 2009 (RED) will continue to apply to the use of all other solid biomass and biogas, with some specific variations for energy crops. As is the current position, the land use criteria will not apply to the use of biomass waste or feedstocks wholly derived from waste, animal manure or slurry.

The new sustainability criteria will be fixed until 1 April 2027, except if the EU mandates or recommends specific changes to the sustainability criteria for solid biomass, biogas or bioliquids, or if changes are otherwise required by EU or international regulation.

Making compliance mandatory

Currently, whilst generators using [...]

Continue Reading




STAY CONNECTED

TOPICS

ARCHIVES