CCS Regulations Update

Ecoal, March 2010, Volume 70

The International Energy Agency (IEA) hosted a CCS Regulators Network Meeting earlier this year. The meeting brought together experts from government, industry and NGOs to discuss the current status of CCS around the world and regulatory developments. The CCS Regulators Network now has over 700 members in more than 35 countries.

The IEA will launch its new dedicated CCS unit in March. In addition, the IEA is due to launch its Model CCS Legal and Regulatory Framework in April.

A recurring issue at the meeting was the period of time allocated before long-term responsibility for CO₂ storage sites was transferred to competent regulatory authorities. Timescales ranging from 20-50 years have been included in both implemented and proposed legislation around the world. However, there was considerable debate at the meeting over the optimum timescale, with the general consensus among participants being that the timescale should be agreed on a project-by-project basis, taking into account factors including project lifespan, the volume of CO₂injected and the specific geology of the storage site.

European Union

Representatives from the European Commission and several Member States updated the meeting on CCS progress in the EU. With the Commission having implemented its CCS directive in 2009 (with a focus on the transport and storage elements of the chain), it is now aiming to publish a full set of guidelines in October this year. The Commission indicated that CCS monitoring authorities in each Member State would be the target audience for the document and the guidelines would be purely advisory and not overrule any existing national legislation. There is likely to be a period of consultation prior to the publication of the guidelines.

300 million allowances from the EU Emissions Trading Scheme (ETS) have been earmarked for allocation to the first batch of 12 CCS projects. A deadline for allocation of the first 200 million allowances has been set for 31 December 2011, with the final 100 million being allocated by 31 December 2013. The second batch will be allocated to correct any technical or geographical misrepresentation.

UK

From a UK perspective, CCS was outlined as the only technology that can bridge the gap between potential renewables output and the required baseload output. The financial mechanism announced by the UK government to support CCS, which will take the form of a levy on electricity bills, is estimated to have the potential to raise around £10 billion. Legislation introduced by the UK will also require all new coal plants greater than 300MW to prove their capture readiness. The majority of the UK's CO2 storage assets are seen as being offshore in depleted oil and gas fields and storage could be regulated alongside petroleum licensing.

Germany

Progress in Germany on CCS legislation has stalled in recent months. Although a draft CCS law was proposed by the Federal government in April 2009, the process for implementing it was suspended in July and has not yet restarted. The draft law covered all stages of the CCS chain and gave control over permitting and long term liability to the individual German states. However, public acceptance issues had hindered progress and the government may now seek to start from scratch on new draft legislation. A new coalition agreement has identified that a national framework for CCS is essential and that public awareness issues must be tackled.

Netherlands

The Dutch government has also identified CCS as an essential energy technology and there has been broad support from environmental NGOs on the role of CCS. A timescale has been set of having large scale CCS demonstration projects in operation between 2015 and 2020, with commercial deployment beyond that. Significant experience of engaging with all CCS stakeholders has been gained during planning for the Barendrecht project, which could help in stakeholder engagement in future projects.

Poland

Poland's approach to CCS has differed slightly, with the government indicating a preference for an international partnership based approach towards financing. The Polish Clean Technology Programme includes CCS as part of the government's energy strategy (with legislation for storage of CO₂ due to be finalised in 2011); however they are seeking increased outside funding, possibly via an EU sponsored fund or the proposed World Bank CCS trust fund.

United States

Developments in the United States were set against the backdrop of the progress made with the Waxman-Markey (House of Representatives) and Kerry-Boxer (US Senate) climate change bills. Although the fact that the Waxman-Markey bill passed through the House of Representatives was seen as a sign of progress, there was less optimism amongst US participants that a bill will pass through the Senate at any point in the near future.

One key problem highlighted with the draft legislation is the lack of specific mention of CCS under proposed emissions performance standard (EPS) levels. It was suggested during the meeting that current proposed EPS levels (as well as those already implemented by some individual states) are far below the optimum levels of capture provided by CCS technologies. This has led to concerns that the implementation of these EPS levels may lead to a near term switch to unabated gas, rather than incentivising the deployment of CCS as the best available technology. On a more positive note, the inclusion of CCS under targets for green stimulus spending was used to highlight the Obama administration's commitment to the technology.

CCS-specific legislation is being developed on a state-by-state basis, although some states are waiting for a final EPA ruling to be developed before committing to their own legislation. Similarly, CO₂ transportation legislation has also been developed on a state-by-state basis. The regional sequestration projects were highlighted as an important indicator of US action and co-operation on CCS on a local level.

Canada

Developments in Canada have been positive, with the Alberta provincial government setting up a C$2 billion CCS fund. Alberta's government has estimated that CCS could contribute around 70% of the province's CO₂ mitigation efforts and intends to have 3-5 projects operational by 2015. The Weyburn project has been operating for 10 years and provides an excellent example of how projects can operate across borders and boundaries (the Weyburn operations cover both sides of the US-Canadian border).

Australia

An overview was provided of the development of Australia's CCS regulatory framework. Onshore storage is to be legislated by the relevant state government, while federal legislation, consistent with the London Protocol, will cover offshore storage. However, the state governments have worked together to develop nationally consistent Australian Regulatory Guiding Principles.

Elsewhere, Australia has made great strides in developing a number of initiatives to support CCS development both domestically and internationally. These include the Global CCS Institute, launched in July 2009, which will receive annual funding of A$100 million from the Australian government.

South Africa

South Africa, a large producer and user of coal, presently has no official CCS legislation in place but an unofficial 'South African CCS Roadmap' has set out a proposed timescale for the development and deployment of the technology. This targets 2016 as the date of the first test injection leading onto a fully integrated demonstration project in 2020 and commercial operations in 2025.

Brazil

Brazil has gained extensive experience of CO₂ storage through commercial offshore enhanced oil recovery activities but no specific CCS legislation is currently in development. With 16% of Brazil's GHG emissions coming from stationary sources, interest in CCS is growing. However, it was indicated that a number of issues still need to be addressed, such as the process for transfer of responsibility for storage sites and post-closure monitoring.

China

Although no representatives from China were present at the meeting, an overview of the STRACO₂ project was provided. The project seeks to build a basis for EU-China co-operation on CCS. China's 11th five year plan has put in place an energy intensity reduction target of 20%, which would require CO₂ emissions reduction of around 306 megatonnes. Clean coal has been identified as a key energy technology but CCS is not eligible for the same level of government support and funding as other energy technologies. At present, the only government support for CCS comes in the form of R&D funding. STRACO₂ has therefore sought to examine the steps that must be taken in order to develop a CCS regulatory framework for China, including action on financial incentives, international co-operation and technology transfer.

Indonesia

The Indonesian government has set a provisional emissions reduction target of 26% and sees CCS as an important means of achieving this, with work currently being undertaken at a ministerial level to develop regulatory guidelines for all stages of the CCS chain. A joint CCS study has been undertaken in partnership with the UK government and huge potential for CO₂ storage has been established. However, concerns have been raised over the potential hazards of CO₂ storage due to the presence of fault lines. Nonetheless, CCS remains on the Indonesian agenda, with a particular focus on enhanced oil recovery.

IEA Model CCS Legal and Regulatory Framework

The meeting concluded with an overview of the process for developing the IEA's proposed Model CCS Legal and Regulatory Framework. This has been designed as a tool to assist governments with the rapid deployment of CCS and, as with the forthcoming EC guidelines, is intended to be non-prescriptive. With a draft review now under way, the final document is due for publication in April 2010. The document will draw on current CCS legislation being developed in the EU, Australia and US and will aim to assist legal and regulatory knowledge sharing around the world.