According to the International Energy Agency, hydrogen is one of the “biggest innovation opportunities” to reduce global CO2 emissions to net zero by 2050, a widely accepted global target to avert the worst effects of climate change. Because it is an energy-dense molecule that can be used in place of oil and natural gas products in many applications, but does not emit CO2 when consumed, hydrogen has the potential to become an essential sustainable fuel and feedstock in the U.S. and globally.Learn More
Shearman & Sterling is a proud sponsor of The Rice Alliance for Technology and Entrepreneurship’s 19th Annual Energy Tech Venture Forum, the premier energy tech venture capital conference held in Houston, Texas on September 15, 2022.
Shearman & Sterling advised Chevron Technology Ventures in its Series G-2 investment, alongside Google, Reimagined Ventures, Sumitomo Corporation of Americas, and TIFF Investment Management, in nuclear fusion company TAE Technologies.
Industries which cannot easily decarbonize would love to be able to claim reductions in net greenhouse gas emissions by “offsetting”–creating or buying carbon credits. For carbon credit offsetting to truly have a role in decarbonization, there needs to be a robust and widely internationally accepted verification mechanism which takes account of the holistic impact of offsetting activities and a market in which to bring the various industry players together. In this article, our experienced team outlines some key initiatives in developing a global carbon credit trading system.
Basel Committee Announces Principles for the Effective Management and Supervision of Climate-Related Financial Risks
The Basel Committee on Banking Supervision has published a set of principles on the effective management and supervision of climate-related financial risks at internationally active banks, which it said should be implemented by member jurisdictions “as soon as possible.” The principles cover corporate governance, internal controls, risk assessment, and management and reporting. As a global standard-setting body, the Basel Committee does not issue rules or regulations, but the release is important in that it is the latest and broadest articulation of what global banking regulators should be doing in this area.
The U.K. Government announced on May 26, 2022 its intention to introduce with immediate effect a temporary Energy Profits Levy (the “Levy”), an additional U.K. Corporation Tax charge at a rate of 25% on the profits of oil and gas companies earned from oil and gas extraction in the U.K. and the U.K. Continental Shelf.
Shearman & Sterling represented the initial purchasers in connection with Preem’s €340 million offering of 12.000% senior notes due 2027 by Preem Holding AB (publ). The offering, which was conducted pursuant to Rule 144A and Regulation S under the U.S. Securities Act, closed on June 21, 2022. Shearman & Sterling also advised the banks in connection with the company’s new intercreditor agreement.
Shearman & Sterling is delighted to be an event sponsor for Reuter’s “Global Energy Transition 2022” on June 14–15, 2022, in New York. #globalenergytransition2022
Obviously, interest in international trade of hydrogen is rising rapidly. New announcements of credible major export initiatives are occurring frequently. But there remain doubts about the rate of development of the infrastructure needed for importing hydrogen at scale, whether as hydrogen or via carriers such as ammonia.
Shearman & Sterling has partnered with Global Success Partnership to present the Global Energy Summit: Accelerating Action on Energy Security and Energy Transition on May 11, 2022 in Morocco. Partners Ben Shorten and James Webber and counsel Samuel Ogunlaja each moderated insightful panels during the summit.
The chemical industry is the largest industrial energy consumer worldwide. With a total gross value addition to the global economy of $5.7 trillion annually, equivalent to 7% of global GDP, the chemical industry is an integral part of the global economic landscape, permeating nearly every goods-producing sector while supporting 120 million workers worldwide.
Mexico’s legislature passed a bill authorizing the nationalization of lithium mining and granting the right to mine lithium to a newly-created state entity. This is the latest in a series of measures intended to assert state control over the natural resource sector.
This note addresses both the short- and longer-term impacts of Russia’s invasion of Ukraine on Europe’s energy markets, as well as some of the potential areas for dispute and steps that industry players can take to protect themselves.
After much anticipation, on March 21, 2022, the Securities and Exchange Commission released its new proposed climate-related disclosure framework, a sweeping overhaul of the current, materiality-based climate change disclosure requirements that would substantially expand the reporting obligations for public companies.
