Liability Risks to Clean Energy Projects

Liability risk is a key climate risk affecting financial stability. Litigation trends reveal that liability risk arises in three broad ways: (i) rights-based action, (ii) compensation claims, and (iii) increased regulatory action. Within Asia, litigants use their legal rights to object to environmental permits issued to energy projects. Clean energy projects are not immune. Litigants have objected to project location for wind and waste-to-energy plants on the grounds of impacts to environment and livelihood. Energy projects may wish to consider the role of community engagement in site selection. Infrastructure damaged due to climate-induced extreme weather events may injure other parties, leading to financial liability. Lastly, as governments aim for net-zero by 2050, they will increase regulatory oversight and action. Understanding recent litigation trends and the nature of liability risk helps energy projects establish practices that may minimize liability risk exposure and boost attractiveness to investors.