Climate change is reaching energy contracts. Contracting parties are beginning to adopt innovative commercial principles and legal arrangements to allocate the risks and deal with the uncertainties of current and potential future greenhouse gas-related laws and regulations.
The frontiers of carbon regulation are still coming into focus. What lies beyond those frontiers is largely uncharted territory. Although the full extent of the economic and legal implications of future greenhouse gas (GHG) laws is unknown, they may be significant for a host of industries, including the energy industry. Climate-change legal developments — e.g., from requiring simple GHG monitoring and imposing stationary-source GHG-permitting or technology requirements to comprehensive carbon legislation or treaties — have the potential to create significant new economic and commercial burdens and uncertainties for companies, including manufacturers and suppliers of energy products.
