Saturday, July 11, 2009

Peru's "Lot 67:" Oil Development and Communities

In the past several months, the Peruvian government has been faced with community-related protests in the Amazon region. The underlying reasons for the protests are primarily linked to the exploration and development (or potential thereof) of oil and gas in the region and the resulting impact on local communities.

Two recent articles consider the issues that are at the heart of the protests and the competing interests before the Peruvian government. Put simply, the oil and gas in the Amazon belongs to all the people of Peru. But how should it be developed and what role should local communities play in decision making that will impact the lives of their people.

An article in The Guardian ("Rumble in the Jungle," July 4, 2009) considers whether there are "uncontacted tribes" in the region and the chance they could be harmed by oil and gas development. The article points to some who say there are uncontacted tribes near Lot 67, an area that may hold 300 million barrels of oil, as well as others who say such tribes do not exist.

Meanwhile, The Economist ("Oil and Land Rights in Peru: Blood in the Jungle," June 11, 2009) reports that, "For seven weeks [this autumn in the southern hemisphere] tens of thousands of Amazonian Indians blocked roads and rivers across eastern Peru. They seized hydroelectric plants and pumping stations on oil and gas pipelines to try to force the repeal of decrees facilitating oil exploration, commercial farming, and logging in parts of the jungle." The Economist goes on to say, "Peru has seen many conflicts between foreign mining and oil companies and local people, who complain of environmental damage and/or a lack of tangible benefits from these investments. The conflicts are often resolved only after protests, and sometimes bloodshed."

The relationship between natural resources development projects and the rights and expectations of local communities loom large as societies, governments, and the development industry seek to balance all of the competing interests. Dealing with these relationships is likely to be a, if not the fundamental issue as the natural resources sector looks to the future.

Friday, July 10, 2009

Big Four Accounting Firms Prepare for Cap-and-Trade; Will U.S. Legal Practitioners be Ready?

If there was ever any doubt about the legal and consulting opportunities associated with a cap-and-trade system in the U.S. those doubts can likely be put to rest -- the Big Four accounting and auditing firms are rapidly gearing up for some type of U.S. greenhouse gas emissions regulatory system.

About 10 days ago, I posted a piece "Accounting and Sustainability" that pointed out how accounting firms have been quite aggressive in seeking out new market niches.  A story in ClimateWire ("Accounting: The Big Four Will be Among the Big Winners if U.S. Adopts Climate Law," July 6, 2009) predicts that accountants are poised to benefit in a huge way if the U.S. limits greenhouse gas emissions.

According to Jan Babiak, who directs Ernst & Young's sustainability and climate change practice, "I don't think it's understood universally by our clients or by the profession.  What we all know is that at some point this is going to be absolutely transformational."

Similarly, Deloitte's Eric Hespenheide, a leader in its sustainability practice, says, "We're clearly leveraging our experience in Europe [which has limited greenhouse gas emissions since 2005] build out and anticipate as best we can what impacts [a cap on greenhouse gas emissions] will have on U.S. businesses."

It is difficult to predict for sure what the cap-and-trade landscape (if any) will look like in the U.S. in a few years or what the business landscape will look like for that matter.  However, what does seem probable is that those who are well prepared to deal -- from a multitude of perspectives -- with these issues will clearly have a first mover's advantage over firms and individuals who don't.  In a partial response to this, the graduate program will introduce a second renewable energy course in Spring 2010 and we are considering other new offerings as well.

Thursday, July 9, 2009

Critical Need for Capital Investment in Renewables Projects

Attracting sufficient capital investment in the wind power industry is a key -- and currently lacking -- element to insuring that the wind industry achieves its maximum potential, three lawyers at Shearman & Sterling assert.

According to an article in the New York Law Journal ("Putting the Wind (Back) to Work," July 6, 2009), historically the wind industry has been strongest when there was a demand for wind power, developers and investors enjoyed tax or other incentives, and there was "easy access to capital."  However, today "debt arrangers have largely exited the market given constrained credit. Additionally, the pool of investors with large enough tax liabilities to utilize available tax benefits has shrunk drastically."

This article is definitely worth a look for those interested in the financing of wind energy projects.

(Muchas gracias to Sergio Stone, Foreign, Comparative, and International Law Librarian at the Stanford Law Library for calling this to my attention.)
The European Union should "put an ambitious set of proposals on the table" at the UN climate change meeting in Copenhagen in December, a highly respected EU think tank said last week.

The Centre for European Reform (CER) said bluntly that if the EU does not take the lead in Copenhagen, "the negotiations could end in a stand-off."

