Gas bills

The EU and UK need to implement new legislation if they want the latest CO2 storage technology to be a success

Gas billsIn the battle against global climate change there are no silver bullets. However, one of the most promising technologies for tackling rising carbon dioxide (CO2) emissions from the burning of fossil fuels is carbon capture and storage (CCS).

CCS involves capturing CO2 from the exhaust gases produced by the combustion of fossil fuels and injecting it into ­underground strata to prevent it from being ­emitted into the atmosphere. It offers the potential for capturing around 90 per cent of CO2 emissions from fossil fuel-fired power stations and has worldwide application. The only catch is that a CCS project involving the whole value chain of capturing CO2 from a power plant, transporting it by pipeline and injecting it into an ­underground storage site has not yet been demonstrated on a commercial scale.

One barrier to the successful commercial deployment of CCS is the current state of the regulatory environment. Most ­existing energy and environmental legislation – both at international and domestic level – was not drafted with CCS in mind, so new legislation and changes to existing ­legislation are required. Internationally, two conventions – the 1972 London Convention and its 1996 Protocol, and the 1992 Ospar Convention – restrict the dumping of waste at sea. Although these have now been amended to permit offshore storage in ­certain circumstances, these amendments need to be implemented in the EU and the UK.

A number of countries around the world, including the UK, are keen to be at the forefront of the development and deployment of CCS technologies. In November 2007 the UK Government launched a competition for the development of a commercial-scale CCS project involving power generation, and in January introduced the Energy Bill into Parliament. The Energy Bill creates a legislative framework for the licensing of offshore CO2 storage sites and for their decommissioning. More recently, on 30 June the Department for Business, Enterprise and Regulatory Reform issued a ­consultation paper on the detail of the UK’s proposed regulatory framework for CCS.

At EU level, in January the European Commission published its proposals for the development of CCS in the EU as part of its ‘Climate Action and Renewable Energy Package’, which included an aspiration for 12 operational projects by 2020. The ­Commission’s proposals included a draft directive on CCS. The Australian government has also recently produced draft ­legislation creating a regulatory framework for CCS projects, in the form of the ­Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill.

There are many legal issues involved in developing CCS projects, but one of the most complex and controversial issues is that of who bears the long-term liabilities for stored CO2. Given that the aim of CCS is to reduce the amount of atmospheric CO2 emissions arising from the burning of fossil fuels, it follows that, once stored, CO2 should remain stored. If stored CO2 were to be allowed to escape over time it would defeat the whole purpose of CCS as a means of abating atmospheric emissions of CO2, as well as potentially creating both local and global environmental risks. The problem is that no operator of a CO2 storage site is ­likely to be prepared to accept liability for future leakage from a site in perpetuity.

The solution to this problem proposed by the European Commission and the UK Government is that once a storage site is closed and has been shown to pose no further risk to the environment, liability for the site ­transfers to the state. However, this in turn raises further questions over the criteria for showing when a site poses no further risk to the environment, and on what terms the transfer of liability should be made.

There is now a general scientific and political consensus that the need for global action over climate change is imperative. CCS offers great potential as a means of mitigating CO2 emissions and there are important roles for lawyers to play in making this ­happen, from shaping and drafting new ­legislation to advising on the major ­undertakings that CCS projects will be. n

Angus Evers is head of environment at SJ Berwin