Roundtable: Environment 2011
The International Who’s Who of Environment Lawyers has brought together two of the leading practitioners in the world to discuss key issues facing lawyers today.
Participants
Leonard Griffiths
Bennett Jones LLP
Canada, ON
FINANCING
Who’s Who Legal: Many of the lawyers we spoke to remarked that the lack of project financing and government budgets has resulted in a fall in large scale infrastructure developments. How are your clients finding ways to fund their big projects? Is private equity filling the financial gap?
Mauricio Llamas: Indeed, during the last three years an important impact and deceleration on infrastructure development has occurred in Mexico. Cuts to government budgets to confront the economic crisis and reduction of financing resulted in the cancellation or suspension of important projects. During the first semester of this year (2011) a slow, but interesting recovery, is perceived; projects such as federal communication infrastructure (including telecomm, federal highways and airports) are being promoted.
Private equity is filling the gap of the lack of financing and government projects, as the same are being granted in concession to the private sector; the amendment to the energy sector regulation that took place during this administration, although incipient, provided and opened certain lines for investment from the private sector in areas such as generation of electric energy through renewable resources.
SOURCES OF WORK
Who’s Who Legal: According to the lawyers we spoke to, energy concerns, particularly water development and shortages and natural gas drilling, are the dominating environmental issues at the moment. What kind of work is this creating for your firm? Are more lawyers developing cross-over expertise in energy, financing and environmental law?
Leonard Griffiths: For the most part, my experience is that environmental lawyers have their feet in at least two camps: environment and energy, as well as natural resources – hard to imagine not doing so. Energy projects go beyond oil and gas, and include clean(er) and green energy. These projects have provided opportunities to develop and assist in the operation of wind farms, biogas facilities, solar projects, natural gas plants, and the like. The issues range from water use and impacts, social impacts, noise, odours, consultation with First Nations, to name a few of the more obvious. One question is where nuclear will go, in Canada and beyond.
Mauricio Llamas: Current projects in the matter of electric energy generation and natural resources exploration & exploitation are generating a specific niche for the environmental experts, who need to expand their expertise to energy regulation and public and private financing, considering that those areas are complementary and require integrated information to reach the objective.
The environmental practice tends to be a more comprehensive scheme, integrality of related services is necessary in an increasingly more competitive scenario; furthermore legal advice on environmental, natural resources and energy related matters, must be complemented with technical expertise, as companies and projects require total solutions. For this purpose strategic alliances are an option, but the same must be conducted under strict standardisation to assure uniformity, quality and success.
Additionally, we have identified an increasing need from transnational companies on specialised legal advice for similar or identical matters in different Latin American jurisdictions, derived from their globalisation processes and regional operations in diverse legal systems, which reveal growing concern on environmental, natural resources and energy related issues. Thus, specialised and multidisciplinary regional networking, appears to be a very interesting alternative; this is the view of EnvironLaw Latin America, a network in which we have been participating since its conception.
REGULATORY CHANGES
Who’s Who Legal: Are you seeing changes in the regulatory regime of your jurisdiction to meet these energy concerns? How are your clients reacting to the changes?
Leonard Griffiths: The old adage needs to be adjusted – the only things guaranteed are death, taxes and regulatory change. The regulatory regime in Canada continues to change to address energy concerns, from regulation of major projects in oil sands, natural gas (including shale) to the regulation of green projects. Consider, for example, in Ontario, where the municipal governments were essentially shut out of the process for developing green energy projects. There has been certainty created by such changes, but also uncertainty when the party in power changes. Business abhors uncertainty, so clients are keeping a keen eye on the regulatory regime and the winds of change.
Mauricio Llamas: As mentioned, what intended to be a comprehensive amendment to the energy sector regulation took place during the current administration; one of the most important objectives of the same was opening the participation on energy related matters, including hydrocarbons exploration, exploitation and transformation; and the electricity sector. In México such activities are considered at a Constitutional level as “strategic areas” and are of the exclusive competence of the federation. The mentioned amendment did not achieve an open scheme for the private investment in those areas, nevertheless, it incorporated certain participation schemes, including co-generation and self-generation of electric energy, among others. These changes have created more involvement from private companies, generating the need for more specialised advice
Other areas developed through the mentioned amendment is a new policy on the sustainable use of energy. The corresponding provisions include the creation of a National Program on the matter and actions to reduce energy consumption of large consumers and other requirements, affecting the private sector, such as the obligation for the electric and electronic industries to measure the energy consumption of regulated products that are placed in the market and include such information in the corresponding labelling. These new provisions are creating several interpretation conflicts that require the assistance of specialists to achieve a viable and adequate compliance.
FUTURE AREAS
Who’s Who Legal: Green house gas emissions trading and renewable energy continue to be talked about as emerging areas. What do you foresee as being the ‘next big issue’ in the coming year?
Leonard Griffiths: It may be easier to predict the winning lottery numbers. Water has emerged as a key issue, and we expect that will continue to grow in importance. It is difficult to live without water. With the economy continuing to struggle, there may not be room to see a big environmental issue come along in the next year, or at least one that resonates with the public, and thus regulators.
Mauricio Llamas: Climate change, promotion and regulation of renewable energy, energy consumption regulation and restrictions, are definitely areas that will continue to be developed, considering that specific implementing regulations, standards and other instruments are not yet in place.
Other specific environmental areas are foreseeable to present more restrictions and regulations, such as waste management and recycling, the tendency is to regulate specific waste streams and increase the reuse potential.
Likewise, it is expected that a stricter regulation for the sustainability of real estate projects will be established; requirements such as rain water harvest and reuse, green areas and energy consumption regulation will be further developed during the coming years.