Energy Research & Social Science 59 (2020) 101305

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Energy Research & Social Science

journal homepage: www.elsevier.com/locate/erss

Original research article

Sovereignty, trade, and legislation: The evolution of energy law in a T

changing climate
Magnus Abraham-Dukuma
Energy and Climate Law, at the Centre for Energy, Resources and Environmental Law (CEREL), Te Piringa - Faculty of Law, University of Waikato, Hamilton, New Zealand

A B S T R A C T

Recent debates on climate change have necessitated a new seminal jurisprudence and proposition of constituents and core principles of energy law in the
Anthropocene. The proposed principles depart from the traditional notion of energy law, which focused on rights and duties of key industry players for economic
growth through optimal resource exploitation. Sovereignty over natural resources and sustainability are part of the proposed principles. This paper observes potential
conflict with international trade rules at the World Trade Organisation (WTO) amidst other conceivable debatable issues. It critically examines the likely coexistence
of trade rules, climate change objectives and sovereignty over natural resources through legislation considering emerging climate responsibility by corporate
structures in the energy industry. Policy insights revolve around reforms to achieve symmetry between sovereignty, trade and climate objectives. Specifically, these
include climate-conscious reforms in WTO law, incorporating positive energy industry obligations in climate deals and country-specific legislative reforms for
achieving climate objectives. These may not prove to be easy tasks. The egregious problem of sovereignty needs delicate attention in construing how it relates with
climate change measures, environmental policies at the WTO and sustainable development of energy resources. Reform processes at international and national law
would have to be structured systematically to achieve desired results. The personalities and processes for reforms also need critical consideration.

1. Introduction Climate Initiative (OGCI), Global Gas Flaring Reduction Partnership

(GGFRP) and the 2030 Zero Flaring Reduction Partnership (ZFR) re-
Over two decades ago, while recognising the difficulty in achieving present positive testaments of industry paradigm shift in construing
consensus regarding the meaning of energy law, Bradbrook con- climate change. These initiatives align with the principle of sustainable
ceptualised the field in his seminal paper as “the allocation of rights and development of natural resources; but tend to overshoot environmental
duties concerning the exploitation of all energy resources between in- strictures of international trade rules. There is need for reforms to
dividuals, between individuals and the government, between govern- achieve complementarity between trade rules, sustainability and leg-
ments and between states” [18]. This covered the regulation of the islation to address climate change in the energy industry. The processes
energy and natural resources industry to create correlative rights and of law reform would have to be optimised both at the national and
duties geared towards optimal resource exploration and development international scenes. WTO rules would have to be amended to be co-
for the economic benefits of all industry players. A key achievement of ordinated with contemporary climate realities in energy production.
Bradbrook's seminal paper was engendering the debate and perspective Countries would also need correlative law reforms in exercise of so-
of energy law as a separate legal discipline, but without clarity on its vereignty for addressing emissions more proactively. This paper ad-
constituents and comprehensive principles. This article presents shifting dresses these issues.
notions and evolving principles of the field, more directly with a new
seminal jurisprudence; and how evolving principles intersect with in- 2. Literature review
ternational trade rules and climate objectives. Amongst the collectively
recognised evolving principles, sustainability and sovereignty need at- In recent times, the debate as to the components and core principles
tention, especially in their relationship with international trade rules, of energy law has surfaced sparsely in some leading energy law texts
and legislating for climate change mitigation in the energy industry. In [10,47,87]. This inadvertently coincides with the Anthropocene epoch
recent times, there is more recognition by oil and gas companies of their when climate change is gaining attention as a global concern of
contribution to climate change. This has birthed renewed industry humanity and the need for affirmative action through mitigation and
collaboration to address emissions through technology development, adaptation policies. The energy industry shares its responsibility for
increased deployment of carbon capture and storage (CCS) and ex- anthropogenic climate change as a source of greenhouse gas (GHG)
change of ideas. The Carbon Disclosure Project (CDP), Oil and Gas emissions. Carbon dioxide (CO2), methane (CH4) and volatile organic

E-mail address: mca13@students.waikato.ac.nz.

https://doi.org/10.1016/j.erss.2019.101305
Received 4 April 2019; Received in revised form 4 September 2019; Accepted 12 September 2019
2214-6296/ © 2019 Elsevier Ltd. All rights reserved.
M. Abraham-Dukuma Energy Research & Social Science 59 (2020) 101305