Shearman & Sterling advised certain subsidiaries of Aemetis, Inc., as borrowers, on an up to $100 million financing agented by Third Eye Capital, consisting of an up to $50 million revolving credit facility to finance projects that reduce, capture, use or sequester carbon with the objective of reducing carbon dioxide emissions and an up to $50 million revolving credit facility for working capital purposes.
Shearman & Sterling advised Chevron Technology Ventures in its investment in Mobilus Labs. Chevron Technology Ventures led a consortium of investors; proceeds will be used to expand deployment of the Mobilus Voice Communications Platform internationally, with a focus on the United States and Europe in the energy, construction, chemical and manufacturing sectors.
Shearman & Sterling is pleased to support the 2022 Solar & Clean Energy Forum in Abu Dhabi, organized by World Future Energy Summit. On January 18, partner and leader of the firm’s Energy Innovation and Global Hydrogen Industry Teams Dan Feldman will moderate the ‘Green Hydrogen Manufacture’ panel.
Beyond tax credits, the energy industry is increasingly adopting carbon-management strategies amid pressures from stakeholders.
On October 29, 2021, shortly before the 2021 United Nations Climate Change Conference, Indonesia issued Presidential Regulation No. 98 of 2021 on the Implementation of Carbon Economic Value to Achieve Nationally Determined Contribution Targets and Control over Greenhouse Gas Emissions in Relation to National Development. The Regulation builds on Indonesia’s ratification of the Paris Agreement, under which Indonesia expressed its hope to better manage the impact of climate change and stated its commitment to reduce greenhouse gas emissions and to achieve the nationally determined contribution.
Shearman & Sterling is delighted to sponsor the 2nd Asia-Pacific Hydrogen Summit 2021, organized by the Sustainable Energy Council.Partner Jean-Louis Neves Mandelli was interviewed by the organizer to discuss why Shearman & Sterling became interested in hydrogen projects globally, comment on prevailing market trends, and share his forecasts for its future.
Shearman & Sterling is delighted to sponsor Connecting Green Hydrogen Asia-Pacific 2021, which will provide a platform for more than 600 regional thought leaders in both public and private sectors to collaborate on critical issues and opportunities in harnessing hydrogen for future.
Elysian Carbon Management Secures Initial $350 Million Capital Commitment from EnCap Flatrock Midstream
Shearman & Sterling advised EnCap Flatrock Midstream in its initial capital commitment of $350 million in Elysian Carbon Management. Elysian provides integrated end-to-end carbon capture and storage solutions to owners of industrial and power facilities seeking to transition to low carbon products and address environmental, social and governance goals through the reduction of emissions.
The new federal government has presented ambitious framework conditions for decarbonizing the German economy through hydrogen, aiming to position Germany at the center of a global hydrogen economy. German industry expects further detail in the next months.
This briefing brings together, in a single easy-to-navigate directory, the statements, declarations and announcements made by governments and organizations during COP26. COP26 was the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change which took place in Glasgow, U.K., during November 2021.
On July 14, 2021, the European Commission published its proposal for a Carbon Border Adjustment Mechanism (CBAM). To allow businesses to adjust, the CBAM will be phased in from 2023 and only become fully operational in 2026.
Shearman & Sterling is committed to doing our part to confront climate change. In a major pro bono effort, Shearman & Sterling recently assisted The Nature Conservancy, one of the world’s leading conservation organizations, in its innovative transaction under the “Blue Bonds for Ocean Conservation” program with the Government of Belize to reduce its debt and provide funding for marine conservation.
In recent times, carbon-intensive sectors in many parts of the world have been subject to mandatory programs that obligate reporting of greenhouse gas emissions, set thresholds for permitted emissions and enforce compliance using instruments such as carbon taxes or cap-and-trade.
Shearman & Sterling represented Empresa Generadora de Electricidad Haina, (EGE Haina) in connection with the issuance of $300 million 5.625 percent sustainability linked senior notes due 2028. The proceeds of the offering shall be used to repay all or part of the outstanding principal amount of multiple series of notes issued in the Dominican Republic’s local capital markets as well as to make a contribution to a special dividend to EGE Haina’s shareholders.
