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Legal implications of cross-border energy trade under evolving carbon markets and international climate agreements regimes
Senior Associate, Attah Ochinke & Co. Solicitors.
Research Article
International Journal of Science and Research Archive, 2021, 02(01), 291-303.
Article DOI: 10.30574/ijsra.2021.2.1.0053
Publication history:
Received on 10 February 2021; revised on 23 March 2021; accepted on 28 March 2021
Abstract:
Cross-border energy trade is increasingly shaped by the convergence of climate policy, carbon markets, and international legal regimes governing tradse, investment, and environmental protection. As states pursue decarbonization while maintaining energy security, cross-border electricity and fuel exchanges have expanded in scale and complexity, raising new legal questions regarding market access, pricing, compliance, and dispute resolution. From a broad perspective, evolving carbon pricing mechanisms, emissions trading systems, and border adjustment measures are reshaping the legal architecture of international energy trade by internalizing climate externalities and altering competitive conditions among jurisdictions. International climate agreements provide an overarching normative framework, but their interaction with regional carbon markets and domestic implementation measures generates legal fragmentation. Divergent carbon prices, monitoring standards, and verification rules create compliance risks for cross-border transactions, while unilateral measures such as carbon border adjustments introduce potential conflicts with trade and investment law. These dynamics challenge traditional contractual models and require re-evaluation of risk allocation, regulatory certainty, and enforcement mechanisms in cross-border energy projects. This article narrows its focus to the legal implications arising at the intersection of cross-border energy trade, evolving carbon markets, and international climate agreements. It examines how carbon pricing regimes affect contractual obligations, market design, and investment protection, and how climate commitments influence state conduct in trade-related regulation. The analysis highlights emerging areas of legal risk, including regulatory overlap, jurisdictional disputes, and compliance-driven cost volatility. By integrating insights from energy law, climate governance, and international economic law, the article provides a structured foundation for understanding how legal frameworks must adapt to support resilient, transparent, and climate-aligned cross-border energy trade. This perspective informs policymakers, regulators, investors, and participants.
Keywords:
Cross-border energy trade; Carbon markets; Climate agreements; Energy law; Regulatory risk; International trade governance
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Copyright © 2021 Author(s) retain the copyright of this article. This article is published under the terms of the Creative Commons Attribution Liscense 4.0