compounds (VOCs) from flaring account for vast amounts of GHG resources within their territorial jurisdiction and devolve such power to
emissions in the oil and gas upstream sector and contribute immensely others (in the form of licenses and permits) according to national in-
to the greenhouse emissions footprint of the oil and gas industry [3]. In terests and prerogatives without any form of external interference.
the year 2015, gas flaring contributed to 22% of global upstream More so, the state establishes a regulatory framework for resource
emissions [65]. According to the World Bank Global Gas Flaring Re- management. It may be difficult for states to wholly comply with an
duction Partnership (GGFRP) data, in the year 2017 alone, the quantum international obligation or rules limiting optimal exploitation of natural
of gas flared by the global oil and gas industry stood at 140,570 billion resources, especially when the economy is largely dependent on re-
cubic meters [115]. In same year, there was a 1.4% global increase in source exploitation. While such international rules may be laudable to
energy-related CO2 emissions, culminating in a historic record of combat a common problem like climate change, they present potential
32.5 giggatonnes [75]. Amidst these climate realities, the Paris Agree- points of friction with sovereignty, especially when there are require-
ment seeks to address the threat of climate change, by limiting global ments to restrict or limit resource exploitation due to environmental
temperature increase well below 2 °C and pursue further reduction to concerns. As states exercise sovereignty, which may necessitate a de-
1.5 °C above pre-industrial levels (Paris Climate Change Agreement, viation from international top-down regulatory measures, the success of
2015, art 2.). Apart from climate and environmental law trends, the mitigation commitments on states becomes uncertain because there is
energy law academic space has been replete with considerations of no guarantee of compliance. If such commitments may not be strictly
paradigmatic shift in focus from conventional notions of rights and adhered to by sovereign states, probably because of perceived conflict
responsibilities for resource exploitation to comprehensive considera- of interests, the quest for climate justice becomes even more arduous
tion of ancillary issues bothering on climate change and sustainable [9].
resource development and management [81]. There is also the discus- It is important to note the relationship between the principle of
sion for energy law as a discipline to develop its own goals and prin- sovereignty and climate change measures. The concept of sovereignty is
ciples for sustainability [62]. These considerations have necessitated a not limited to just state management of resource wealth. From the
new treatise for energy law as a discipline with seven core principles, climate change point of view, there is also environmental sovereignty,
namely access to modern energy services, resilience, energy security, which grants states power to legislate and promulgate policies for en-
national resource sovereignty, energy justice, sustainability and the vironmental protection [26,37]. So, over time, the principle of perma-
precautionary principle [48]. While this emerging jurisprudence may nent sovereignty over natural resources has permeated the political
constitute the subject matter of academic polemics and cross-fertiliza- right to self-determination, international human rights law, trade law
tion of ideas on energy law, this article proceeds with the inclination and environmental law [103], hence the notion of environmental so-
that the core principles advanced may gain relative recognition and vereignty. In principle and fact, the sovereignty of states at interna-
prominence amongst academics, researchers, and policymakers within tional law to willingly participate in multilateral agreements for ad-
the field. However, the focus currently is the interplay between the dressing climate change is recognised and respected (United Nations
principles of national sovereignty over natural resources, sustainability Framework Convention on Climate Change 1992, preamble; Paris
in the context of climate change mitigation in the industry and inter- Agreement 2015, art 13(3)). There is also a strand of thought on the
national trade rules. importance of acting when discharges of pollutants and hazardous
substances imperil human life and endanger the resource wealth of a
3. Methodology tribe [51]. It can be argued that such acting could be construed as an
exercise of sovereignty through relevant environmental regulation or
The treatise on the constituents and proposed principles of energy policy for pollution or emissions control and remediation of impacted
law is an innovation in the academic space, to the extent that it holi- sites. It is also possible that acting will mean control measures other
stically discusses proposed principles of the discipline. There is need to than regulation or policy by government, tribal/local authorities or the
examine the interaction of some of the principles in certain conditions personality or entity responsible for the environmental pollution.
where tensions arise or are likely to arise. This present paper adopts Nevertheless, within the context of the present paper, the first under-
critical legal analysis in its examination of permanent sovereignty over standing seems more likely. Additionally, another way of exercising
natural resources and sustainability as they relate with international environmental sovereignty can be in the form of incentivising invest-
trade rules, legislating for achieving climate objectives, emerging cor- ment in low carbon and clean energy technologies. This mostly takes
porate environmentalism, and climate responsibility. the form of regulatory and policy instruments for climate financing
Accordingly, the following sections of the paper unfold as follows: [76].
Section 4 examines the interactions between sovereignty, international However, it may be apposite to juxtapose the foregoing argument
trade rules, corporate structures and climate change. Section 5 ex- with the no-harm rule. This rule acknowledges the sovereignty of states
amines shifting paradigms amongst energy players and evolving cli- over their natural resources but also obliges them to ensure exploitation
mate responsibility, a departure from preconceived notions and cor- of resources within their jurisdiction in such a manner that they do not
porate denial of climate change. Section 6 discusses the need for policy cause damage to the environment beyond their jurisdiction (Rio
and legislative reforms to achieve symmetry between trade rules, cor- Declaration on Environment and Development 1992, principle 2). Even
porate climate responsibility within the energy industry, and legislating prior to the emergence of the Rio Declaration, it had been a trite cus-
for climate change; while conclusions and policy implications constitute tomary international law principle that sovereignty creates reciprocal
the themes of Section 7. environmental responsibilities on sovereign states towards states be-
yond their immediate territories [23]. It has a dual-natured character –
4. Sovereignty, trade rules, corporate structures and climate rights and limitations [49]. In contemporary times, and in line with
principle 2 of the Rio Declaration, there is the necessity of rational
The concept of national sovereignty over natural resources has very adjustments in perceptions about sovereignty over natural resources,
close connection with energy exploitation and supply but poses a re- especially as exploitation of such resources impact the environment
curring controversial subject in international law [55]. This is a po- [100]. The adjustments contemplated here touch on environmental
tential technical problem for international or multilateral accords like responsibilities of sovereign states to protect the climate as they ex-
the United Nations (UN) climate change regime. It is trite principle that ercise sovereignty in context of resource exploitation, and not just for
independent sovereign states have permanent sovereignty over their economic priorities or pecuniary benefits. At some points, this informs a
natural resources (United Nations General Assembly Resolution 1803 of relational approach to sovereignty for international interdependencies
1962). This presupposes power of states to manage and exploit natural and cooperation required for addressing climate change [91]. This

