March 31, 2017
Legal uncertainty is never a good thing for industry: it’s a barrier to investment, and thus an adversary to growth. Unfortunately, the law is often a laggard when it comes to new and innovative technologies that form the backbone of many burgeoning industries – including the offshore. The offshore wind energy and offshore aquaculture sectors have seen dramatic growth fuelled by vital advancements enabling the installation of offshore wind and fish farms farther out to sea. Yet as they migrate further from shore, they move further from the legal certainty they enjoy closer to shore.
Here’s how leaving the offshore wind energy and offshore aquaculture industries adrift in legal uncertainty is creating a chilling effect and hindering their development, and the international legal reforms that can prevent it.
THE GROWTH OF OFFSHORE INDUSTRY
The offshore wind energy and the offshore aquaculture sector have both grown in recent years, fed by new technologies that are enabling offshore wind and fish farms to be installed further out to sea.
Offshore Wind. The offshore wind energy market has grown markedly. This growth is most notable in Europe, where it’s predicted that 30% of all wind turbines will be located in the offshore by 2020, climbing to 60% by 2030.1 Contributing to this growth are the technological advancements allowing wind farms to be installed further and further ashore, such as the development of floating substructures for turbines that allows them to operate in water over 60 metres deep. These developments allow offshore industry participants to benefit from the advantages offshore wind farms offer as compared to land-based ones, most notably the lack of any height and noise restrictions because of the stronger and steadier winds offshore.2
Offshore Aquaculture. Global offshore aquaculture, or ‘mariculture’, production totalled 36.1 million tonnes in 2010, according to the UN’s Food and Agriculture Organization (FAO) Statistics and Information Branch. As the FAO has noted, “[t]here has been interest in expanding aquaculture to offshore areas for decades”.3 Offshore aquaculture has also seen significant technological advancement over the past decade. Specifically, fish farms have been increasingly engineered to be suited for installation further offshore. This “blue revolution” to re-engineer fish farms to be located in the offshore was spurred by the harmful environmental impacts that can arise when fish farms are located in shallow waters: waste from fish farms becomes diluted much faster in the offshore because the water is deeper and the currents stronger out at sea. The technologies vary widely, but some models currently in development are submersible and floating cages designed to better withstand the power of ocean waves, currents and storm events.
THE CHILLING EFFECT OF LEGAL UNCERTAINTY
Despite a growing need, there’s a lack of clarity about how international law will deal with offshore wind farms and aquaculture installations. The international community has failed to provide the necessary level of certainty these industries require to thrive.
UNCLOS. The United Nations Convention on the Law of the Sea (UNCLOS) remains the principal international legal regime governing the offshore. However, it fails to make express provision for either offshore wind or aquaculture. Some scholars argue the wording of UNCLOS is sufficiently broad to encompass both offshore wind and aquaculture:
If so, they are subject to the same constraints as many other installations in the offshore arena. For example, in the territorial sea, the coastal state must not unduly infringe on the right of innocent passage. In the EEZ, the states must show due regard for the rights and duties of other states which means, for example, the installation can’t have the functional effect of denying or substantially impairing international navigation.4 However, UNCLOS is unhelpfully silent on what constraints apply in the high seas.
The difficulty with this approach, however, is that it’s academic opinion only. To date, there’s no judicial interpretation confirming that the current wording of UNCLOS does, in fact, encompass both offshore wind and aquaculture cover – and therefore does nothing to curb the uncertainty plaguing both industries.
Domestic Laws. Some countries have taken the international silence as a license to develop domestic legislation to govern these burgeoning offshore industries. For example, the United Kingdom’s Energy Act creates a Renewable Energy Zone, and its Marine and Coastal Access Act creates a uniform mechanism for offshore regulation; Germany has developed a similar marine management plan.5 The Canadian Department of Fisheries and Oceans has also adopted domestic policies and regulations, however their authority under the Fisheries Act only extends as far as the territorial sea.
Chilling Effect. The lack of guidance from international law-makers risks creating a chilling effect on the growth of the offshore wind and aquaculture sectors. While literature hints the UNCLOS wording is sufficiently broad to cover them, this doesn’t quell the uncertainty and associated risk in relying on the regime as it’s currently written. Stretching UNCLOS to encompass offshore wind and aquaculture may be a stop-gap measure, but it’s insufficient to ensure the necessary degree of certainty in the offshore to stimulate the growth of these industries. As Law Professor David Percy says, “If mariculture does extend from a state’s [EEZ] to the high Seas, there is a regulatory vacuum; which means that the potential problems of mariculture are almost completely neglected.” However, the international legal regime’s continued silence will, at best, result in the piecemeal development of individual domestic schemes – the antithesis of the uniformity the international law of the sea constantly seeks. It’s only when this uniformity is achieved that industry players will have full confidence that the law is sufficiently certain. As author Milford Shirley states in relation to mariculture:
The absence of law poses an additional threat. “Mariculture requires the exclusive use of ocean space, a financial investment and legal protection for that investment. The security of any financial investment in the use of the sea for mariculture depends upon the legal status of such activity.”6
INTERNATIONAL LEGAL REFORM
It’s not necessary to reinvent the wheel to achieve certainty around this “legal status”: there are other international regimes that could provide guidance for offshore wind and aquaculture beyond UNCLOS. For example, the existing infrastructure developed under the United Nations’ International Maritime Organization (IMO) and Fish Stocks Agreement (FSA) could be utilized to create specific regimes to govern offshore wind and aquaculture respectively.7
Simply put, however, despite the extensive infrastructure available to international law-makers, they have yet to mobilize and capture the unique cases of offshore wind and offshore aquaculture in the international legal sphere – to the detriment of both industries.
Please contact your McInnes Cooper lawyer or any member of the Maritime Law Team @ McInnes Cooper to discuss this topic or any other legal issue.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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