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THE INTERNATIONAL LAW OF ENERGY The world’s energy structure underpins the global environmental crisis andchangingitwillrequireregulatorychangeatamassivelevel.Energyis highly regulated in international law, but the field has never been com- prehensively mapped. The legal sources on which the governance of energy is based are plentiful but they are scattered across a vast legal expanse.Thisbookisthefirstsingle-authoredstudyoftheinternational lawofenergyasawhole.Writtenbyaworld-leadingexpert,itprovidesa comprehensive account of the international law of energy and analyses the implications of the ongoing energy transformation for international law.Thestudycombinesconceptualanddoctrinalanalysisofallthemain rules, processes and institutions to consider the past, present and likely future of global energy governance. Providing a solid foundation for teaching,researchandpractice,thisbookaddressesboththetheoryand real-worldpolicydimensionoftheinternationallawofenergy. JorgeE.ViñualesistheHaroldSamuelChairofLawatCambridge,the Founding Director of the Cambridge Centre for Environment, Energy and Natural Resources Governance, and a Member (Associé) of the Institut de Droit International. He has published extensively on inter- nationallawandhaswideexperienceascounsel,expertandadjudicator. CAMBRIDGE STUDIES IN INTERNATIONAL AND COMPARATIVE LAW: 164 Established in 1946, this series produces high quality, reflective and innovativescholarshipinthefieldofpublicinternationallaw.Itpublishes works on international law that are of a theoretical, historical, cross- disciplinaryordoctrinalnature.Theseriesalsowelcomesbooksproviding insights from private international law, comparative law and trans- national studies which inform international legal thought and practice moregenerally. The series seeks to publish views from diverse legal traditions and per- spectives,andofanygeographicalorigin.Inthisrespectitinvitesstudies offeringregionalperspectivesoncoreproblématiquesofinternationallaw, andinthesamevein,itappreciatescontrastsanddebatesbetweendiver- ging approaches. Accordingly, books offering new or less orthodox per- spectives are very much welcome. Works of a generalist character are greatly valued and the series is also open to studies on specific areas, institutions or problems. Translations of the most outstanding works publishedinotherlanguagesarealsoconsidered. Afterseventyyears,CambridgeStudiesinInternationalandComparative Lawsetsthestandardforinternationallegalscholarshipandwillcontinue todefinethedisciplineasitevolvesintheyearstocome. SeriesEditors LarissavandenHerik ProfessorofPublicInternationalLaw,GrotiusCentreforInternational LegalStudies,LeidenUniversity Jeand’Aspremont ProfessorofInternationalLaw,UniversityofManchesterandSciencesPo LawSchool Alistofbooksintheseriescanbefoundattheendofthisvolume. THE INTERNATIONAL LAW OF ENERGY JORGE E. VIÑUALES UniversityofCambridge UniversityPrintingHouse,CambridgeCB28BS,UnitedKingdom OneLibertyPlaza,20thFloor,NewYork,NY10006,USA 477WilliamstownRoad,PortMelbourne,VIC3207,Australia 314–321,3rdFloor,Plot3,SplendorForum,JasolaDistrictCentre,NewDelhi–110025,India 103PenangRoad,#05–06/07,VisioncrestCommercial,Singapore238467 CambridgeUniversityPressispartoftheUniversityofCambridge. ItfurtherstheUniversity’smissionbydisseminatingknowledgeinthepursuitofeducation, learning,andresearchatthehighestinternationallevelsofexcellence. www.cambridge.org Informationonthistitle:www.cambridge.org/9781108415835 DOI:10.1017/9781108235273 ©JorgeE.Viñuales2022 Thispublicationisincopyright.Subjecttostatutoryexception andtotheprovisionsofrelevantcollectivelicensingagreements, noreproductionofanypartmaytakeplacewithoutthewritten permissionofCambridgeUniversityPress. Firstpublished2022 AcataloguerecordforthispublicationisavailablefromtheBritishLibrary. ISBN978-1-108-41583-5Hardback CambridgeUniversityPresshasnoresponsibilityforthepersistenceoraccuracy ofURLsforexternalorthird-partyinternetwebsitesreferredtointhispublication