Energy transition at a tipping point

The world is faced with an energy trilemma: how can we achieve energy transition, energy security and energy affordability in a changing world? We sounded out four alumni, all heavily involved in the energy industry, for their views on the transition and the likely next steps.

How did you each come to focus on energy law?

MARK TUDOR: I originally wanted to be a telecoms lawyer, and joined Denton Hall who were strong in telecoms and media. It was actually a friend who advised that energy was an interesting area of law. I spent my last trainee seat in Singapore working on a gas pipeline project from Indonesia. On qualification I went on a two-year secondment to one of the firm’s oil and gas clients in Tokyo. I moved to Herbert Smith (as was) in Tokyo and, in fact, helped set up the firm’s office there. I developed my energy practice back in London, working for, among others, Mark Newbery, Stephen Murray and Henry Davey before moving back to Tokyo on secondment to INPEX. I was with the firm for 11 years before my first stint in-house at BW Offshore.

MALLIKA MATHUR: My first seat was in the corporate energy team. As a trainee, I did a secondment with the BG group. On qualification, I worked on nuclear projects with Julia Pyke, who was brilliant at breaking down advice on hugely complicated issues, regulatory regimes. Like Mark, I learned a lot from Stephen Murray, who could explore all sorts of different risks related to an issue and yet be able to describe them simply.

I then did another secondment, this time with BP, and learned a lot about the lubricants business. I then got to work on a great range of legal issues, including trademarks, commercial contracts, and business development which broadened my horizons, and that led me to going in-house with BP. I have been with the company now for 13 years and have worked in different aspects of the business, both upstream and downstream, as well as three years in low carbon businesses, such as wind and hydrogen.

ROBIN CARVELL-SPEDDING: I, like the others, was drawn to the firm’s outstanding Energy practice, largely thanks to my time as a trainee with Anna Howell in Hong Kong. This experience of the international energy industry then led me, as a newly qualified solicitor, to Indonesia, where I spent a very happy and rewarding 18 months with Hiswara, Bunjamin and Tandjung. Other great experiences with the Energy team back in London included big deals for EDF. Like Mallika, I also did a secondment with the BG Group, and became that client’s relationship associate as a result.

I was (and still am!) attracted by the geopolitical angle to every part of the energy sector and the sheer variety of issues with which one has to contend as an energy lawyer, from funding, land, regulation and project development to construction and supply/offtake, to name but a few. The fact that many of the projects and related contracts are high-risk and high-value adds to the challenge, which I enjoy.

What are your current roles?

ROBIN: I work for Protium as general counsel and company secretary. Protium, at its core, is a developer of green hydrogen projects - “green” denoting the fact that we produce hydrogen using power only from renewable sources. We are one of the few developers successfully producing and selling green hydrogen in the UK, and our second hydrogen project is due to come online early next year. We’ve also recently expanded ‘downstream’, with our HyHaul project which (backed by a government grant) is seeking to commercialise and promote the use of heavy goods vehicles powered by hydrogen fuel cells along the M4 corridor.

I lead a brilliant team of four lawyers and we’re certainly kept very busy with the variety and volume of legal work that comes from being in a scale-up company that is seeking to grow whilst playing a leading part in the energy transition in the UK.

MALLIKA: I lead the Mauritania and Senegal legal team at BP in the oil and gas business, and where we manage a large floating liquefied natural gas (FLNG) asset. There is a relatively nascent regulatory regime in these countries and we operate a unitised field which sits across an international maritime border, so that makes it very interesting from an upstream oil and gas lawyer’s perspective. This involves an international cooperation agreement of treaty status with the two countries, interesting JV dynamics, complex financing agreements, interesting production sharing contracts, procurement, health and safety, currency controls issues, as Senegal is part of a currency union, and so on. There’s never a dull day.

MATTHEW: I have recently finished at RWE, a global energy company headquartered in Germany. I spent seven years working with the private equity/venture capital-style investments team there, who buy, sell and manage a wide variety of investments across the energy transition space (plus the upstream sector for a period). These include several projects in North America and a hydrogen business in Scotland, Green Cat Hydrogen, which will interest Robin. My role as a lawyer was a broad remit covering corporate, partnering, M&A, energy, regulatory and others. Echoing Mallika, it has never been boring, and I received wide exposure to our portfolio companies across a range of jurisdictions and legal regimes.

MARK: I’m the assistant general counsel of BW Offshore based in Singapore. We engineer, procure, construct and install floating production storage and offloading (FPSO) vessels and other floating offshore infrastructure for lease and operate. FPSOs have become hugely complex constructions, with construction costs now often exceeding US$2 billion. I deal generally with the client contracts with the oil companies.

How is the company you are working for dealing with the energy transition?

MARK: Our new ventures arm is working in areas of renewable energy that fit well with our existing business of operating FPSOs, such as carbon capture and storage, offshore gas to power and offshore hydrogen and ammonia production.