There have been a large number of energy sector disputes within the EU recently. For example, on September 16, 2021, the fiftieth investment treaty claim was filed with the International Centre for Settlement of Investment Disputes regarding Spain’s renewable energy reforms.
We are delighted to bring you the fifth edition of our Energy & Infrastructure Insight, providing expert information and analysis of the current issues facing the energy and infrastructure sectors across the globe.
Partners Dan Feldman and Lachlan Poustie, of counsel Patrick Wolff and associate Frederick Lazell authored an expert analysis article for Law360 about key European regulatory developments relevant to hydrogen in 2021.
Shearman & Sterling advised OMERS Infrastructure in its agreement with a fund managed by Ares Management Corporation to acquire 100 percent of Navisun LLC, an independent distributed generation solar power producer.
Partner and leader of the firm’s Global Hydrogen Industry Team Dan Feldman joined a webinar titled “Green Hydrogen and Ammonia in Australia: A New Commodity for the 21st Century” co-hosted by Shearman & Sterling and Gilbert + Tobin. View the presentation slide deck.
Almost two years ago, the European Commission (EC) published its Green Deal, which mentions hydrogen only three times. Since then, hydrogen has come to the centre-stage of the EC's decarbonisation agenda. Hydrogen is integral to the Fit for 55 package and therefore the EC's vision for a decarbonised European economy. Is this, then, the beginning of the 'hydrogen decade' in Europe?
Shearman & Sterling is pleased to sponsor the 2021 Financing Energy Projects in Asia Virtual Conference organized by Project Finance International (PFI). On October 13, partner Jean-Louis Neves Mandelli will join the Hydrogen Panel which will consider the commercial project financing for green hydrogen schemes and how projects can build up bankable revenue stacks for hydrogen projects.
Partner and leader of the firm’s Global Hydrogen Industry Team Dan Feldman will join a webinar titled “Green Hydrogen and Ammonia in Australia: A New Commodity for the 21st Century” co-hosted by Shearman & Sterling and Gilbert + Tobin on October 12.
Europe has been in the forefront in passing and implementing legislation to phase out fossil fuels and reach 100 percent clean energy within the next two decades. This shift in energy resources is driven by international commitments (such as the Paris Climate Accord) and recent United Nations reports, highlighting the urgency of carbon reducing and offsetting measures. While the United States has generally lagged behind Europe in shifting away from fossil fuels, the Biden Administration has set forth a new climate strategy that includes the goal of reaching net zero emissions no later than 2050.
Between October 4-6, 2021, Shearman & Sterling sponsored the World Hydrogen Congress. During the conference, partner Dan Feldman, Leader of Shearman & Sterling’s Global Hydrogen Industry Team, was interviewed by Nadim Chaudhry of World Hydrogen Leaders. In the interview, Dan discusses the recent progress in the industry and the outlook for its future.
On September 21, 2021, Shearman & Sterling’s Global International Arbitration Practice Group Leader Alex Bevan moderated a webinar titled “Hydrogen: Risks, Opportunities and Potential Disputes.” The session was organized by Shearman & Sterling in the context of Paris Arbitration Week 2021.
According to the International Energy Agency, hydrogen is one of the “biggest innovation opportunities” to reduce global CO2 emissions to net zero by 2050, a widely accepted global target to avert the worst effects of climate change. Because it is an energy-dense molecule that can be used in place of oil and natural gas products in many applications, but does not emit CO2 when consumed, hydrogen has the potential to become an essential sustainable fuel and feedstock in the U.S. and globally.
Shearman & Sterling is delighted to sponsor the 2nd Annual World Hydrogen Congress taking place on October 4-6, 2021. This event is a platform for more than 200 thought leaders and 800 attendees to discuss the future of hydrogen.
Shearman & Sterling advised Chevron Technology Ventures in its investment in the Series B round of financing of Gr3n, a Swiss recycling company. Chevron Technology Ventures joins a consortium of investors.
Partners Robert Freedman (New York-Project Development and Finance) and Omar Samji (Houston-Private Equity) and counsel Gabriel Salinas (Houston-Private Equity) authored an expert analysis article for Law360 about the opportunity offshore wind provides for local economic growth and job creation.
In the transition to cleaner and more secure domestic energy sources, offshore wind presents a significant opportunity for local economic growth and job creation. Notably, on June 8, 2021, the U.S. Department of the Interior (DOI) announced its intent to assess potential opportunities to advance clean energy development on the Gulf of Mexico Outer Continental Shelf. This article discusses opportunities and challenges for offshore wind in the U.S., the Biden administration’s goals, and a comparison of offshore oil & gas leases vs offshore wind leases.
On August 17, 2021, the U.K. government published its highly-anticipated Hydrogen Strategy. The strategy outlines the U.K.’s approach to developing a thriving low-carbon hydrogen sector, re-states its ambition for 5GW of low carbon hydrogen production capacity by 2030 and outlines how the hydrogen sector will be instrumental in achieving the U.K.’s target of net zero greenhouse gas emissions by 2050. This article provides an overview of the U.K. Hydrogen Strategy and highlights some of the key commercial opportunities outlined thereunder.
New Bipartisan Senate Infrastructure Bill Emphasizes Reauthorization, Research, Resilience And Reliability
On August 10, a group of 19 Republican Senators joined their Democratic colleagues in approving a bill that, if passed by the House of Representatives and signed by President Biden, would provide for more than $1 trillion in improvements to the nation’s physical infrastructure.
The preliminary draft CBAM proposal from the European Commission that became public last month: envisages the continuation of the “free” allowances of carbon credits to European ammonia producers up to the benchmarks under the ETS; imposes the same carbon costs on importers of ammonia as those faced by EU-based producers by requiring importers to acquire and surrender CBAM certificates for carbon emissions only to the extent that they are in excess of the benchmarks; and preserves for European “green” and “blue” ammonia producers (provided their emissions are below the benchmark) the ability to monetize their increasingly valuable “free” allowances.
On July 1, 2021, the Internal Revenue Service issued Revenue Ruling 2021-13 to clarify that a taxpayer may qualify for the carbon capture credit under section 45Q of the Internal Revenue Code of 1986, as amended, without owning every component of carbon capture equipment within a single process train.
The current landscape of unconventional “shale” oil and gas in the United States is filled with both opportunities and pitfalls. A confluence of events developing out of 2020 continues to impact the industry: a Russian-Saudi price war; the ongoing COVID-19 pandemic; the energy transition; and continuing ESG market concerns.
Vietnam’s Power Development Master Plan, the latest draft of which was released in February this year (PDP 8), reflects Vietnam’s commitment to prioritize renewable energy projects in its energy mix.
Structuring and Financing a Green Hydrogen Project on the Back of the Anticipated Regulatory Environment in Europe
The basic definition of green (versus grey, brown or blue) hydrogen is well known – see our article “Hydrogen: Is it the answer to clean energy?” from the Autumn 2020 edition of this publication.
Shearman & Sterling recently sponsored the European Hydrogen Conference 2021, focusing on how hydrogen will be integrated across the value chain through ministerial, industrial and technological collaboration.
The preliminary draft CBAM proposal from the European Commission which became public earlier this month: envisages the continuation of “free” allowances of carbon credits to European steel producers up to the benchmarks under the ETS; imposes the same carbon costs on importers as those faced by EU based steel producers by requiring importers to acquire and surrender CBAM certificates for emissions in excess of the existing EU benchmark; and preserves for European “green” steel producers the ability to monetize their increasingly valuable “free” allowances.
The last 18 months have seen a flurry of activity in the Central Asian renewable energy sector with countries seeking to incubate the industry from a standing start. The sudden drive for clean energy has been prompted by a confluence of motivations.
We are excited to bring you the fourth edition of our Energy & Infrastructure Insight, providing expert information and analysis of the current issues facing the energy and infrastructure sectors across the globe.
On June 7, 2021, Secretary of Energy Jennifer M. Granholm launched the U.S. Department of Energy (DOE) Energy Earthshots initiative. This Earthshots program aims to accelerate breakthroughs in net-zero carbon technologies in the United States and around the world, while creating clean energy jobs and achieving the Biden-Harris Administration’s goal of a net-zero carbon emission economy by 2050.
