Executive summary

The precautionary principle (PP) has been an important aspect of regulatory delivery for nearly four decades. Although there is no universally accepted definition of the PP, several formulations centre around the following elements: 1) the need for (environmental or health) protection; 2) the presence of a threat or risk of serious damage; 3) the understanding that a lack of scientific certainty should not be used to avoid taking action to prevent that damage, and — in the case of stronger formulations — an obligation to act in the face of uncertainty, 4) the need to provide evidence of safety (“reverse burden of proof”).

The PP was originally developed as a regulatory response for environmental protection and is now applied more broadly. It is usually applied when a given technology or activity has considerable uncertainties related to its environmental, health, and safety risks (i.e. uncertainties related to the probability, magnitude and long term effects of any possible harms). The PP envisages a scenario where a risk is known to exist, but its probability and magnitude of harm are uncertain or unknown. Now widely applied and with a global reach, the PP is often invoked whenever the scientific evidence surrounding the safety of a given technology is not conclusive. This report therefore strengthens the case that the PP supports — and is an important element of — risk-based regulation. A companion report is being published specifically on risk-based and risk-informed regulation of key hydrogen applications for the energy transition, and this latter report goes significantly more into specific technical details and decision-making issues. The two reports are complementary, with the current one being more at the level of principles and covering a broader range of issues and topics.

There are however different interpretations of the PP, notably regarding the burden of proof, or the responsibility to demonstrate safety. Given this diversity of interpretations across regulatory regimes, this report seeks to foster a better understanding of the PP to support prudent decision-making that enables the energy transition and contributes to the achievement of targets on net-zero emissions.

Often, the PP is considered relevant to regulatory decision making when alternative scenarios exist, each presenting different risks that need to be regulated. In the case of the energy transition - the structural shift from fossil fuels to renewable energy - the decision is between the risks stemming from new technologies, versus those of devastating climate change. The fundamental difference between the two set of risks is that while climate change impacts are being felt around the world today, the most disastrous effects of climate change are distant in time and diffuse — and therefore still insufficiently perceived as an immediate risk, whereas risks from new technologies may be perceived as more immediate and quantifiable. Historically, regulatory decision-making has often favoured short-term benefits while neglecting long-term harms (as observed in the cases of coal power, the railroads and hydropower). Indeed, long-term harms were often either fully unacknowledged or unknown, or at the very least unregulated (and indeed it was not until the 1960s that proper environmental regulation emerged). Furthermore, in earlier stages of the energy transition (from wood to coal, oil and gas), environment pollution tended to be the prevalent consideration as opposed to climate change. applying the PP remains crucial to prevent additional pollution generated by the energy transition.

The PP is commonly in the background of many risk management decisions, but it is complex to apply in practice. Yet, the safety risk of technologies supporting the energy transition is immediate. This can lead policy-makers or regulators to operate and apply the PP over-cautiously — sometimes to the extent of complete inaction — in a misguided attempt to protect public and environmental safety. At the policy level, the PP can be invoked rather than properly understood and applied, to justify inaction driven by the reluctance to run into opposition to disputed policy choices. At the same time, there are cases of regulators not applying the PP when it would be relevant, despite early warnings. This report examines how the PP can be used as a tool to support flexible decision-making, helping regulators and operators to manage risk through positive action. The PP should enable the identification of all key potential risks, including those related to environment, health, safety, and uncertainties associated with the use of a new technology. The PP should help regulators act without adding excess requirements for the sake of “playing it safe”.

In the context of the energy transition, many regulatory choices are loaded with risks. However, this need not involve banning a given technology or action. Doing so can affect public opinion negatively and lead to a lower acceptance of it (even if eventually declared safe). When it comes to energy technologies, the PP has been invoked in several cases to justify decisions that arguably did not result from evaluative and deliberative processes, but instead were driven by socio-political factors and pre-existing perceptions of risk. A precautionary approach, in essence, means accepting the existence of uncertain risks and proceeding with caution through a range of measures also including pilot projects, international data sharing co-operation and dedicated scientific collaborations.

This report also explores the interplay between the PP and the innovation principle. Evidence suggests that, if applied overly rigidly, i.e. when an overly-cautious approach is taken without sufficient consideration for risk-risk trade-offs and potentially less restrictive regulatory solutions, the PP can thwart potentially beneficial innovation. Instead, governments and regulators should consider applying the PP in ways that help manage the introduction and deployment of these innovations in a safe and agile way. To do so, risks stemming from a new technology should be considered in the context of its concrete application, and weighed against its potential benefits. Moreover, the PP can help ensure that knowledge generated through experimentation and gradual upscaling is regularly and systematically fed into regulatory development and improvement.

This report also discusses the use of the PP regarding low-carbon hydrogen, which presents a concrete illustration of the potential practical application of the PP. Hydrogen has been in use for over a century, albeit mostly concentrated in industrial applications, and much is known about its physical behaviour, even though specific technologies used in the energy transition are largely new. This means that safety issues are mostly understood and do not warrant excessive precaution. Low-carbon hydrogen, which is seen as a key technology for the energy and climate transition, is produced through electrolysis using low-carbon electricity – with an environmental impact on water sources that can be meaningful, particularly while seawater electrolysis technologies are still being matured. This means a holistic and inclusive approach is necessary to understand the risk-risk trade-offs. Namely, all the risks should be looked at together rather than individually, following a “one risk at a time” approach. This notably involves striking the right balance between mitigating the potential negative safety or local environmental impacts of an innovation on the one hand, and addressing potentially devastating climate-related threats on the other hand.