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M. Abraham-Dukuma Energy Research & Social Science 59 (2020) 101305

creates environmental due diligence obligations on states, whether they management (Agreement on Technical Barriers to Trade 1994, pre-
are directly involved in the resource exploitation or merely regulatory amble and art 1). The GATT allows for national regulation necessary for
[99]. Ordinarily, this is a widely recognised concept in customary in- the protection of health and environment (GATT [43], art XX). This
ternational law [16], which should be a very relevant rule for addres- encapsulates price and market mechanisms in the form of environ-
sing climate change [67], but the theoretical expositions on the no- mental taxes and trading schemes as measures for internalizing en-
harm rule and its practice often seem off tangent, as there is a wide gap vironmental costs such as GHGs [118]. Similarly, the Subsidies and
between theory and practice [53]. Nevertheless, the principle ne- Countervailing Measures Agreement (SCMA) allows fiscal support
cessarily presupposes that states could dictate rules for energy ex- programmes for the promotion and deployment of environmentally
ploration and exploitation in the context of sustainable development, friendly technologies, which help to mitigate the environmental im-
i.e. formulating rules for incorporating sustainability in the energy in- pacts of corporate activities (Agreement on Subsidies and Counter-
dustry through statutory or legislative requirements on best environ- vailing Measures 1994, art 8). Additionally, the Government Procure-
mental practices. Despite how simple this may seem, the international ment Agreement (GPA) tends to promote sustainable production and
legal order on trade, as it is presently contrived, poses some difficulties consumption by availing states discretion to apply technical specifica-
in achieving sustainable development in the energy industry with the tions and procurement evaluation criteria to promote the conservation
instrumentality of legislative instruments that place very stringent en- of natural resources and protect the environment (Revised Agreement
vironmental rules on the energy industry and may have distorting ef- on Government Procurement, 2012). As can be observed, these provi-
fects on trade. It is thus pertinent to consider international trade (as it sions are directed to states under the WTO framework, and not the
relates to corporate structures within the energy industry) and climate corporate entities carrying on business or trade. They are general ex-
change. ceptions to WTO core rules on trade restrictions and do not constitute
There is the belief, supported by empirical study, that institutional substantive mandatory obligations of states or even trading companies.
affiliations between countries and organisations greatly influence en- Their performance or execution lies within the purview of states
vironmental policies domestically [29]. This paper proceeds with the through legislation or regulation, as the case may be, albeit cautiously.
inclination that the WTO typifies such notion as far as the environ- Therefore, corporate structures have no mandatory obligation re-
mental policies of its member states are concerned, especially trade/ garding environmental protection or climate change mitigation under
economic practices harmful to the environment. The following para- the WTO. Similarly, energy and natural resources companies have no
graphs elucidate this point. This situation is made worse by right-wing trade obligations to reduce emissions traceable to their operations.
populist ideologies where there is less regard for sustainable energy Moreover, these measures are subject to the condition that they do not
transformation and more regard for economic interests [40]. The weak constitute arbitrary or unjustifiable discrimination of corporations and
climate policy direction of the United States of America under the constitute restrictions or distortions to international trade (GATT [43],
Trump presidency clearly exemplifies this second strand of thought [1]. art XX). Even though there is recognition of energy efficiency in pro-
Trade liberalization, an element of the international trade law/ duction processes in the Technical Barriers to Trade Agreement, the
rules, is a pivotal driver of international economic growth and in- prohibition of technical regulations restricting trade poses a challenge
dustrial revolution, which leaves traces of environmental degradation for states in enacting appropriate legislation to target emissions re-
[34]. This creates a paradoxical interaction between trade, develop- duction in the energy and natural resources industry for fear of non-
ment and environmental concerns [2]. Global trade rules emerged at compliance with WTO rules. While it is trite to avoid unjustifiable
the international scene in 1947 with the adoption of the General discrimination, legislating on restricting energy production practices,
Agreement on Tariffs and Trade (GATT) 1948, which served as the which contribute to climate change, may constitute restriction to trade
principal document governing world trade until 1994 when the Ur- within the WTO framework and result in investor-state dispute settle-
uguay Round of trade talks climaxed in the establishment of the WTO ment (ISDS). The restrictive scope of these exceptions purportedly al-
(Agreement Establishing the World Trade Organisation 1994), com- lowing environmental and sustainable development policies constitutes
prising 164 countries and about 23 observer governments at the time of a barrier to environmental protection. States lacking mandatory
writing (WTO [120]). Prior to the emergence of GATT, preferential minimum standards on energy efficiency, decarbonisation and climate
trade agreements (PTAs) underpinned the economic openness, in- change mitigation more often than not present the WTO rules as ex-
tegration and trade networks amongst states at bilateral and multi- cuses or justifications for policy inaction, necessitating the thinking that
lateral levels [118]. Although there are fragmented conventions and the WTO presents a barrier to climate action [14]. This also inhibits the
multilateral agreements relating to trade, which represent specific possibility of a radical action to proscribe fossil fuels [41], without
sources of international trade law [31], the WTO exists as the pre- prejudice to the veracity or logicality of such an extreme measure.
dominant international administrative institution responsible for for- Additionally, the absence of positive obligations, rather than just pas-
mulating rules and ensuring smooth, predictable, liberalised trade and sive general exceptions, presents the WTO framework as unsuitable for
community trade obligations among the nations of the world [63,108]. environmental protection and emissions reduction [20]. These diffi-
The impact of trade on the environment and the impact of en- culties exemplify the general notion of complexity of international law
vironmental policies on trade are key issues in the recurring trade and at different levels [68].
environment debate [117]. While it is apparent that the core scope of There has been a rife perception that international trade law and
the WTO is the provision of a common institutional framework for the climate change law are two separate bodies of international law with
conduct of trade relations globally (WTO Agreement 1994, art II), complex regimes and cross-purposes that are difficult to align [36]. This
thereby creating an international legal order on trade, with a legal and earlier considerations in the previous paragraph underpinned the
personality (The WTO Agreement 1994, art VIII), its founding Agree- earlier notion that the WTO is not the right avenue to tackle climate
ment also recognizes optimum resource use in the context of sustain- change [39]; but in contemporary times, there has been an optimistic
able development and environmental protection. This recognition is at shift in understanding the need for a reformed international trade
best opaque, as it makes no operational or substantive provision for system that truly pays attention to the environment [13,22,89]. Apart
addressing climate change or environmental aspects of trade [85]. from their economic objectives, trade agreements may as well portend
However, other legal instruments within the WTO framework make untapped potentials for climate change mitigation [57]. Greenhouse gas
comparatively closer provisions (in the form of exceptions) on en- emissions emanating from oil and gas exploration, production and re-
vironmental sustainability. For example, the Technical Barriers to fining processes constitute environmental externalities of oil and gas
Trade Agreement (the TBT Agreement) recognises the necessity of ef- companies in the global trading system [84]. As a way of addressing
ficiency in production processes, improved resource use and this and generally mitigating anthropogenic climate change, there is a

