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Updates on legal & regulatory developments

As a result of government and industry initiatives, CCS regulations are under development in a number of countries and internationally.  Developments in a few key countries are highlighted below. Click here for information on international developments.

Australia
In 2005, the Australian Government consulted with States and Territories to develop and agree a set of principles to achieve a nationally consistent framework for CO2 storage activities. An extensive consultative process with government, industry, research organisations and non-governmental organisations led to an endorsement of the Regulatory Guiding Principles for Carbon Capture and Storage (the principles) by all Australian jurisdictions.  The principles were designed with the aim of providing industry with an investment climate that facilitates the uptake of CO2 storage and enhance community confidence in the technology. They cover assessment and approvals processes, access and property rights, transportation issues, monitoring and verification, liability and post-closure responsibilities, and financial issues.

In May 2008, the federal government released draft legislation, known as an ‘exposure bill,’ which proposes to amend the federal Offshore Petroleum Act 2006 to allow for CO2 injection and storage in offshore areas. The draft legislation, known as the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008, would provide for new offshore titles for pipeline transportation, injection and storage of CO2 and other GHGs in offshore geological formations through the amendment of existing legislative provisions governing acreage release and injection licences, among other provisions. As many sedimentary basins that could be suitable for storage sites are located within petroleum ‘provinces’ or regions, the draft legislation seeks to ensure the appropriate co-existence of petroleum and GHG injection and storage activities.

Amendments would also be made to provide for safety management, including procedures for site selection, risk identification and monitoring, and to equip the regulators with powers to require mitigation and remedial actions. In June 2008 the bill was introduced into the federal parliament. Once the legislation is passed, the first CCS acreage and exploration permits can be issued (Squire, 2008). It is envisaged that the state governments will seek to pass similar legislation governing state waters once the federal legislation is passed. In addition to the further development of relevant state legislation, the way in which CO2 capture and storage relates to the planned national GHG emissions trading scheme and issues around the financing and regulationof common CO2 transport infrastructure remain to be resolved (Squire, 2008).

Canada
CO2 storage implementation is expected to fall under the authority and responsibility of those agencies that regulate the energy industry (oil and gas, power generation), and would cover CO2 capture, transportation (pipelines) and injection. However, groundwater protection falls under the authority of environment protection agencies; in this case, provincial agencies are expected to coordinate their activities to address the potential for leakage and environmental impact assessments. As an example, the Alberta Energy Resources Conservation Board (formerly the Alberta Utilities Board), has jurisdiction over CO2 storage and coordinates with the Alberta Department of Environment concerning groundwater protection and with the National Energy Board (a federal agency) on trans-boundary issues.

Existing federal and provincial oil and gas legislation covers certain aspects of CCS, including most capture and transportation-related issues, such as construction and health and safety issues. In most Canadian jurisdictions, CO2 storage activities, in particular the definition of CO2 storage, property rights (storage and access rights) and injection and post-injection activities (regulatory permitting, monitoring and liability) still remain to be addressed (Bachu, 2008; Hegan, 2008). In January 2008, the Canada-Alberta EcoENERGY CCS Task Force made a range of recommendations regarding how to address these outstanding issues.

In terms of encouraging CCS deployment, the federal government released its “Turning the Corner” plan to reduce GHGs and air pollution through the development of a regulatory framework on 26 April 2007. This included mandatory and enforceable targets for emissions of GHGs and air pollutants from all major industrial sources, among other proposed measures (Government of Canada, 2007). Further details were provided in March 2008. The framework sets out industrial emissions intensity targets that increase in stringency over time. Coal-fired power plants and oil sands plants coming into operation in 2012 or later will face the most stringent targets, the meeting of which will effectively require the use of CCS or equivalent technology by 2018. CO2 emissions at a regulated facility that are captured and stored will be considered as emission reductions. The framework also provides for various compliance options, or flexibility mechanisms, to incentivise investments in CCS. Further work will now be carried out by the federal government to define capture-readiness and to establish protocols for measuring and crediting CO2 reductions, among other issues (Environment Canada, 2008). Various measures to encourage or mandate GHG mitigation also exist or are being developed at the provincial level.

European Union
On 23 January 2008, as part of a larger announcement on renewable energy and climate change, the European Commission issued a proposal for a Directive that establishes the legal framework for “environmentally-safe capture and geological storage of carbon dioxide” in the European Union. Among other things, the CCS Directive seeks to ensure environmental security; to address issues of  liability; to remove existing legislative barriers to deploying CCS; to provide incentives for deploying CCS; and to provide an enabling versus a mandating framework for CCS. It provides for the use of existing legislation where possible – in particular for capture under the Integrated Pollution Prevention and Control Directive (96/61/EC) and transport under the Environmental Impact Assessment Directive (85/337/EEC) at the member state level. It also proposes new legislation to address CO2 storage.

On the same day, a communication on “supporting early demonstrations of sustainable power generation from fossil fuels” was released by the Commission in the context of the European Council’s previous endorsement of a goal to develop up to 12 demonstration plants of sustainable fossil fuel technologies in commercial electricity generation by 2015. In the communication, the Commission proposed the establishment of a European initiative on CCS to demonstrate the viability of CCS by 2020. It also noted that significant investment will be necessary if demonstration plants are to be financed and that such funding would need to come from public-private partnerships.

