How to Write a First-Class Post-Graduate Law Essay (Example)
Here is a practical example of a first-class law essay that was written by a post-graduate student from a Russell Group university in the UK!
Please explain the “energy trilemma” and how international energy regulation can help to solve the issues associated with the same.
The phrase “energy trilemma” has become prevalent in energy industry. It is most usually used to describe a balance between 1) energy security; 2) social impact and 3) environmental sensitivity. These three elements are presented as conflicting aspects of energy production which are difficult to balance out and are sometimes provided in the shape of a triangle to show how these ideas interlink and compete with each other. People worried about carbon emissions argue for greater use of nuclear, solar, wind and tidal power to reduce our reliance on fossil fuels and keep the spirit of the Kyoto Protocol alive. Traditionally, legal provisions such as international treaties were limited to the scope between two or more states. These are known as “hard laws” and usually have the power for judicial intervention and penalties for flagrant violation. However, the increased involvement of corporations and international conglomerates in the energy industry has opened up a Pandora’s box of human rights abuses, corruption and environmental damage (“Resource Curse”) and various quasi-legal instruments such as international best practice standards, codes and principles have been established to counter the Resource Curse. These instruments are categorised as “soft law” and applicability to companies is merely obligatory unlike mandatory hard laws. The soft law plays an important role in addressing the three competing elements of the energy trilemma triangle. Violating soft law instruments may in the long run pose greater negative consequences to an energy company than hard law. Soft laws may in fact be more effective in regulating sustainable development, human rights and in turn improving business. This is because soft laws work on a ‘name and shame’ basis for compliance.
Those with an interest in geopolitics will point to arguments over energy security; the influence of OPEC; or the ability of certain states to turn off the gas taps if they do not feel that they are being accorded enough respect (Russia and Ukrainian crisis including the Orange Revolution, the gas contracts and the more recent instability in Ukraine and the abandonment by Russia of the construction of the South Pipeline), to take just a few examples. In these cases, they might favour domestic solutions such as hydro, coal and shale gas where available. Over the generations we have been told that practically limitless free energy lies just around the corner, if only the technology can just be refined for nuclear fusion, solar, wind or biofuels.
All this while populations in many regions worry more about whether they can even afford energy to cook or heat their homes rather than how it might impact climate change effects or be vulnerable to geopolitical insecurity. The best energy must not be too expensive, not too unreliable and not too carbon intensive. For most of us in the real world, the only answer to meeting our future energy needs lies in diversity. A balanced energy mix that provides affordable, reliable energy that is sourced with an appreciation of the trade-offs needed to tackle climate change. Utilising a sensible mix of energy resources means making well thought out, hard-won compromises and creating bespoke solutions tailored for specific geographies and markets.
For instance, in the United States, the shale gas revolution is important in providing affordable energy at a time of insecurity across many of the oil-producing nations of the Middle East. In the UK, solar and onshore and offshore wind are essential. Yet it is only as part of a diversified energy mix that they can consistently deliver in conjunction with a reliable base load, whether that is from nuclear, natural gas, shale gas or coal utilising carbon capture technologies. And in the emerging economies of Asia and Africa there is huge potential for low carbon, inexpensive energy solutions, but they must be viewed in conjunction with optimising the balance between all three elements of the “trilemma”, affordability in particular.
Innovation is crucial to help solve the energy “trilemma” of lower carbon dioxide emissions, securing supplies and keeping consumer bills low, according to a government minister. According to Amber Rudd, Secretary of State for Energy and Climate Change: “Solving the so-called energy ‘trilemma’ will only be achieved with the help of innovation, paving the way for tomorrow’s deployment of important technologies”.
Different regions and nations will face unique challenges in the coming years that will all contribute to the global picture. According to Riccardo Puliti, Managing Director for Energy at at the European Bank for Reconstruction and Development, “Energy access, energy security, climate change are all very important objectives. The size of this triangle is shaped in a different way from region to region and country to country” and in order to find a solution, there are global targets, but there are also “regional and national targets that contribute to this global target”. The goal of achieving a sustainable energy future depends on sound policy dynamics and a collaborative approach, according to the 2014 World Energy Council Trilemma report.