MALLIKA: We, in BP, have done a lot of transition in the last few years, and while we have focused our investments in low carbon, we remain involved in a portfolio of hydrogen, carbon capture, wind and solar investments, as well as oil and gas. We are, of course, a business and we always need to ensure shareholder returns, whether that means energy that is fossil fuel-generated or renewables, or whatever other opportunities exist. We have recognised the market has not moved as quickly as we would have wanted it to, and we have had to adjust. In response to the suggestion that the world is pulling back from renewables, I would say it is not all change, it is refocusing.

MATTHEW: RWE, which, as I said, I have left, is having to respond to significant headwinds that have affected the transition — the war in Ukraine, shaking off the dependence on Russian gas, Trump-imposed tariffs and so on. Whilst renewables remain a key focus, they increasingly see gas and LNG as a vital part of the transition.

We face a number of challenges in the transition. How can you keep the lights on in a renewable scenario without bankrupting consumers? How do we improve the infrastructure to support renewables? There are the increased energy loads required to drive the AI boom and data centres, particularly in the US. It is a very politicised space. That can hinder effective long-term planning, because huge investments are needed over the long term, but consumers want short-term results.

ROBIN: We recognise that we are in the process of transition and that, as yet, there is no one clean energy source or technology that can viably replace 100% of fossil fuels. With the world seemingly more unstable now than at any time in the past few decades, there is also a growing focus on energy security, and rightly so.

We believe that hydrogen is only going to grow in proportion to the overall fuel mix, and that can only enhance energy security. Examples include the role that hydrogen can play in producing sustainable aviation fuels and in powering the energy-hungry data centres to which Matt alludes. We are also looking at ways to ‘synchronise’ with, and work alongside, other clean energy solutions, such as battery storage and using hydrogen as a means to store energy from renewable sources, like windfarms, which would otherwise be wasted or curtailed. We don’t pretend that green hydrogen is the silver bullet that is going to solve all energy transition issues, but we know that it can be a key part of that transition.

MATTHEW: Ultimately, the market will adapt, but right now there are changes that mean the market is nervous about whether or not to invest. Taxes have gone up, there is uncertainty around changes in regulatory policies, costs have increased across the board, supply chains are being impacted, imposition of tariffs. It is something of a Molotov cocktail that has been lobbed into the picture.

MALLIKA: I agree. We have to be realistic about what people want, in terms of energy security and energy affordability. The transition has taken on a different path to the one many of us expected. Some sections are doing well, such as solar, while others are still being developed. The world has shifted.

What are your personal views on the energy transition?

ROBIN: Much like my company, I can see line of sight to a world in which carbon emissions are greatly (if not completely) reduced, and I’m hugely excited to be a part of that. Big challenges remain though, mainly (in my view) political and economic. Political leaders need to be honest and educate people on what ‘net zero’ (or, at least, the energy transition) really means, why it is important and what it will take to achieve it, including the costs and trade-offs involved.

In the private sector, and in a world where governments and taxpayers seem to be economically-challenged at every turn, I think investors (especially those that profess to believe in the energy transition) need to consider whether that extra return on investment percentage point is really necessary to be able to invest in a clean energy project. If every investor, for example, settled for a 10-11% IRR (as opposed to insisting upon a, say, 12-15% IRR), imagine how quickly we might be able to accelerate the transition? Just a thought!

MARK: I’m not an expert. I do think that there’s a need to be less reliant on fossil fuels. However, there is an economic calculation to be carried out to try to balance out the costs vs the immediate gains. This is complicated by misinformation on both sides of the debate and political posturing. It’s difficult sometimes to know which narrative or facts to trust.

But I do have faith that technology will solve a lot of this at some point. The aspect that is easiest to comprehend is cars. While there have been concerns around battery range and speed and charging infrastructure vs the speed of filling a car with petrol at one of many petrol stations, technological developments will in time make electric cars a more economical and obvious choice. Toyota recently announced that it has developed a car battery that can do 1,200 kilometres and charges to full in 10 minutes. This and other innovations should allay fears around ‘range anxiety’ of electric cars and revolutionise motor transport away from fossil fuels for transportation.

MATTHEW: We are moving in the right direction. I am fully in favour of the transition so long as it is managed appropriately. We can fill the gap in the journey towards full renewables with gas, blue hydrogen and, I believe, nuclear power, where deployment of small modular reactors will prove to be the reliable, safe and cost-efficient solution to power electrification of the economy.

There is a groundswell of opinion generally that we need to do something, although that may vary in degree between places. I would say that there is general agreement in Germany and the UK that we need to decarbonise our economies, including the demand-side elements. More European countries have reached a point where more than 50% of their power generation comes from renewable sources. The same cannot be said for the US, at least as things currently stand.

MALLIKA: I care deeply about the energy transition and want it to succeed. But we need to be realistic: success depends on aligning policy, demand, energy security, and technology readiness. That’s what enables smart investment decisions, rather than chasing technologies and targets in isolation.