Clifford Chance

Energy Transition – How to mitigate the risk of disputes in decommissioning

21 November 2023

The global rise in renewable energy projects has brought into focus the need to decommission ageing fossil fuel assets effectively and sustainably. Decommissioning is often overlooked as part of the energy transition. Nonetheless, it is a crucial part of the journey and it can be problematic. The acquisition of fossil fuel assets by new entrants into the market – who may be under-resourced and under-estimate the potential decommissioning liabilities and responsibilities they are inevitably assuming – creates risks. The complexity, cost and scale of decommissioning activities are enormous, as are the inevitable associated environmental, legal and logistical challenges. As a consequence, the scope for regulatory, technical and financial disputes is extremely broad.

This paper considers some of the ways in which parties to decommissioning projects may seek to limit their exposure to liability and to mitigate against the risk of being drawn into protracted and costly disputes.

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