While the U.S. largely limps along (the passage by the U.S. House of the Waxman-Markey bill represents some movement, but the details in the bill include a mind boggling array of handouts) in the climate change policy debate, it is interesting to see how European thought leaders -- including the CER -- view the issue:
"The EU has led the world in its response to climate change. And although the election of Barack Obama to the White House means more constructive U.S. engagement, there are few signs that Washington is prepared to take the lead. As a result, the onus to bridge the differences between rich and poor countries will rest with Europe. In an ideal scenario, the EU will put an ambitious set of proposals on the table; other developed countries will follow suit, showing that they are prepared to shoulder prime responsibility for saving the world's climate; and the developing world will then get on board."
However, the CER cautioned that in order for the EU to be credible at Copenhagen it needs to strengthen its own policies:
"The EU is relying on carbon pricing to encourage investment in green technologies. But carbon prices under the EU's emissions trading scheme are nowhere near high enough to provide business with the necessary incentive to make such investments. Unless companies start investing in new technologies now, Europe will not be able to bring about a permanent reduction in emissions. Bleak economic prospects (which means less output and few emissions) mean that prices are set to remain weak over the medium term -- unless action is taken to boost them. The [Swedish presidency of the EU] should recommend tightening the emissions caps or introducing price floors for carbon permits."

Wednesday, July 8, 2009

Mississippi Gov. Haley Barbour Says Cap-and-Trade Legislation Will Reduce Economic Growth

Lest anyone think that the cap-and-trade concept will receive a completely enthusiastic welcome in the U.S. Senate...

Mississippi Republican Gov. Haley Barbour, in testimony yesterday before the Senate Environment and Public Works Committee, said the Waxman-Markey energy bill will "drive down economic growth." According to Gov. Barbour:

"It is hard to believe that at a time when growing our economy is our number one priority, Congress is considering a bill that would reduce economic growth. When families are suffering because of a serious recession, Congress is considering a bill to drive up the cost of the electricity that cools those families' homes and the gasoline that runs their cars. As U.S. manufacturing faces stiff foreign competition, Congress is considering a bill that would make our manufacturers less competitive."
One thing that the governor did not talk about was his long-time lobbying (he was a professional, and quite successful, lobbyist before being elected governor) efforts on behalf of the Southern Company, a large electricity producer located in the southeast part of the country. Probably just an oversight on his part.

Ecuadorian Mining Sector Heats Up: New Mining Law Now in Place

Ecuador is taking steps to get back into the mining business, just more than 12 months after the government cancelled nearly 500 mining claims.

According to the July/August 2009 issue of LatinFinance, the mining ministry is busy evaluating claims by international firms:
"Concessions are being offered under a new mining law approved in January.  The law limits concessions to 25 years and 5,000 hectares.  No limits existed in the earlier law.  It also calls for a minimum five percent royalty on sales, but unlike neighboring countries, will set conditions in individual contract negotiations with companies instead of instituting a sector-wide policy.  The law also calls for strict adherence to environmental norms written into the 444 article Constitution, possibly the greenest in the world if fully applied, which was approved in a September 2008 referendum."
The Ecuadorian government's default of 2012 and 2030 bonds has raised concern among many potential investors. As a result, "The government is going to have to go out of its way to make investment opportunities attractive," Alberto Bernal, a mining analysis in the country, told LatinFinance.

The matter of resource nationalization is likely to loom ever larger in the future as countries -- such as Ecuador -- seek to benefit from international investment while protecting the property rights of their own citizens.

Tuesday, July 7, 2009

June 2009 Issue of The Green Power Network Published

The latest issue of the Green Power Monthly E-Mail Update has been published by the U.S. Department of Energy. The publication, which is freely available, provides summaries of recent green power marketing news, green pricing programs by utilities, information on renewable energy certificates, and green power purchases.

For those interested in renewable energy in the U.S. it is a great resource. It can be subscribed to by clicking here.

Monday, July 6, 2009

BP-China National Petroleum Company Win Iraq's First Oil Auction

Last week a partnership involving BP and the China National Petroleum Company won the right from the Iraqi government to extract oil from the Rumaila oil field.

All other major oil companies -- including ConocoPhillips and Exxon Mobil -- did not complete the bidding process. The next auction will be held by the Iraqi government later this year.

A story in The Los Angeles Times ("Iraq awards BP-led consortium a contract to develop oil field," July 1, 2009) suggested that the auction was not the major success the government had hoped for:

"The disappointing outcome to the widely anticipated event, which was planned a year ago, suggested that international oil firms aren't as eager to invest in Iraq as the government had hoped and that there will be no quick fix for the nation's looming financial problems."
An interactive overview of what Iraqi oil field are available can be accessed by clicking here.