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discussion regarding the possibility of using trade-related environ- agreement with the obligations of parties who are also parties to the
mental measures (TREMs), trade-related investment measures (TRIMs) WTO Agreement, but entrenching environmental and climate policy
and sanctions against states without a price on carbon [109,72]; but obligations in such regional trade agreements underscores the need for
states have continuously exercised restraint in adopting such measures policy symmetry and coordination between trade law and climate
[17]. Placing high import tariffs on products without clean technologies change law [32]. While this particular issue may constitute a topic for
or life cycle production processes, border tax adjustments (equalizing polemics and academic debate, the limited number of participants, di-
tax on imported products to be same with domestic tax on similar do- rect reciprocity, opportunities for policy experimentation and their
mestic products), eco-labelling (awarding eco-friendly labels to pro- unique contextual drafting targeting trade-related aspects of climate
ducts for compliance with eco-friendly standards) constitute TREMs change mitigation are considerable distinctive features that show po-
and TRIMs in the literature [88,90]. Howbeit, these may be subject to tentials in PTAs and RTAs [71]. However, a more fruitful pact may be
the restriction contemplated under the GATT, which permits only PTAs and RTAs that include major GHG emitters generally, and major
charges on similar domestic products and reciprocal internal taxes by emitters from the energy and natural resources industry particularly.
WTO member states (GATT [43], art II). This presents difficulties for Further still, beyond harnessing PTAs and RTAs for achieving global
wide range implementation feasibility. environmental objectives, linking trade-related initiatives and multi-
Additionally, fuel subsidies for the oil and gas industry constitute an lateral agreements such as the Paris Agreement may achieve wider
incentive for continuous oil and gas exploration and production with impacts considering the wider reach of its multilateral scope (Di [54]).
climate change implications, hence the call for their removal [45,69]. As optimistic as these may seem, achieving such structural inclusiveness
In fact, they tacitly condone energy-intensive industries like the oil and may present a herculean task, apparently because of the general pro-
gas sector and serve as a subtle discouragement for investments in ef- blems associated with international law examined above and the
ficiency and clean energy development [92]. Surprisingly, the global penchant for unilateralism against multilateralism as exemplified by the
trade legal regime has maintained historical silence over this [95]. United States (a major GHG emitter) in the Paris Agreement exit. Still,
Away from this conspiratorial silence, international trade can make there is critical legal work to be done in striking feasible balance and
vital contributions in scaling up decarbonisation through clean pro- compromise in the linkages between trade and environmental goals
duction systems and technologies [30]. Considering the general diffi- [60].
culties associated with formulating policies that affect trade, examined
in the foregoing paragraphs, there is need for reforms in WTO rules to 5. Energy players and evolving corporate climate responsibility
curb such environmentally harmful practices [64], and meet crucial
environmental imperatives of the growing climate science [105]. Ra- Sustainability is a cardinal concern for businesses, especially with
ther than fossil fuel subsidies, there could be subsidies to incentivise increased climate change awareness. In recent years, private regulation
more investments, adoption and use of clean energy systems [33]. has evolved as an important source of global climate governance [34].
However, it is important to note that fossil fuel subsidy removal could Sectoral frameworks and international cooperative initiatives (ICIs)
have a distorting effect on trade investments and other conceivable geared towards emissions reduction and climate change mitigation in
economic and environmental implications [106]. According to a report the oil and gas industry have emerged as well. This trend is not limited
prepared by Wood Mackenzie for the American Petroleum Institute to the energy industry, but cuts across various sectors of the global
(API), fuel subsidies removal can lead to as much as 14% reduction in economy, based on both private and public-private partnership ar-
oil and gas production in the United States (the US) alone and further rangements. Recent climate initiatives in the oil and gas sector, and
reductions globally, and consequential oil and gas production related indeed the entire energy industry, underscore the need for transfor-
GHGs; but with potential for massive job losses and multifaceted eco- mative change in the industry [74]. This, perhaps, lends credence to the
nomic implications [111]. While this may seem revolutionary, a rather evolving jurisprudence of incorporating sustainable development as
soft approach may be to subsidise only oil and gas ventures that in- one of the core principles of energy law. Few of such initiatives are
corporate fuel efficiency standards, and cleaner production processes relevant to the present examination and may merit a brief discussion. In
into their corporate value chain, but critical independent monitoring this respect, schemes such as the World Bank Global Gas Flaring Re-
and compliance assessment become considerable issues for successful duction Partnership (GGFRP) and the 2030 Zero Routine Flaring (ZRF),
implementation of such an option. Carbon Disclosure Project (CDP), and the Oil and Gas Climate Initiative
Notwithstanding, it is possible for states to explore preferential (OGCI) come to mind. Additionally, independent proposed and ongoing
trade agreements (PTAs) and regional trade agreements (RTAs) to climate initiatives of private corporate actors in the oil and gas industry
achieve emissions reduction in order to circumvent most of the diffi- may seem a positive commendable direction worthy of consideration,
culties associated with multilateralism [56]. For example, the Trans- perhaps a testament to the optimism for possible linkages between
Pacific Partnership recognises the interdependence of economic devel- trade and climate change objectives.
opment, environmental protection and sustainable development; and
makes positive substantial provisions on environmental protection in 5.1. GGFR and 2030 ZRF
course of trading (Trans-Pacific Strategic Economic Partnership
Agreement 2005, arts 8, 10 and 16). The negotiating process of the As already pointed above, the contribution of flaring alone to global
Transatlantic Trade and Investment Partnership between the EU and upstream emissions for the year 2015 was pegged at 22%, while
the Americas makes similar recognitions and provisions. Although still 140,570 billion cubic meters (bcm) of gas was flared in the year 2017,
an ongoing process, the draft agreements were shrouded in secrecy at representing the sum of oil and gas producing countries flaring data for
the time of writing; but leaks from Green Peace suggest incorporation of the reference period. While this has been a historical trend dating back
the ultimate objective of the United Nations Framework Convention on to decades, reduction initiatives have emerged at the international
Climate Change (UNFCCC) and the Paris Agreement and prerogative of scene only relatively recently, with the GGFRP being the most promi-
parties to determine their sustainable development policies and prio- nent [86]. The GGFRP and 2030 ZRF are two key public-private part-
rities in trade deals [44]. As the negotiations are still an ongoing pro- nership initiatives of the World Bank – comprising national and inter-
cess at the time of writing, if the leaked texts are anything to rely on or national oil companies (IOCs), international institutions, national and
eventually form part of the substantive agreement, there may be a regional governments – to address this industry challenge. The GGFRP
nuanced departure from the WTO paradigm as signatories may have a comprised 18 governments, 13 IOCs and 3 international organizations
better framework document for balancing trade and environmental totalling 34 members; while the ZRF had 27 states, 34 IOCs, and 34
concerns. A point of contention would be reconciling this proposed intergovernmental organization totalling 95 participating members at