A decision from the European Parliament on the CCS Directive is expected toward the end of 2008.

The Netherlands
The Netherlands is currently discussing the possibilities and issues associated with regulating CO2 storage within its current legal and regulatory system. It has a substantial amount of mature gas reservoirs or reservoirs where production has ended that are still subject to a production licence.

Working with the energy sector, the government has created a CCS Task Force which is developing a vision and approach to the implementation of CCS. It has also formed an internal government CCS Team that involves the Ministry of Energy, Environment, Transport, and SenterNovem. In June 2008, the government also announced an Energy Plan designed to deploy new technologies and to foster energy innovation through R&D. CCS is one of a number of technologies that this Plan will target (Ministry of Economic Affairs, 2008).     

Norway
Norway has provided global leadership via a variety of activities, including managing a well-established CO2 storage project at the Sleipner field.  This project is regulated by the Petroleum Act which applies to the injection of CO2 as part of or in connection with the extraction of oil and gas from sub sea petroleum deposits under Norwegian jurisdiction.  The Petroleum Act requires CO2 storage in the Sleipner field to be permitted as part of the conditions for approval by the Ministry of Petroleum and Energy.  This is subject to an impact assessment undertaken by the licensee company for the production licence which gives the licensee the right to explore for and produce oil and gas in the area in question.

Currently, there is no general framework legislation to guide the construction and operation of CO2 pipelines and the exploration, development and use of offshore reservoirs for permanent CO2 storage, except where such activity is part of a petroleum operation, as per the above. However, the government anticipates developing a licensing scheme and other regulations to address outstanding issues.

Japan
On 20 May 2007, the national Law relating to the Prevention of Marine Pollution and Maritime Disaster was amended. The amendment aimed to manage and implement Carbon Dioxide sequestration in offshore, sub–seabed geological formations in an environmentally appropriate manner. The amendment of the Law became effective when the London Protocol 1996 came into force in Japan on 1 November 2007.  According to this framework, any party who plans to conduct a CCS project in offshore sub-seabed geological formations must submit to the Minister of the Environment a permit application that includes, among other things, an implementation plan, the environmental impact assessment and the monitoring plan.  Permits will be issued for a maximum period of five years, with a possibility of renewal. Any party who plans to conduct a project shall submit an impact assessment that addresses potential impacts in the event of a leak (as stated in the Specific Guidelines for the Assessment of Carbon Dioxide Streams for Disposal into Sub – seabed Geological Formations). Furthermore, appropriate monitoring methods are required to be selected in consideration of progress in Science and technology. The party is also required to report on the implementation of the actions as well as the results of subsequent periodical monitoring.

USA
In the United States, the Environmental Protection Agency (EPA) has programmatic jurisdiction over CO2 injection for enhanced oil recovery, and has asserted jurisdiction over the injection of CO2 for geologic storage. The majority of the regulations that cover CO2 storage operational issues are authorized and administered under the underground injection control (UIC) program established by the US Safe Drinking Water Act (SDWA). The EOR operations in the US today have all been authorized and/or permitted under the UIC program by state agencies that have promulgated the necessary regulations and been approved under the federal statute to implement their applicable state UIC Programs. 

In July 2006 the EPA announced that geologic sequestration of carbon dioxide through well injection meets the definition of ‘underground injection’ in section 1421 (d)(1) of SDWA. After consultations with states and other stakeholders the EPA announced a regulation for commercial-scale CO2 storage under the UIC program in July 2008. It is expected the regulation will include typical UIC elements, including: site characterisation; well construction and operation; monitoring and post-closure care; and public participation.

A range of other government entities are also involved in CCS activities. The Department of Energy (US-DOE) leads R&D and demonstration activities, and international collaboration on CCS. The Department of Transportation (US-DOT) is responsible for regulating CO2 transport pipelines, in conjunction with the states and the Federal Energy Regulatory Commission, which is inolved in pipeline siting. Additionally, several states, including Illinois, Kansas, Montana, New Mexico, North Dakota, Texas, Washington and Wyoming, are actively pursuing CCS through activities.

Various other legal issues remain to be addressed. These include the treatment of CCS under the Clean Air Act, accounting for injection and any leakage from CO2 sites, and long-term liability. It is likely that additional legislation will be needed to manage these issues. 

 

References

Environment Canada (2008), Turning the Corner: Regulatory Framework for Industrial Greenhouse Gas Emissions; see http://ec.gc.ca/doc/virage-corner/2008-03/541_eng.htm.

Government of Canada (2007), “Turning the Corner: An Action Plan to Reduce Greenhouse Gas Emissions and Air Pollution;” see http://www.ec.gc.ca/default.asp?lang=En&n_714D9AAE-1&news+4F2292E9-sEFF-48D3-AD.

Ministry of Economic Affairs, the Netherlands (2008), Energierapport 2008, Directorate General for Energy and Telecom, www.ez.nl.

Squire, M. (2008), “Policy, Legal and Regulatory Framework for CCS in Australia.” http://www.iea.org/Textbase/work/2008/ccs/pdfs/PanelII_1_Australia_MartinSquire.pdf.

A range of other sources are available through the hyperlinks in the text above.