Decarbonization Disputes

The transition to Net Zero will not be smooth. The scale of the investment required, and the appetite to implement new policy, will cause unprecedented disruption for businesses and policymakers alike.

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Read Time

8 mins

Published Date

Apr 20 2023

This record-breaking investment opportunity and capital reallocation will produce winners and losers as governments make short-term decisions that may eventually become the greatest new source of litigation for business across global jurisdictions. We identify the myriad ways the Net Zero transition will generate claims – and take a deep-dive into the main risks.

Summary

NGOs are increasingly bringing litigation against business leaders and governments, in a bid to discourage high-carbon activities, target alleged failures to adapt to the Net Zero transition, claim compensation for climate damage, and highlight instances of “greenwashing”.

Financial institutions are facing demands to reduce the emissions generated by their lending activities, and to report these emissions correctly. Banks and investors also risk being sued for withdrawing financing for high-carbon projects or businesses.

The decommissioning of nuclear power plants, as well as high-carbon infrastructure such as pipelines, are set to trigger lawsuits as parties dispute the allocation of costs and liabilities for the closure of facilities and the clean-up of contaminated sites.

We will see more construction litigation as low-carbon production facilities and transmission equipment are installed, and a rise in commercial disputes around non-performance of contracts as the energy transition impacts the provision of goods and services.

Disputes