Mechanism Design for the Fiery Ice

Abstract

Offshore methane hydrates present a potentially abundant source of energy and \nfresh water and may open new pathways to green energy. However, there are \ncertain novel harms and hazards present within the circumstances of developing \nand producing offshore methane hydrates. Both cataclysmic and non-cataclysmic \nhazards must be integrated into policy planning for the onset of this new energy \nresource. \nThe study proceeds in four parts. The first part of the study provides an \nintroduction to the scientific, engineering and commercial characteristics of offshore \nmethane hydrate projects. It also provides reviews of both the potential benefits and \nthe potential hazards of offshore methane hydrates. \nThe second part of the study provides a review of the law and economics \ntheory of accident law as applied to environmental accidents. Rules of civil liability \nare reviewed to determine when strict liability or negligence might be efficiently \nemployed in risk governance. Further, similar reviews are developed for public and \nprivate regulation. A scientific review of the circumstances of offshore methane \nhydrates finds that the optimal set of rules is a combination of a strict liability \nparadigm in complementary implementation of public regulations. \nThe third part examines existing laws and conventions to determine which \nmight be applicable to offshore methane hydrates. The study also reviews if their \nrisk governance strategies are in accordance with the recommendations from the \nsecond part of the study. It is found that most of the evaluated laws do follow a \nsimilar risk governance strategy of strict liability accompanied by public regulation, \nbut that many of the current laws to address offshore oil and gas hazards would not \ninterface with the particular circumstances of methane hydrates. \nIn the fourth part of the study, a summary of the three previous parts is \npresented and recommendations are made as how to update the existing legal \nframeworks to accommodate the onset of offshore methane hydrate development \nand production