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the time of writing (World Bank GGFRP, [116]). The former started in risks and opportunities, performance, GHG emissions accounting and
the year 2002, with the key objective of serving as a catalyst for op- governance. Research shows that companies’ strategies to address cli-
timum gas utilization by working towards removing technical and mate change may be supported by their annual corporate reports
regulatory barriers to flaring reduction through stakeholder facilitation, showing quadrants such as environmental asset management, loss and
policy change, research, dissemination of best practices and project pollution prevention, GHG emissions and mitigating strategies [35].
implementation (Climate Initiatives Platform, [24]). The latter, which Although the carbon reporting of the CDP is at the discretion of parti-
began in the year 2015, furthers the objective of the former but with an cipants, the CDP issues periodic guidance. Some key players in the oil
additional aspiration of ending flaring by 2030. Apart from their gen- and gas industry take part in the scheme annually. Apart from this, from
eral methodologies for goal execution, there are specific instruments a conceptual perspective, corporate disclosure of environmental foot-
through which these initiatives operate. Although there is explicit re- prints qualifies as part of the fiduciary duties of corporate structures to
cognition that direct regulation of gas flaring falls within the jurisdic- their shareholders and investors [80], partly because the impact of GHG
tion of countries and their relevant national energy and environmental emissions on financial value represents one of the core concerns of in-
authorities [112], the GGFRP and ZFR formulate periodic guidelines vestors [46]. In this respect, shareholder activism and the opportunity
necessary for emissions reduction. For example, the 2008 Guidelines for for emissions reduction publicity by corporations potentially influence
Flare and Vent Measurement recommends use of gas-to-oil ratios corporate environmental disclosures [107]. To the extent that such
(GORs), mass balance and process simulations as best practice for flare disclosures incentivise corporate entities to reduce emissions, environ-
and vent estimation in order to achieve accurate measurement and mental disclosure initiatives may constitute a sort of quasi-regulation of
mapping appropriate reduction methodologies [113]. A further 2009 oil and gas exploration and production companies for climate change
guidance recommends targeted contractual, fiscal frameworks, and mitigation. There is also the assumption of correlation between cor-
appropriate penalties to incentivise flaring reduction; and states clarity, porate environmentalism and innovation [52], i.e. corporate environ-
autonomy, participation, accountability, transparency and predict- mental awareness through carbon disclosure schemes can incentivise
ability as criteria for relevant regulators [114]. A latter technical gui- corporate adoption of innovative solutions for emissions reduction. To
dance on gas monetization proposes technical processes and new shareholders, investors, the public and surrounding communities
technologies for the conversion of flared gas into chemicals and liquid (especially because of likely contentious community issues), the en-
fuels rather than flaring [38]. vironmental performance or climate compliance of oil and gas com-
The multi-sectoral character of participants of these initiatives – panies may garner reputation and a sort of social licence to operate
crisscrossing IOCs, governments of sovereign states, and relevant in- [96]. Although this growing concept is yet to be formally entrenched
ternational and intergovernmental organisations – provides a good into legal systems, its recurrence has the potential to spur corporate
platform for ideological and pragmatic interchange amongst relevant entities into changing their modus operandi [73]. This may not be the
players. However, without casting aspersions or doubts about the pos- case for some investors who construe poor environmental performance
sibility of achieving zero gas flaring by 2030, as projected by the as negative impacts on anticipated profitability of their investments
GGFRP and ZFR, one may be inclined to ponder the magnitude of in- regardless of climate change concerns [58]. Nevertheless, the notion of