Hiring News: MRLS Graduate Joins the National Association of State Energy Officials

Kate Marks (MRLS graduate 2009) has joined the National Association of State Energy Officials (NASEO).

NASEO is made up of the governor-designated energy officials from each territory and state.   The organization was established through an agreement in 1986 with the National Governors' Association.

According to Ms. Marks, "State energy offices are busy right now with all of the [stimulus legislation] funding they have been granted."

Ms. Marks was the 2008-2009 recipient of the prestigious Col. Jan Laitos Scholarship Award, which is given annually to a high achieving student in the environmental and natural resources law and policy graduate program.

Sunday, July 5, 2009

Do Democrats Have "Filibuster-Proof" Senate? Don't Count on It

With Democrat Al Franken of Minnesota soon to be joining the U.S. Senate Democratic Caucus comes the assertion from Senate Majority Leader Harry Reid that the Senate is now "filibuster proof."

What Mr. Reid is referring to is the the ability of the 58 Democrats and two Independents to vote in favor of a cloture motion that would override a filibuster by the body's 40 Republicans. This, of course, assumes that all the 58 Democrats and two Independents would actually vote to override a Republican-initiated filibuster.

But in reality, could this ever happen. Let's presume, for a moment, that a climate change bill gets to the Senate floor and the Senate Republicans initiate a filibuster. Can Mr. Reid count on all 58 Democrats to vote to override the filibuster? Well, let's take a look at some of those who are in the 58. Senator Evan Byah of Indiana -- he's hardly a firm vote. Or Senator Mary Landrou of Louisiana -- I wouldn't want to count on her. Then there's Senator Ben Nelson of Nebraska -- a Democrat in name only. Mr. Reid might not be able to count on Senator Bill Nelson of Florida. And then the two senators from Coal, Inc., West Virginia -- Robert Byrd and Jay Rockefeller. Not sure I would want to count on them either.

Out of the 40 Republican Senators, there are a few...well two to be exact...who might vote to override a filibuster -- Susan Collins and Olympia Snowe, both of Maine.

In any case, I'm not sure how Mr. Reid reaches the 60 votes necessary to override a fillibuster.

Maybe Mr. Franken should reprise his Stuart Smalley Saturday Night Live role for Mr. Reid: "I'm good enough. I'm smart enough. And doggone it, people like me." Well, many people do indeed like Mr. Reid, but don't bet on any unanimous Democratic votes to override a climate change related filibuster.

Happy 4th of July...From the European Union and Stockholm!

All of us in Denver wish the readers of this blog a Happy (but a bit belated) 4th of July! And we aren't the only ones wishing you the best.

Our program's "man" in Stockholm, Marcus Oscarsson, was featured on a national news show for Sweden's TV4 yesterday. Marcus, who some of you may be familiar with if you've taken "European Union Environmental Law & Policy" from me, joined a roundtable discussion about this 4th of July and America's mood as perceived from a European perspective.

And for those of you who don't know Marcus, let me tell you a little about him. Marcus and I became acquainted nearly 10 years ago when he was an intern at the Swedish-American Chamber of Commerce in Denver. That year, to be precise in the spring of 2001, Sweden's government was serving as the president of the EU and Marcus helped arrange for me -- recently returned from several years working in the EU -- to speak to the Denver group. Since then, we have become fast friends and he has helped me in my numerous offerings of "EU Law & Policy" and "EU Environmental Law & Policy."

For the next six months, Marcus is part of the Swedish government's EU presidency. This is a particularly important six months for the EU for many reasons, not least of which is that Sweden will lead the EU's delegation to the U.N. sponsored climate change talks in Copenhagen in December. In this role, Sweden (in collaboration with its other 26 EU member states) will likely take an ambitious position vis-a-vis where future global climate change policy will go. (It is worth noting that Sweden, and its impressive government and group of civil servants, is perhaps the most admired and respected holder of the EU presidency, which is rotated among the EU's member states.)  But this is getting a bit far afield from commenting about our program's great friend in Stockholm and the EU.

This coming semester (which begins in mid-August) I will be teaching "EU Law & Policy," and Marcus will most likely speak to the class from Sweden about the Swedish EU presidency.  Of course I would prefer to take the entire class right to Stockholm, but there is the slight matter of cost to do so...

If you check out the video link, Marcus is the one on the right-side of the panel.  Oh, and one more thing -- the video is all in Swedish so for those (like me) who don't speak Swedish, it may be a bit difficult (but not impossible) to follow!