As we consider the large investments that will be required in the energy sector, political and regulatory risk is considered by investors the major factor preventing the mobilisation of the capital required. Balanced policy frameworks that address the trilemma are the best guarantee to avoid sudden and dramatic policy changes, political risk, and therefore a condition for the mobilisation of the required capital. Ultimately, a good energy trilemma balance is a strong basis for the prosperity and competitiveness of individual countries.
The energy financing conundrum highlights that there is enough capital available from the private sector if the right conditions are provided. But policymakers and regulators must clearly signal their future energy strategies, recognise the need for appropriate risk-reward structures, and put in place lasting policy and regulatory frameworks, free from populist political interference and in line with the framework the energy trilemma provides. It is clear that bridging the related skills is a critical success factor to deliver energy projects around the world and enable the energy sector to absorb capital.
In 2003, 9 large banks created what became known as the Equator Principles. The Principles serve as a checklist for financial institutions before acting as lenders in project financing. The Principles apply to any new project with a capital cost of USD 10 million or more and require an Environmental and Social Assessment (ESA) under Equator Principle No.2 to evaluate the environmental impacts and the effects on local communities. Principle No.6 provides for a grievance mechanism much like the Ruggie Framework. The fact that Equator Principles now have over 80 signatories demonstrates the influence that soft law plays in addressing the “energy trilemma” by making provisions for environmental, social and security elements.
Soft law in the form of the Principles could potentially halt financing of a project if it is determined that the project does not abide by certain labour and human rights standards. Having said that, soft law such as the EP still have disadvantages. This can be seen in the Baku-Tbilisi-Ceyhan pipeline where Equator Principle Financial Institutions (EPFI) were found to have breached the Principles on 157 counts. However, soft law may also be subject to hard law judicial enforcement. This was seen in the case of EPA v Shell Australia (1999) interpreted a petroleum development contract to include international best practices.
Under regulatory pressure of Basel III (the global, voluntary regulatory standard on bank capital adequacy), banks may be obliged to reduce their infrastructure loans and increase their risk premium for project finance. Meanwhile, other forms of funding, including pension funds, are not yet prepared or incentivized to meet the challenge.
In conclusion, the European Commission has estimated the EU needs up to €1trn of investment by 2020 to ensure security of supply, diversification of sources, cleaner energies, and competitive prices within an integrated energy market. The key remains not the level of capital expenditure for energy infrastructure but how it dovetails with policy at the EU. In Germany, which in some ways is Europe’s poster child when it comes to the dash for renewables, cynics may charge that the government is happy to see some plants fall, especially if it makes it easier to meet greenhouse gas emission targets. For many consumers that will count for little as they’ll continue picking up the tab by paying for subsidies to bring more renewable capacity on stream. From a Europe-wide perspective the portents in the short term at least don’t provide much cause for optimism, so long as national governments continue to pursue divergent policies based on specific national needs.
But there are bigger problems with the EU’s strategy. First is that market integration dilutes the impact of renewables, which makes high levels of renewable penetration at the national level easier to manage, but it does not solve the underlying problem. As other national markets increase their renewable generating capacity, the problems associated with high levels of renewable penetration will resurface. The single market ideal is based around an EU-wide competitive wholesale market for conventional generation, but EU power markets have become a hybrid of social levies and Feed-in Tariffs for prioritized renewable electricity. The solution appears to be capacity markets, a solution that no one wants, but one that many believe has become necessary, despite that fact that it will further undermine the wholesale market. The EU’s build out of renewable energy sources is the world’s most ambitious attempt to address climate change concerns. The problem is that its single market philosophy was dreamed up in another age. Almost every part of its emissions mitigation strategy has depended upon measures that undermine markets. That is perhaps inevitable because markets, even perfect ones, are insular and incapable of addressing externalities without intervention.