Regulatory and policy changes, emphasis on enforcement and compliance, and a high volume of sophisticated renewable energy projects have been key themes in the research once again this year. Practitioners reported, “Environmental law is becoming ever more complex and technical,” a trend that is inevitably leading to increased specialisation within the international legal market.
A continuing trend, market commentators highlighted, is the narrowing of the gap between environmental law and energy law, which are “becoming interconnected as two sides of the same coin”. It is widely recognised that “the transition to a less carbon-intensive economy will drive more initiatives in the field of renewables,” and this is generating high volumes of work surrounding infrastructure projects. Wind and solar projects have been coming to the market in droves, particularly in jurisdictions including Belgium, Korea, Finland and the US, with interviewees expressing “high levels of market confidence” in future projects in the renewable energy sector.
When it comes to projects, sources note that “environmental and sustainability concerns are driving the economy in ways you weren’t seeing before”. This “very positive change” is occurring in jurisdictions around the world and is resulting in an increasing focus on compliance and and enforcement across the civil, criminal and administrative courts.
Belgium is seeing “a high volume of enforcement cases”, while practitioners in the Netherlands have reported “a lot of changes in environmental permits and more enforcement against storage tank companies”. More generally, in Asia, South America and Europe, “there is more and more enforcement surrounding failure to disclose liabilities”. Emerging economies such as India and China are also moving in the right direction. In India, “There is a very positive trend towards implementation being taken seriously and a stricter drive to comply.” Meanwhile in China one lawyer notes, “The authorities have really started tightening up enforcement – we have all the regulations, but only in the last few years has the government started to enforce them.” Stricter enforcement globally “forces manufacturing companies to pay more attention to compliance and risk management” – a trend that is only set to continue.
The Trump administration and its stance on environmental and climate change issues have been capturing headlines around the world, not least due to the US’ withdrawal from the Paris Agreement. There has been a widespread rollback of Obama’s policies, and an emphasis on undoing the climate change regime that was established during the last presidency. In the words of one interviewee, “This gutting of environmental regulation involves a vast number of deregulatory steps,” and there has been “a decided step-down from enforcement activity” in the coal, oil and natural gas sectors. Market commentators describe this as “a real problem” for environmental protection and health and safety standards in the US.
Unsurprisingly, given the administration’s stance, “The federal government is not stepping up to the climate change issue,” and as such, states have risen to fill the void. There has been “a huge explosion” of attention on climate change in the legal market, and a focus on how state and local laws can be used to deal with climate change issues. In many cases, “State governments are the real driving force behind compliance and enforcement related issues in the US.” This trend can also be seen on a more local level, with many US cities and towns are brining legal challenges involving climate change. This is particularly prevalent in coastal areas which are vulnerable to storm surges, rising sea levels and other environmental changes caused by climate change.
As well as cities, companies, NGOs and activist groups have “become very creative and innovative” in bringing legal claims and devising ways in which they can use the court system to force changes in the way business is conducted and climate change issues are addressed. There are currently “key litigation cases working their way through the courts” concerning issues such as air quality and clean water, as well as climate change. One lawyer surmised: “Everything that is being done in Washington is being contested in court,” due to the long-term significance of climate and water regulation. Given the “constant changes in US environmental policy”, there is high demand for sophisticated legal advice in this respect. One source told us, “The challenge for lawyers is to see through the aggressive rhetoric and determine what, if any, changes will be made”.
The legal market is becoming increasingly specialised in terms of those focusing on regulatory law, enforcement and litigation, and also in terms of the key environmental issues that are being focused on. Considering the increasing complexity of regulatory systems, both nationally and internationally, and the growing focus on businesses’ environmental impacts, this trend towards increasing specialisation is not only expected to continue, but to also become ever more necessary. As such, “the competition falls into different pockets, which are each very competitive”.
Market sources in jurisdictions around the world reported high levels of M&A activity, and “a very hot market” for advising on environmental impact assessment in transactions. There has been an uptick in corporate, private equity and refinancing work, which has created “a very busy period” for environmental advisers in these areas. In addition, the regulatory and compliance side of the practice is booming, particularly in the EU and US, where policy is “changing all the time” and businesses face uncertainty surrounding the impacts of Brexit and the Trump administration on environmental rules in their respective regions.
In this busy legal market, US and European firms have been building their environmental practices, both in terms of size and jurisdictional coverage, to assist clients in relation to work that is increasingly global. In jurisdictions such as India and China, where the practice is relatively new in comparison, many firms are working hard to recruit experts and expand their offerings to meet client demand for this advice. Boutique firms maintain a strong role in the market and are highly sought after by businesses and for referrals due to the highly specialised knowledge of environmental law.
This year, environmental law has continued to be a primary concern among corporates, activist groups and regulators alike. The trend towards more comprehensive environmental protection and controls on companies continues in jurisdictions around the world, with the notable exception of the US, where the Trump administration “continues to undermine fundamental environmental protections” in many key areas. Domestic and international rules and policies are “changing all the time”, giving rise to a busy and vibrant legal market to serve companies’ “constant need” for sophisticated legal advice.