anddoesnotguaranteethatanycontentonsuchwebsitesis,orwillremain, accurateorappropriate. To my friends and colleagues of the Cambridge Centre for Environment, Energy and Natural Resource Governance (C-EENRG) – I could not have hoped for a better intellectual home in which to develop the ideas leading to this book. CONTENTS Figures xvii Tables xviii Preface xix Abbreviations xxi Instruments xxiii Cases lxxxiii Introduction 1 1 Energy in International Law 10 I TheInternationalisationofEnergyTransactions 10 II EnergyasaLegalObject 14 2.1 Overview 14 2.2 EnergyasaResource 15 2.3 EnergyasaProduct 17 2.4 EnergyasaTechnology 17 2.5 EnergyasanActivity 18 2.6 EnergyasaLegalObject:Summary 20 III ThePurposesofEnergyGovernance 21 3.1 Overview 21 3.2 MainPurposesofEnergyGovernance 21 3.3 ThePrimacyofAvailabilityandSecurity 23 3.4 TheRiseofAccessandSustainability 25 3.5 CompetitionamongPurposes 28 IV TheStructureofInternationalEnergyTransactions 29 4.1 Overview 29 4.2 ‘Transactions’and‘Externalities’ 29 4.3 TheRulesGoverningInternationalEnergy‘Transactions’and their‘Externalities’ 32 V ThreeApproachestotheRegulationofInternational EnergyTransactions 34 5.1 Overview 34 5.2 FoundationalApproach 36 5.3 AdHocApproach 37 5.4 CentralisedApproach 39 vii viii  2 Foundational Approach: International Energy Transactions 42 I Overview 42 II LegalEntitlementsoverEnergyasaLegalObject 43 2.1 RulesConferringEntitlements 43 2.1.1 IntroductoryObservations 43 2.1.2 States 45 2.1.3 Peoples 48 2.1.4 OtherCollectiveSubjects 50 2.1.5 Individuals 53 2.1.6 InternationalOrganisations 55 2.2 RulesAllocatingEntitlements 56 2.2.1 IntroductoryObservations 56 2.2.2 EnergybetweenTitleandEffectivités 57 2.2.3 EnergyandMaritimeDelimitation 58 2.2.4 PrinciplesGoverningCompetingUsesofEnergy 60 2.2.5 AsymmetricConditions 64 III RulesEnablingandProtectingInternational EnergyTransactions 66 3.1 AnalyticalDistinctions 66 3.2 APartialSynthesis:TheEnergyCharterTreaty 69 3.3 AnInchoateGlobalFrameworkforEnergyTrade,Investment andTransit 73 3.3.1 IntroductoryObservations 73 3.3.2 EnergyTradeundertheWTOAgreements 74 3.3.2.1 From‘Whether’to‘How’ 74 3.3.2.2 ExtentoftheCoverage 78 3.3.2.2.1 ExportMeasures 78 3.3.2.2.2 EnergyServices 80 3.3.2.2.3 Network-BoundTransit 81 3.3.2.2.4 MembershipandCommitmentsof KeyCountries 82 3.3.2.3 ModalitiesofApplication 83 3.3.2.3.1 CharacterisationofElectricity 83 3.3.2.3.2 BusinessPracticesofState TradingEnterprises 84 3.3.2.3.3 Operationof SubstantiveStandards 85 3.3.2.3.4 Differentiation 86 3.3.3 InvestmentProtection,Bilateralism andMisalignment 88 3.3.3.1 ForeignInvestmentandTradeDisciplines 88 3.3.3.2 ForeignInvestmentand InvestmentDisciplines 89 3.3.3.3 Misalignments 91  ix 3.3.4 TheTransitMosaic 93 3.3.4.1 OverarchingPrinciples 93 3.3.4.2 GlobalLevel 95 3.3.4.3 RegionalLevel:TheECT 98 3.3.4.4 Project/Route-SpecificLevel 100 3.3.4.5 InteractionsbetweenLevels 101 3 Foundational Approach: Regulating Negative Externalities 104 I Overview 104 II TheOperationofSpecialRules 105 2.1 LegalProximity 105 2.2 Carve-outs 107 2.2.1 TaxationCarve-outs(Article21ECT) 107 2.2.2 Non-PrecludedMeasures(ArticleXIArgentina– USBIT) 108 2.2.3 PublicProcurementCarve-out(ArticleIII(8) (a)GATT) 109 2.2.4 NationalSecurity(ArticleXXIGATT) 110 2.3 ModulationsofPrimaryNorms 111 2.3.1 EnvironmentalAspects(Article19ECT) 111 2.3.2 RevisedGovernmentProcurementAgreement 112 2.3.3 InterpretiveAnnexes(Annex10-B(4)(b)US– OmanFTA) 113 2.3.4 ImplicitModulations 114 2.4 Exceptions 116 2.4.1 Overview 116 2.4.2 ArticleXXoftheGATT 117 2.4.3 ExportMeasuresandArticleXX 118 2.4.4 RenewableEnergySupportSchemesand ArticleXX 119 2.4.5 TechnicalBarrierstoTradeandArticleXX 121 2.4.6 ProcessesandProductionMethodsunder ArticleXX 122 2.4.7 EnergySecurityandArticleXX 123 2.5 SeparatebutFormallyLinkedInstruments 124 2.5.1 Overview 124 2.5.2 ThePEEREA 124 III ‘General’RulesLimitingNegativeExternalities 126 3.1 StagesofIntervention 126 3.2 CostInternalisation 127 3.2.1 ThePolluter-PaysPrinciple 127 3.2.2 PricingMechanisms 128 3.3 PreventionofHarm 131 3.3.1 Overview 131 3.3.2 PrinciplesofCustomaryInternational EnvironmentalLaw 132