Energy Sector Compliance: Regulatory Outlook
With the globally increasing dominance and effectiveness of technology, the energy industry needs to keep up with the pace of change. Organizations should be ready to evolve and adapt to the ever-changing environment, successfully deal with any arising issues, and take opportunities to benefit from the innovation in the energy sector. The approach to compliance should become more holistic, enabling companies to resolve upcoming issues and threats in a cost- and time-effective manner.
Main Prognosed Challenges in Energy Sector
The energy industry faces numerous challenges, depending on the region, business specifics, regulatory, and law environment. They also relate to security and incident response.
Some of the major problems of energy sector expected in 2021 are as follows:
- Long-lasting effect of the COVID-19 crisis. According to the World Energy Outlook, the Recovery Scenario expects prolonged pandemic consequences. Given the global economy comes back to its pre-crisis state only in 2023, the rates of energy demand growth are the lowest since the 1930s.
- Rapid advancement of Europe’s green policies. They are expected to push on more quickly, posing challenges for many companies to align with. By 2030, companies will have to cut emissions by 55%, which will lead to an increase in renewable energy and energy efficiency targets. New rules will influence the fossil fuels sector, including natural gas, and make future funding of such projects unlikely.
- Growing urge to harden security. Security has always been a critical issue for the energy sector and will continue to be the most burning topic this year. During the last 20 years, nearly 11,500 oil & gas pipeline-related incidents took place. They resulted in approximately 320 fatalities and more than 1,300 injuries, which has led to an estimated $7Bn of direct costs to operators with an average cost per incident of ~$1MM.
- Heavy regulatory pressures for non-compliance. Besides immediate fines and fees, companies are subject to non-financial penalties such as loss of operating license, associated negative reputation with the regulators, potential future partners, and the general public.
Compliance: Standards Overview for Energy Sector
To maintain market competition and reputation, protect their assets, data, preserve business continuity and environment, energy organizations need to comply with a list of international regulations obligatory for this sector.
Besides international standards on security, quality, data, and environmental protection, and business continuity, there are industry-specific standards for energy companies to align with, such as ISO 50001 and ISO 27019. If the company deals with renewables, there are more specific applicable regulations, i.e., for solar energy. The energy industry peculiarity is that every country may have very stringent regulations regarding energy management they need to align with. Energy organizations operating in the DACH market have several laws and industry acts to take into consideration.
Company-specific policies depend on the organization’s strategy, business needs, sustainable development plan, mission, and vision. Companies in any country can decide to have additional internal regulations to align with.
Practical Tool-driven Implementation Framework for Energy Companies
To stay afloat and deliver added value to their partners and end customers, companies need to consider and follow the major industry trends today. Moreover, organizations in the energy industry face even more challenges regarding security, data privacy, and experience additional pressures due to a large number of standards and regulations in the sector. Cost-effectiveness requires centralization of activities in avoiding non-compliance fines, reducing the number of incidents, and improving audit response time. Importantly, companies should pay specific attention to improve compliance and reduce significant incidents causing environmental or property damage that have been increasing within the last ten years. Companies can reach centralization and standardization with an innovative holistic approach empowered by a modern GRC solution, such as Infopulse SCM, enabling companies to focus all their effort regarding security, data protection, quality, and environmental management in one place.
Maintaining Standards for Energy Sector
As regulatory activities are on their way to full or partial digitalization, companies should attempt to advance their compliance. Also, standardizing processes through digitization and automation can bring crucial operating efficiencies and reduce the time and effort needed to complete tasks. This will allow the company leaders to pay more attention to strategic initiatives, proactive management of regulatory risks, and business continuity. Implementing a tool-driven approach in compliance management for the energy sector can bring significant benefits allowing companies to resolve challenges quickly and align with the international standards and regulations.
Infopulse SCM team is continuously monitoring the market trends and demands and adding new functionality to the software to help companies succeed in their compliance journey.
Effective and easy-to-use IT security management system based on the latest standards and regulations — from planning and establishing the security concept to certification.