This article originally appeared in the January-March 2026 issue of Corporate Disputes Magazine.
What are the most significant recent and ongoing trends shaping the global energy sector? What are the main challenges companies face?
Bodell: The global energy sector is undergoing profound transformation across multiple fronts. The Organization of the Petroleum Exporting Countries’ market power continues to erode while liquified natural gas production (LNG) and exports surge worldwide. Perhaps most dramatically, electricity demand is skyrocketing – driven by data centres supporting cloud computing, artificial intelligence and cryptocurrency operations – creating urgent needs for new generation capacity and transmission infrastructure. Meanwhile, a stark divergence is emerging between global reliance on renewable energy and the US federal government’s recent pullback from wind and solar incentives. This split extends to decarbonisation efforts more broadly, with most countries pursuing their Paris Agreement commitments even as US policy shifts direction. The electric vehicle (EV) landscape similarly reflects this geopolitical divide, with China establishing dominance as the US withdraws support. These shifts are creating immediate challenges for energy companies. Rising electricity prices stem from the collision of higher demand, stagnating supply and increased delivery infrastructure investment. At the same time, stressed electricity systems are raising serious questions about reliability and resiliency. Companies planning large data centre loads or industrial investments face frustrating interconnection delays that can significantly impact project timelines and economics.
How are geopolitical tensions and sanctions reshaping dispute risks for cross-border energy investments and infrastructure projects?
Bodell: Energy’s role as a cornerstone of the global economy means that geopolitical shifts send ripples throughout the sector, creating new dispute risks at every turn. While energy has largely been excluded from tariff regimes, the uncertainty surrounding these rules – and their potential to change at any moment – continues to create planning challenges for international investments.
The EV sector exemplifies these complex dynamics. The Biden administration’s ban on Chinese EV imports, followed by the Trump administration’s elimination of EV subsidies, has created a technological competitiveness problem for US automakers globally while paradoxically hindering American energy independence goals. Meanwhile, sanctions on Russian energy exports have redirected lower-cost fuel to China, India and Turkey, forcing Europe and sanction-enforcing nations to become increasingly dependent on US LNG. Critical minerals have emerged as a new flashpoint, with recent China tariff negotiations, US support for Ukraine, and the minerals essential to new energy technologies driving a fundamental repositioning of global alliances and trade relationships. These tensions are unfolding against a backdrop of broader changes to the world order. As US policies are increasingly perceived as isolationist, traditional American allies are seeking greater independence from US trade relationships. Perhaps most significantly for long-term energy sector structure, dollar-denominated energy transactions are declining. Roughly one-fifth of energy commodities were transacted in other currencies in 2023, with China developing the ‘petroyuan’ and Russia conducting nearly 80 percent of its oil trade in BRICS – Brazil, Russia, India, China and South Africa – customers’ local currencies. This trend could fundamentally challenge the dollar’s status as the global reserve currency.
What types of disputes are commonly arising within the energy sector?
Bodell: Changing market conditions have made contractual scrutiny essential for ensuring that contracted value is both provided and preserved. Supply chain disruptions, higher tariffs and rising interest rates have prompted some renewable energy developers to abandon their contracts entirely, triggering waves of renegotiations and breach of contract litigation. Related to these breaches, liquidated damages provisions face increasing challenges as potentially invalid penalties. The renewable sector’s troubles run deeper than simple breaches – a surprising number of company bankruptcies also involve fraud allegations, making thorough due diligence critical for M&A. This heightened risk environment is driving increased reliance on representations and warranties insurance for post-sale protection. Meanwhile, sanctions compliance has become its own litigation category, with violations potentially adjudicated before the International Court of Justice, US courts, regulatory agencies or facing penalties from the Trump administration.
How are changes in regulation affecting the energy sector? In what ways are new laws and policies influencing energy contracts and related disputes?
Bodell: The most dramatic regulatory story is unfolding in the US, where federal incentives originally established to run through 2032 were abruptly truncated to end in 2027. This creates massive regulatory uncertainty. Administrative pullback of renewable project grant funding and Bureau of Ocean Energy Management stop-work orders for offshore wind have forced players to exit the market while existing investments face sharply higher capital costs. The residential solar sector faces an especially dire outlook – federal incentives expire entirely on 31 December 2025, eliminating the 30 percent tax credit and dramatically increasing costs. Without state-level policy interventions, this effectively kills the residential solar industry. Solar and wind developers more broadly now face truncated development pipelines, with projects relying on federal incentives becoming ‘out of the money’ unless they can achieve commercial operation by the end of 2027. This has slashed development pipeline valuations unless future administrations reinstate incentives. The EV sector is experiencing similar policy whiplash. Removal of EV charging station grants and the expiration of EV subsidies have already driven up US EV prices and reduced Q4 2025 sales. Internationally, sanctions are fundamentally reshaping energy relationships and forcing reliance on new trading partners. Rather than seeking relief through international institutions, counterparties increasingly find themselves navigating international arbitration.
Why is it important for businesses across the energy industry to review their contractual obligations and assess their exposure to potential disputes?
Bodell: Economic and industry disruption invariably drives companies to their contracts as mechanisms for preserving or extracting value. Organisations tighten their operations and become more stringent about enforcing favourable contractual relationships while simultaneously challenging less favourable obligations and commitments. History shows that litigation typically increases during difficult periods as companies reconfigure their contractual positions. However, these same challenging times also constrain litigation budgets, making it critical to assess potential disputes through the lens of success likelihood and return on investment. Often, this contractual review is triggered reactively – in response to a counterparty’s assertion or inquiry about contract management – but proactive review can identify issues before they escalate into costly disputes.
What resolution options are available to energy companies when disputes occur? How do litigation and alternative dispute resolution methods compare in terms of cost, efficiency and outcomes?
Bodell: Energy companies approach dispute resolution similarly to businesses in other sectors, though the path to resolution follows a predictable escalation pattern. The essential first step involves reviewing the contract to understand each party’s obligations and identify areas of ambiguity or potential breach. Resolution should always begin with direct conversations between counterparties – many disputes can be resolved through good-faith discussion. When conversations fail or cannot proceed in good faith, the next step typically involves the contractual dispute resolution process, usually beginning with mediation or independent third-party assessment of the disputed provisions. If mediation proves unsuccessful, counterparties can seek arbitrator or court opinions on narrow issues that might resolve the broader dispute without full litigation. When these earlier steps cannot resolve the matter, full-blown litigation through arbitration or courts becomes necessary. Even then, resolution may not be final – parties often appeal decisions and continue litigation until reaching a definitive decision or settlement. Generally, complexity and cost increase with each escalation step while efficiency decreases, making early resolution whenever possible the most economically rational approach.
How do you anticipate the nature of disputes in the energy sector evolving in the near future? Which production, trading or export policies are likely to play a significant role in shaping this landscape?
Bodell: International disputes will increasingly rely on international arbitration, while contracts involving US partners will be adjudicated domestically through arbitration or litigation. Tariff and sanctions compliance may become a dominant dispute category, with the US hearing these matters in federal courts and imposing penalties through both judicial and administrative mechanisms, while other countries continue to rely on international arbitration frameworks. The Trump administration’s rejection of longstanding international institutions like the World Trade Organization creates an opening for alternative dispute resolution mechanisms, particularly around tariffs – currently being negotiated country to country. China may seize this opportunity to establish its own international dispute resolution process, consistent with its growing role on the world stage and increasing position in global energy markets. This could fundamentally reshape how international energy disputes are resolved in the coming decades.
Reach out to Tanya Bodell to discuss these topics and how StoneTurn can help.
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