fluence these initiatives have for incentivising emissions reduction and CDP and similar initiatives constituting a rich database upon which to
likely success. A 5% global flaring reduction was achieved by the end of contrive or gauge corporate climate change strategies and policies [8]
2017 (Climate Initiatives Platform, [24]). Unlike the 147.6 bcm of gas may at best represent idealism with critical concerns about reality, as
flared in 2016, the total flare sum for 2017 was 140.6 bcm. While this the discussion reveals.
reduction may seem infinitesimal compared to the climate change im- The voluntarist approach of the CDP inhibits consistency or con-
plications of the still high percentage of flaring, it remains a com- tinuity of corporate emissions disclosure by oil and gas companies.
mendable achievement with plenty room for improvement. However, it While some players may be willing to disclose their emissions profile,
may be inappropriate to conclude or ascribe this reduction solely to the some others may not always be willing to do so. Their environmental
working of the GGFRP and ZFR initiatives. There could have been profile or legitimacy constitutes a key factor that influences the possi-
country-specific national measures and other conceivable factors that bility or not of their corporate carbon disclosure [59]. There are also
contributed. Moreover, the voluntarist approach of these initiatives considerable variations in emissions data, with some firms being com-
questions the possibility of serious compliance. This leaves them with prehensive in their response to annual surveys and others being opaque
the challenges of implementation and reignites sentiments of emissions and hiding their emissions profile from public scrutiny [66]. For ex-
reduction as being a sovereign state responsibility of oil and gas pro- ample, according to available data, between the years 2016 to 2018,
ducing countries [98]. mixed reactions trailed CDP's disclosure requests (CDP [21]). While
some companies responded and attained different scores, some others
5.2. GHG reporting schemes: CDP as a test case failed to respond in some cases and responded partially. For example,
Total participated in the years 2016, 2017 and 2018, with “B”, “A”, and
Carbon disclosure and reporting schemes have evolved over the “A” ratings for the three years respectively. Royal Dutch Shell partici-
years with initiatives such as the Greenhouse Gas Protocol (GHGP), pated in the three years under reference, with “A”, “B”, and “C” ratings.
International Standards Organisation (ISO) 14064 for Greenhouse Gas Chevron participated in 2016 and 2017, with “B” ratings for the two
Accounting and Verification, the United Nations Global Compact and years, but declined to participate in 2018. British Petroleum (BP) par-
Global Reporting Initiative (GRI) and the Carbon Disclosure Project ticipated in 2016 and 2017, with “B” and “A” ratings for the two years,
(CDP). These have been contrived with the expectations of enabling but did not respond to 2018 disclosure request. Exxon Mobil partici-
corporations to strategize on carbon risks and influencing appropriate pated in 2016 and 2017, with “C” ratings for the two years, but did not
decision-making for climate change mitigation (Andrew and Cortese respond to 2018 disclosure request, as BP. Sinopec did not respond to
[5]). This paper does not intend to discuss all these schemes, but the disclosure request at all for the three years under reference. Saudi
focus is a conceptual examination using just the CDP as a test case, Aramco and Petróleos de Venezuela, S.A. (PDVSA) represent examples
partly as it constitutes one of the earliest reporting systems [12], and of companies that had never participated in the initiative, at least from
falls as one of the most commonly used reporting platforms (Whitfield its inception until 2018. Additionally, there is the possibility of political
and McNett [110]. CDP is a United Kingdom-based global carbon dis- ideological influence in participation and disclosure. The US shows an
closure system founded in 2002, which affords companies, regions, example of how the variables of political preference and political power
states, cities and investors a platform to self-measure and manage their can influence the will of firms to disclose their environmental perfor-
environmental footprints (CDP [21]). Its reporting parameters include mance. It is common that political parties in the US (in this case, the

5
M. Abraham-Dukuma Energy Research & Social Science 59 (2020) 101305

Democrats and Republicans) are divided across party lines on the ne- strong internal climate/environmental targets, it has made financial
cessity of addressing climate change through relevant climate policies commitment in terms of investments in technologies and research and
for the oil and gas industry. Research shows that, apart from this development of innovative methods of operation. After its inception,
ideological division, different oil and gas companies tend to act in ac- the OGCI commissioned a research to assess the availability of critical
cordance with the political leanings of their locations, so that firms infrastructure and storage capacity for its CCUS programme [78]. In
located at Republican domains are less likely to disclose their en- 2017, in keeping with its objectives, it invested in a CCUS project in the
vironmental performance [50]. This may be true for countries with UK that has a potential impact of removing 90% CO2 from gas, provided
similar political preferences like the US. Notwithstanding, it is im- financial and technical assistance to two studies on methane emissions,
portant and cautious to note that these examples are sourced from a and invested in Achates Power, a company undertaking research and
search – search and view past CDP responses – conducted on the CDP development of energy efficient engines [78]. These and similar in-
website, and do not in any way tend to portray and/or project the vestments have emissions reduction potentials. Similarly, at the time of
environmental stewardship status of any company. On the contrary, writing, all its members were providing emissions data and collectively
they only sample some key industry players willing to participate in the invested $5.5 billion in low carbon energy technologies and acquisition
CDP, the comprehensiveness of their emissions disclosures and ro- [79]. The unanimous willingness of its members to provide emissions
bustness of their corporate policy response to climate change. The ex- data is a departure from previous observation regarding the Carbon
amples do not also represent an exhaustive list of all the responses of oil Disclosure Project above, where inconsistency, unresponsiveness and
and gas companies to the initiative, as there are others on the CDP site. lack of comprehensiveness characterised requests for carbon reporting.
Another issue worth reflecting on is whether the disclosures lead to Aside the collective industry action exemplified by the OGCI, oil and
result-oriented climate actions in the context of emissions reduction or gas majors have also independently and individually acknowledged the
just mere greenwashing of oil and gas companies for their economic problem of anthropogenic climate change, their share of responsibility
advantage. In the heat of the climate change debate and linkages with and enunciated self-imposed targets and GHG emissions reduction
the oil industry, there have been increased corporate greenwashing and measures [94]. For example, Royal Dutch Shell plans a 20% net carbon
gestures of corporate environmentalism from the sector [19]. Their emissions reduction by 2035 and potential further reductions in line
annual corporate reports, comprehensive reporting of emissions to vo- with global society target by 2050 [93]. One of the ways it intends
luntary carbon reporting schemes such as the CDP, with mitigating achieving this target is reducing operations emissions, including oil and
strategies may be symbolic of corporate environmentalism. Never- gas production processes. Some other possible strategies it proposes to
theless, these may not necessarily guarantee emissions reduction or implement include changing the proportion of gas to oil at production
reflect true environmental status or performance [61]. However, it is from 50% to 75% for reduced flaring, selling biofuels produced by 25
expedient that the reported environmental indices of oil and gas pro- biofuel production companies and developing the capacity of 20 CCUS
ducing companies translate into tangible and feasible investments in plants in Canada. These all seem positive trajectories towards achieving
emissions reduction. Such investments would match emissions reports transition in line with its new corporate policy on energy transition,
with correlative action and consequential climate change mitigation. In which intends resilience in the mid-term (till 2019 to 2030) and
the absence of these, symbolic corporate environmentalism may at best changing investment portfolio and operational paradigms in the long-
be a mere corporate rhetoric with little relevance with respect to cli- term (after 2030). Despite these positive ambitions, a point of worry
mate change mitigation. may be its disclaimer on the lack of immediate plans to move towards a
net-zero emissions portfolio over its investment horizons of 10 to 20
5.3. The OGCI and private corporate initiatives years. This may qualify as an implied formal statement of a ten-to-
twenty year delay of prompt corporate actions for net-zero emissions.
In the preliminary years of climate policy evolution, the oil and gas Invariably, the world may have been handed a justification to expect
sector maintained a uniform defence against the climate change debate little action from Shell, in spite of its beautiful transition ambition.
as a conspiracy theory to oust them from business [7]. Recent sector- Nevertheless, while it makes no plans to achieve net-zero emissions
driven initiatives such as the Oil and Gas Climate Initiative (OGCI) may within 10 to 20 years’ time, a successful implementation of its climate
portend a divorce or paradigm shift from this old bias. The OGCI is a initiatives, which results in considerable emissions reduction, will be a
voluntarist Chief Executive Officer-led industry-specific collaboration progressive path, no matter how little.
that serves as a catalyst to address climate change in the oil and gas Similarly, Total has made climate issues an integral component of
industry [79]. At inception, ten global industry players – BP (U.K.), its strategic corporate vision alignment with the Paris Agreement ob-
Total (France), Saudi Aramco (Saudi Arabia), Royal Dutch Shell (the jectives [102]. The company has an ambition of becoming the re-
Netherlands), Petrobras (Brasil), Pemex (Mexico), Eni (Italy), CNPC, sponsible energy major, and recognises the need to address climate
Statoil (Norway), and Repsol (Spain) – launched it at the UN Climate change impacts of its operations [101]. It hinges its climate policy on
Summit in New York, September 2014 [77]. In September 2018, improved energy efficiency, renewable energy development (through
Chevron, Exxon Mobil and Occidental Petroleum Corporation joined biofuel investments), and reducing the carbon intensity of production
the initiative, making its membership 13 oil and gas companies at the processes by 15% from 2015 to 2030 in the short-term, and a long-term
time of writing [77]. Its programme encapsulates three cardinal ob- reduction target of 25% and 35% reduction by 2040. An ambitious
jectives of reducing energy footprint (energy intensity), accelerating target in its climate policy is to achieve net-zero flaring by 2030, with a
low-carbon solutions and enabling a circular carbon model through short-term flaring reduction target of 80% from 2010 to 2020. Ac-
carbon capture, use and storage (CCUS), improved industry energy ef- cording to its report, it claims to have achieved a 30% emissions re-
ficiency, methane emissions reduction, and transport emissions reduc- duction generally and an 87% reduction of routine flaring particularly
tion as its main areas of focus. It also plans a ten-year $1 billion in- from 2010 to 2017, slightly above its flaring reduction projection of
vestment in these areas through $100 million contribution from each 80%. Additionally, it claims to have made a research and development
member. (R&D) spending of $912 million in 2017 as part of its commitments to
In contrast with earlier critical thoughts on greenwashing and address climate change in its oil and gas production activities. As al-
symbolic corporate environmentalism with respect to the reporting ready noted above, other oil and gas majors are also making efforts
programme of the carbon disclosure project, oil and gas companies towards climate change mitigation in course of their operations, but
seem to be metamorphosing from their position of climate laggards to these are just examples of private independent industry initiatives
potential climate action leaders within the OGCI framework [6]. Some worthy of recognition.
reasons may lend credence to this positive perspective. In pursuit of its While the OGCI initiative of the oil and gas industry and