On May 24, 2021, the State of Nebraska signed into law LB650, providing precise guidance on the management of geological subsurface Carbon Dioxide (CO2) storage. While other states, including Texas, have issued legislation on this issue in the past, LB650 represents the latest attempt by a state to regulate subsurface CO2 on a comprehensive basis.
The Clean Energy for America Act (the “CEAA” or the “bill”), which would consolidate more than 40 existing energy incentives into three emissions-based provisions that incentivize clean electricity, clean transportation, and energy efficiency was advanced by the Senate Finance Committee on May 26, 2021. The bill now moves to the full U.S. Senate for consideration and approval.
On May 26, 2021, the Hague District Court in the Netherlands granted a claim brought by a group of Dutch NGOs and ordered global energy company Royal Dutch Shell PLC to reduce its group-wide CO2 emissions by 45 percent (net) compared to 2019 levels, by the end of 2030. Although the decision was taken under Dutch law, the court drew heavily from international treaties and ‘soft law’ in giving content to Shell’s reduction obligation. As such, the court’s reasoning could be replicated by other national courts in assessing similar claims for climate-related liability, and it therefore has implications for energy and energy-intensive companies around the world.
On May 18, 2021, the International Energy Agency (IEA)—the world’s leading energy policy intergovernmental organization—released a comprehensive report, “Net Zero by 2050: A Roadmap for the Global Energy Sector” (Report). The Report outlines the IEA’s view of the steps that must be taken globally in order to meet the goal of “net zero” global greenhouse gas emissions by 2050, which is in turn required to meet countries’ commitments under the Paris Agreement to limit global warming to 1.5°C. The Report is the first of its kind focused on the global transition to net zero emissions, whilst purporting to safeguard stable and affordable energy supplies and supporting strong economic growth.
Shearman & Sterling advised Abu Dhabi Future Energy Company (Masdar) on the development and financing of a 65 MW Solar PV Power Plant in Greece.
Partners Etienne Gelencsér (Tokyo-Project Development & Finance), Karl Pires (Tokyo-Mergers & Acquisitions) and Jean-Louis Neves Mandelli (Singapore-Project Development & Finance) and consultant Naomi King (Tokyo-Project Development & Finance) have authored an article in Project Finance International titled “Japan – Key link in hydrogen value chain.” The article highlights the key challenges and opportunities in the development and financing of hydrogen projects and the pivotal role that Japan is expected to play in facilitating the expansion of the hydrogen value chain in the future.
On April 20, 2021, the Corporation for the Promotion of Production (Corfo), Chile’s Economic Development Agency, released bidding guidelines for its first call to develop green hydrogen projects in the country (the “Tender”). The Tender aims to promote the production of green hydrogen as part of Chile’s Green Hydrogen Strategy to achieve carbon neutrality by 2050.
Shearman & Sterling advised Abu Dhabi Future Energy Company (Masdar) on the 230-MW solar power plant in the Kharadagh (Baku) and Absheron districts in the Republic of Azerbaijan.
The U.S. Internal Revenue Service (IRS) and the U.S. Treasury Department (“Treasury”) have issued final regulations (T.D. 9944) (the “Final Regulations”) providing additional guidance on several aspects of the income tax credit for the capture of qualified carbon oxide (CO) under section 45Q of the Internal Revenue Code of 1986, as amended (the “Code”). By largely adopting the proposed regulations released on May 28, 2020 (REG -112339-19) (the “Proposed Regulations”), discussed in our client alert dated June 22, 2020, with certain helpful modifications, the Final Regulations aim to alleviate some of the uncertainty previously faced by developers and should attract more widespread attention and investor participation.
Shearman & Sterling advised Engie Energía Chile S.A. (Engie) as New York counsel on the entry into a $125 million unsecured loan facility from the Inter-American Investment Corporation (IDB Invest) in its own capacity and in separate capacities as agent of the Inter-American Development Bank and as sub-implementing entity of the Trust Fund for the Clean Technology Fund.
Shearman & Sterling advised Citigroup Global Markets Inc., as initial purchaser in connection with a Rule 144A/Reg S offering of $262,664,000 6.500 percent senior secured notes due 2038 by UEP Penonomé II, S.A., one of the largest diversified clean energy companies in Central America and the biggest unconventional renewable energy producer in Panama in terms of installed capacity.