CURRENT STATUS OF POLICY AND REGULATORY

FRAMEWORKS FOR CCS

IAN HAVERCROFT

CCS Symposium on Policy and Regulatory Framework, Tokyo, Japan

3 September 2013

OVERVIEW

International action on CCS

United States – Federal and State-level regulation

Implementation of the European CCS Directive

Australia – completing the policy and regulatory picture

Canadian regulatory initiatives

Developing country activity

Long-term liability – a critical issue for deployment

Developing frameworks – considerations for policymakers

and regulators

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INTERNATIONAL ACTION

Significant developments under the auspices of international

and regional agreements have reinforced global

commitments to CCS, including:

o inclusion of CCS in the London Protocol and OSPAR

Convention;

o adoption of rules for including CCS in the Clean

Development Mechanism (CDM); and

o recognition of CCS in discussions leading up to a 2015

climate change agreement.

Establishment of an ISO Technical Committee to progress

the standardisation of CCS across the capture, transport and

storage phases.

Despite these successes, a number of outstanding issues

remain:

o ‘transboundary movement’ under the London Protocol.

2

UNITED STATES

Federal and State-level governments have implemented a

number of policy initiatives, which will impact upon the

development and deployment of CCS in the US.

Despite the absence of an over-arching Federal regulatory

regime for CCS:

o amendments to legislation aimed at protecting

underground sources of drinking water; and

o provide a regulatory basis for the injection of CO2 (‘Class

VI Rule’).

State-level action constitutes a far-greater body of CCS-

specific legislation.

Detailed and historical pathways for the regulation of

Enhanced Oil Recovery (EOR).

Federal and State-level regulation:

3

UNITED STATES

Recent announcements in President Obama’s Climate Action

Plan include several issues of relevance to CCS:

o EPA directed to propose and finalise pollution standards

for both new and existing power plants;

o End of US support for the public financing of new coal

plants overseas – save for those deploying CCS.

Several anticipated legal and regulatory developments

remain outstanding:

o further guidance documents on the Class VI ‘transition’;

and

o conditional exemption from the RCRA hazardous waste

regulations for geological storage activities.

Federal and State-level regulation:

4

EUROPE

The Directive on the geological storage of carbon dioxide

(Directive 2009/31/EC) provides a comprehensive, but

efficient regulatory model:

o addresses the novel aspects of the technology;

o utilises several familiar concepts to regulate and

incentivise;

o affords discretion to Member States (MSs) to implement

many aspects; and

o complemented by a series of guidance documents.

Original transposition deadlines were not met by the majority

of MSs, however this position has improved:

o Commission is now focusing upon the adequacy of the

national implementing legislation.

Implementation of the EU CCS Directive:

5

EUROPE

Project proponents and regulatory agencies are already

using these nascent permitting regimes in many MSs:

o divergent approaches to transposing the Directive in

many of the jurisdictions.

However, a number of legal and regulatory issues are still to

be addressed – particularly evident in the responses to the

Institute’s annual survey of LSIPs.

Directive operates as part of a broader policy framework

developed to support the deployment of the technology.

Consultative Communication on CCS and broader Green

Paper were issued by the Commission in March 2013:

o consultation period for the Green Paper ended 2 July

2013.

Implementation of the EU CCS Directive:

6

AUSTRALIA

Australia is an ‘early-mover’ jurisdiction - substantial policy,

legal and regulatory interventions have sought to support the

technology’s deployment.

Federal government has introduced a number of direct

support programmes for the technology, as well as enacting

a regulatory framework:

o Offshore Petroleum and Greenhouse Gas Storage Act

2006 governs storage activities in Commonwealth

waters; and

o secondary legislation provides further detail to the

permitting regimes and processes.

States of Queensland, Victoria and South Australia have also

developed regulatory models and project-specific legislation

in Western Australia.

Completing the policy and regulatory picture:

7

AUSTRALIA

Australia’s climate change policy approach continues to evolve:

o earlier transition to an emissions trading scheme (2014);

and

o linkages with the EU ETS also brought forward.

Some regulators have indicated their regulatory frameworks are

largely complete, however:

o further work is necessary to ensure that a nationally

consistent approach is adopted; and

o legislation has yet to be enacted in New South Wales and

Western Australia.

State of Victoria has been working with the Institute to deploy

the Institute’s regulatory test toolkit:

o final report to be released by the end of the year.

Completing the policy and regulatory picture:

8

CANADIAN REGULATORY INITIATIVES

Canada committed to CCS, which remains an integral aspect

of its climate change policies.

Legal and regulatory development has principally occurred at

the provincial level:

o Alberta, Saskatchewan, British Columbia and Nova

Scotia have all undertaken legal and regulatory activities.

Alberta remains at the forefront of legal and regulatory

developments in Canada:

o enacted amendments to oil and gas regulatory regime in

2010, which remove barriers to the technology;

o multi-stakeholder Regulatory Framework Assessment

(RFA) process concluded in December 2012; and

o RFA report was published in August 2013.

Federal and provincial action:

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DEVELOPING COUNTRY ACTIVITY

Increasing interest from developing countries in reducing

their domestic legal and regulatory uncertainties with regard

to CCS:

o assessment of the capacity of existing regulatory

capacity; and

o early consideration of the approach to be adopted in

regulating the technology.

The Institute has recently worked with the government of

Malaysia to undertake an assessment of their existing legal

and regulatory regime:

o considered the application of existing regulatory regimes

to a hypothetical project;

o report published by the Institute in July 2013.

10

LONG-TERM LIABILITY

Legislation, where it addresses the issue, has largely focused

upon managing operational and long-term liabilities across

the project life-cycle:

o examples to be found in EU and Australian legislation.

Operational liabilities to be largely borne by the operator:

o obligations under a permit, remediation of damage to the

environment and ‘climate damage’.

Closure of the storage site and potential for transfer to a

competent authority:

o operator’s obligations for closure of a storage site; and

o potential for post-closure transfer of responsibilities for a

storage site under some legislation.

A critical issue for deployment:

11

LONG-TERM LIABILITY

Uncertainties remain in some jurisdictions:

o legislation is ‘silent’ on long-term liabilities;

o possibility of residual liabilities post transfer (e.g. under

the common law); and

o ambiguity in some of the terminology and definitions.

Project surveying reveals that some issues around liability

remain critical for projects:

o ROAD permitting study includes a detailed assessment

of the legal liabilities for the project.

Efforts to clarify legislation surrounding long-term liability:

o EU Guidance Documents provide expanded analysis of

terminology and requirements in the Directive.

A critical issue for deployment:

12

DEVELOPING REGULATORY FRAMEWORKS

Progress made to date with the development of CCS-specific

legislation, reveals several important considerations.

Pathways to regulating the technology are jurisdiction-

specific:

o Important considerations around how to address the

novel aspects of the technology;

o Interactions with existing energy and environmental

legislation – to regulate or provide incentives; and

o Specificities of domestic situation must be addressed.

Body of material which may provide useful examples and

models for new legislation:

o Work of international organisations in the L&R space –

fora for discussion and publication of resources.

Considerations for policymakers and regulators:

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