When that dreaded commercial awareness question comes up, whether it be in an application or interview, a students first thought is to start talking about BREXIT or technology. In the future, I imagine COVID-19 will be just as popular. Whilst these are certainly ‘issues of the day’ which have a marked impact on a law firm’s strategy and allocation of resources, this blog post aims to draw attention to an equally important issue in which all global law firms are stakeholders. That issue is renewable energy. In this blog I am going to break down the mystery of renewables and advise on how to use it to answer the commercial awareness question.
World leaders are finally acting
To confidently talk about renewables in an application or interview, it’s important to have some background knowledge on the issue. So, world governments are certainly motivated to tackle climate change and to invest in renewable energy projects (well, most governments that is). In 2015, 196 countries signed the Paris Agreement – an impressive number which was certainly undermined by the US withdrawal in 2017. The Agreement intends to keep global temperatures ‘well below’ two Degrees Celsius. This coupled with Saudi Arabia’s 2030 vision to reduce dependency on oil illustrates the desire of major players to move away from fossil fuel production.
Why is it so important?
In Australia, I worked as a solar panel salesman and I came across a keen young lady who said to me, “I don’t understand why everyone doesn’t harness that sun’s power”. I couldn’t agree more! So why do we want to upgrade to renewables? The main reasons are clear. We want to combat climate change and reduce air pollution leading to a consequent increase in public health. However, there are equally important but perhaps more trivial advantages of renewables. Investment into renewable energy is likely to see lower energy costs and stable energy prices. This is particularly important in the current environment. BP have reported a 66% drop in their first quarter profits following the coronavirus pandemic, illustrating the volatility of the fossil fuel industry. The ability to ensure stability in the power industry will certainly help to restore consumer confidence.
Impact on law firms
So, what does this mean for law firms? This is the most important element of any answer when answering a question on commercial awareness. I am going to tackle this section from two different angles.
Firstly, law firms can actually benefit from a decline in the oil industry. During the oil industry boom around a decade ago, production companies borrowed heavily to finance new drilling projects. Following the decline of oil prices since 2014, these companies are left with mounting debt. In the current climate, the coronavirus pandemic is only exacerbating the problem. This is forcing multinational oil production companies to consult lawyers on restructuring and bankruptcy. This certainly suits firms with strong energy and restructuring practices.
Secondly, there is likely to be a boom in renewables. Let’s take a look at China. The country has more solar energy capacity than any other state in the world. In 2012, the Chinese government announced that solar was simply too expensive. But, in true fashion of the ‘product life cycle’ that you would have come across in GCSE Business or PHSCE days, solar panels are suddenly more affordable. This prompted China to pledge $360bn towards renewable energy sources by 2020, creating 13 million jobs in the process. In fact, the world’s largest solar facility, ‘Tengger Desert Solar Park’ is currently under construction in China. Bloomberg New Energy Finance predicts that the majority of the world’s energy will be clean by 2040. They expect that solar will account for 35% of new power generation infrastructure built over the next 25 years, with $3.7 trillion being spent on solar projects globally. Therefore, there will be countless opportunities for the law firms to expand their energy practices, with huge financials at stake.
In conclusion, the financial and moral benefit of law firms investing time and resources into energy projects are clear. To use the topic of renewables in the commercial awareness question, it’s crucial that you can confidently break down and discuss the importance of the issue to the legal sector and more specifically the firm you are applying to.
In this blog, I have tried to break down renewable energy and show just some of the effects the issue has on the legal market. To understand more about commercial awareness, have a look at our other blog posts! For more information on the topic discussed in this blog see these websites below: