Shearman And Sterling

The clean energy innovation movement – specifically the move to decarbonize the global economy – started years ago following greater awareness of greenhouse gases and their effects, was pushed along with government incentives, and now has been accelerated by the global pandemic and sustainable recovery plans. Many of Shearman & Sterling’s clients – traditional oil & gas companies and investors in the hydrocarbons sector, along with renewable energy companies – are looking for opportunities in the energy transition movement, seeking to take advantage of the demand for immense development and clean energy innovation in the sector. The International Energy Agency’s Net Zero by 2050 report estimates that 75 percent of the emissions reductions necessary to meet net-zero emissions are dependent on renewable or clean energy technologies that have not yet reached commercial maturity.

Four significant, dynamic and viable areas of innovation in the energy transition include the clean (or semi-clean) development of hydrogen as a multi-purpose fuel, the development of carbon capture projects at the source of emissions, the development of energy storage projects particularly as a component of larger renewable energy projects, and the greening of industrial manufacturing particularly that of steel and cement.

Shearman & Sterling’s Energy Innovation team is a leader in working on these decarbonizing projects. We have deep experience in working with traditional oil & gas companies, renewable energy developers, private equity investors, clean technology companies, governments, state-owned energy companies and lenders on the development and financing of these innovative clean energy projects. We are knowledgeable about project structuring and what it takes to get projects financed, particularly when emerging technology is involved. We have been consistently recognized by Chambers Global as one of the leading Projects and Energy law firms in the world.

Hydrogen 

The attractiveness of hydrogen – on a mass basis, hydrogen has nearly three times the energy content of gasoline and produces zero emissions – has initiated significant investments by energy, chemical and commercial gas companies as well as major equipment suppliers in renewable energy-rich regions across the world. Major green energy projects are in development in Europe, the Middle East, Australia, parts of Latin America and the United States.

A highlight of our extensive hydrogen sector experience is that we are the lead law firm advising NEOM Company on all aspects of the novel Project Helios, a $5 billion world-scale green hydrogen and green ammonia production facility in Saudi Arabia. Powered by 4 GW renewable electricity, this is the largest renewables project in history and the world’s largest green hydrogen project, supplying 650 tons per day of carbon-free hydrogen for transportation globally and saving the world three million tons per year of CO2.

Check out our hydrogen sector experience and capabilities in this overview piece.

Carbon Capture 

Due to increased interest from the private sector and increasingly supportive government policy, the number of carbon capture projects under development globally has been growing significantly. The United States leads the world with 13 carbon capture facilities and 30 more in development across a variety of industries. Europe and the Middle East are active in carbon capture as well. Our team advises on all aspects of these projects – financing, development, commercial agreements, environmental issues, and the tax incentives that enable these projects.

Our team’s experience includes the following recent representations:

  • Advising a private equity-backed midstream company in its potential development of a carbon capture project
  • Advising investors in an ethanol plant in connection with developing a carbon capture project on site
  • Advising on the financing related to a carbon free manufacturing facility to be constructed in Nebraska

Check out our latest client alert about carbon capture below.

Energy Storage 

Energy storage, a component of the power grid’s transformation to becoming more dynamic and adaptable, allows utilities, end users and third parties to store or release electricity on demand. Energy storage can increase resiliency, provide backup power during power outages, stabilize the grid, lower the cost of meeting peak power demand, increase the value of wind and solar installations, reduce transmission infrastructure costs and provide numerous other benefits.

A highlight of our energy storage experience is advising the lenders to Bolt Energy for the construction and expansion of an up to 490 MW/1,525 MWh partially contracted portfolio of three battery energy storage projects located in California. This is the largest financing of battery energy storage systems to date, and one of the battery energy storage projects in the portfolio, Gateway Energy Storage, is the largest in the world.

Green Industry 

Heavy industries represent the next frontier in the fight against climate change. The highly energy intensive production of steel and cement – with each accounting for 7-8 percent of energy-related emissions globally – will need to be addressed in order to reduce emissions.

Shearman & Sterling’s deep experience advising heavy manufacturers combined with our experience in renewables and hydrogen position us perfectly to assist manufacturing clients as they transition their operations to become lower carbon-producing.