6
M. Abraham-Dukuma Energy Research & Social Science 59 (2020) 101305

independent initiatives of industry majors in addressing climate change For example, the negotiations on trade and the environment are key
may be commendable, only time will tell whether they live up to their components of the Doha Development Agenda – round of trade talks –
bidding of emerging energy industry climate actors. The important launched at the Fourth WTO Ministerial Conference in Doha, Qatar, in
consideration of relevance to this paper is achieving emissions reduc- November 2001 (WTO [120]). In 2013, twelve years later, the WTO
tion in oil and gas production particularly and the industry in general. Committee on Trade and Environment in Special Session (CTESS) was
As these initiatives are relatively in their nascent phases, perhaps it is still discussing ways to achieve reforms for reducing and eliminating
better to allow them some space to function for a while before under- barriers to trade in environmental goods [119]. There is also the notion
taking a critical examination on them. Moreover, the OGCI's $1 billion of process and organisational deficiency in driving reforms at the WTO
investment accelerating low-carbon solutions and reducing energy [42]. Arguably, the law – either at national or international level –
footprint is a ten-year plan. However, the OGCI is a commendable in- should be dynamic enough to evolve with changing times and respond
dustry effort worthy of cautious and critical consideration with time. to contemporary issues. On the contrary, if the law adopts a snail-speed
This also applies to the various independent initiatives of corporate motion to issues, it is likely that the society would advance beyond the
structures in the oil and gas industry. law. In an era of logical science-backed evidence on climate change,
and the need for change in business models, it may be worthwhile to
6. Need for policy symmetry and legislative reforms reconsider the prevailing legal order on trade in a manner that is sus-
tainability-oriented.
Irrespective of the foregoing considerations, while the industry The difficulties involved in reforms are real, as the above paragraph
seems to recognise climate change and is taking appropriate measures reveals. However, appropriate triggers, real consultation and negotia-
in this respect, private regulation does not necessarily have to supplant tions; focus on the facts, and practical timely recommendations may
state regulatory and policy interventions. On the contrary, governments help facilitate a successful process [11]. It is probable that the science of
need to step up their regulatory and policy preparedness towards sus- climate change, proposed changes in energy law and the transition
tainability and climate change mitigation in the energy industry. While debate could be triggers for sincere and objective negotiations for re-
international organisations and legal regimes may have crucial roles forms at the WTO. Reforms at the two fronts – domestic and interna-
and commendable initiatives, arguably, the energy destiny of the world tional – will need to be coordinated in order to address the issues dis-
lies in the policy trajectories, decisions and actions of independent so- cussed in this paper and avoid conflicts. It is the argument of this paper
vereign states. Here comes the need for regulatory reforms at both the that appropriate reforms within the WTO system and complimentary
national level (through appropriate legislation) and the international amendments in the laws of member states through legislation may
level through reformed trade rules for more recognition of practical contribute considerably to coexistence of trade rules, climate change
corporate imperatives for climate responsibility in course of trade with objectives and sovereignty over natural resources. Rather than conflict
respect to the energy industry. between sovereignty and international trade law, the reforms could
Considering the foregoing, the reform process (at both state and create a regime of domestic-international cooperation and com-
international levels) is an issue deserving examination. Two key issues plementarity in achieving both economic and environmental goals. This
become relevant for discussion – who to reform and how to reform. brings us back to the start of the examination on traditional and evol-
Conceptually, law reform usually involves different phases – setting ving notions of energy law as an academic discipline. The various
terms of reference, research, consultation, publication of issues paper, proposed principles in the new seminal jurisprudence on energy law
submissions, report, and amendment/change [25]. This can also take examined in Section 2 above present academics and policymakers with
different forms and initiated by an interest group, a governmental de- different pieces of the contemporary energy-climate change puzzle,
partment, a political party, or even a non-governmental organisation; which challenge traditional notions. Possibly, there could be further
but the legislature eventually performs the task of carefully drafting/ academic debates on these principles. Such cross-fertilization of ideas
redrafting the law to reflect the needed change [15]. Part of Section 4 constitutes part of the hallmarks of scholarship. Nevertheless, the pro-
above discusses the need for a reformed international trade law that posed principles may as well represent the new reality of global energy
pays attention to the environment, given the evolution of energy law law narrative and necessitate consequential shifts in legal paradigms
and climate change debate. One point to add in this respect is that the and perspectives.
need for modernising international trade system to support innovation
and environmental sustainability has received much scholarly attention 7. Conclusion and policy implications
in recent times [104,97,27]. Therefore, it may be appropriate to un-
dertake the processes of law reform outlined above to initiate suitable The new seminal jurisprudence on energy law presents core prin-
changes to the law. ciples that challenge traditional notions of the field. While the tradi-
However, it is important to note that while the approaches outlined tional notions were circumscribed to the existence of rights and duties
represent the conventional procedures for law reform at the state level, of key industry players for economic growth through optimal resource
the task may not seem simplistic for international law. This is due to exploitation, evolving notions embrace a broader mix of principles
challenges of regime complexity [4] and scepticism resulting from in- cutting across energy, environmental, developmental and climate ob-
stitutional structure, legitimacy concerns and relationship with the jectives. They may be debatable but represent contemporary realities.
principle of sovereignty [82]. Globalisation, multiplicity of state actors This paper has critically examined the interplay of two of such princi-
and multilevel structures also constitute challenges capable of stalling ples – national sovereignty over natural and energy resources and
reforms in international law [83]. The WTO is also susceptible to these sustainability – in context of coexistence with international trade rules
difficulties, being an international law instrument. For example, any and highlighted certain difficulties. The argument observes difficulty in
amendment to WTO rules requires re-negotiation and resolutions that entrenching such principles without paradigm shifts in the international
must be accepted by two-thirds of contracting parties (WTO Agreement legal order on trade and legislative amendments to reflect the new
1994, art XXX). It becomes evident that reforming international trade realities. Therefore, international trade rules and energy-related statu-
law falls within the powers of states who are signatories to the WTO tory instruments need some amendment in order to be symmetric with
Agreement; and requires extensive negotiations. Without mincing achieving climate objectives in the energy industry. The key personal-
words, international trade law largely ‘hinges upon the state of play of ities to drive reforms of international trade rules would be the signa-
international negotiations’ [28]. The negotiations can take many years tories to the WTO establishment agreement and other complementary
with or without resolutions. This factor generally characterises the in- trade pacts. For countries, their legislatures have a task of reforming
ternational law on trade as being slow in responding to challenges [70]. energy and environmental laws to effectively address current realities,

7
M. Abraham-Dukuma Energy Research & Social Science 59 (2020) 101305

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