Module 10 Regulatory and legal aspects of CO2 storage

Original text by J. Stephens & D. Keith, APEC Capacity Building in the APEC Region, Phase II Revised and updated by CO2CRC

Overview

Injecting large quantities of CO2 into subsurface reservoirs creates a host of new risks that need to be addressed within a regulatory framework. Module 8 discussed the nature of these risks and this module discusses regulatory approaches to management of them. These risks occur at two scales: local risks associated with human or ecosystem health and global risks relating to re-release of CO2 into the atmosphere.

Learning objectives

By the end of this module you will:

  • Understand the role of regulation in both managing the risks of CO2 storage as well as promoting or discouraging uptake of the technology;
  • Understand the requirements of effective regulation related to CO2 injection and storage;
  • Be familiar with international legislation or agreements which could have relevance to CO2 injection and storage; and
  • Appreciate some of the challenges of regulating CO2 injection and storage.

Regulation as a tool for managing risk

As discussed in Module 8, health and safety risks associated with CO2 storage may occur at local and global scales. The local health, safety or environmental risks in the region where the CO2 is being stored can be appropriately managed through regulations. Global risks may require the development of an international regulatory regime to ensure consistent monitoring practices and accurate reporting of reduced or avoided global CO2 emissions associated with each CO2 storage project. International regulation may also be required to manage the risks associated with storing CO2 in geologic formation beneath the sea floor in areas where no single economy has jurisdiction.

In addition to serving as a tool to manage risk, regulation also will play a critical role to promote or frustrate CO2 storage projects. While many CO2 storage projects are already underway, the initiators of current projects each have unique research goals and/or funding opportunities which have provided the incentive for their projects. Before CO2 storage becomes common or widespread on a scale that would be required to actually reduce or stabilize the atmospheric CO2 concentration, regulation designed to put a real cost on CO2 emissions will need to be in place. Only when governments impose restrictions on CO2 emissions, through economic mechanisms such as taxes, tradable permits or credits, will the additional costs associated with capturing and storing CO2 be incurred by industry on a large scale.

Regulation in APEC economies

Several APEC economies are currently developing or have passed regulation relating specifically to CO2 injection and storage, including addressing the issue of long-term liability (Hoversten, 2009).

  • In Canada, injection of CO2 for EOR and acid gas injection is allowed in some states. These CCS operations have been in place for some time under legislation for petroleum, mining and natural resources. Suggestions for new CCS regulations have been proposed in the by the EcoENERGY CCS Task Force.
  • In the United States, the Safe Drinking Water Act regulates all underground injection activities (Underground Injection Control (UIC)). The activities must ensure zero movement of the injected material into underground sources of drinking water. The EPA has developed a draft rule for CO2 storage based on the UIC and has created a new category of injection well for compressed CO2 for storage. The draft rule covers site characterisation to post-injection site care and closure. The rule will be enacted in late 2010. Various US states are developing legal frameworks for CCS including New York State, North Dakota, Montana, Illinois and Texas Wyoming and Washington State. Wyoming was the first state to pass specific legislation for storage of CO2 for within the UIC (Kerr et al, 2009). In addition, there is a proposed Federal bill to allow commercial demonstration of CCS which has provisions for the Secretary of Energy to be responsible in the long term for the in jection site including monitoring and remediation, and the possibility of indemnifying the project owner from liability.
  • Australia has adopted the Offshore Petroleum Amendment and GHG Storage Act (2008). The Act provides provisions for greenhouse gas leases, greenhouse gas pipelines, and injection licences for offshore storage of GHGs. The injection licences will cover comprehensive site plans, monitoring, measurement and verification. At the end of injection, the licence holder must assess the migratory behavior of the GHG and recommend an approach to monitoring the stored GHG. A Site Closure Certificate is then issued and after a minimum of fifteen years long-term liability can be transferred to the government if the GHG is safely stored and behaving as predicted. The Act also deals with the potential impacts of greenhouse gas storage on petroleum title holders.
  • Individual Australian states have passed laws allowing storage of CO2 onshore

    • The Victorian Greenhouse Gas Geological Sequestration Act 2008 permits storage of greenhouse gas substances subject to environmental and public health considerations and with monitoring and verification requirements. Once the government is satisfied that the GHG is behaving as predicted, the government will take over monitoring and verification, but the issue of liability is uncertain.
    • The Greenhouse Gas Storage Act 2009 covers onshore storage in Queensland with provisions for exploration permits to assess potential storage formations and injection and storage leases. After injection, the lease is surrendered once an extensive monitoring report has been approved. Long-term liability potentially rests with the leaseholder.
    • The South Australian government amended the Petroleum act to allow storage of CO2 but the issue of long term liability is not covered.
    • Western Australia has specific legislation for the Gorgon Project, which will store CO2 from the Gorgon LNG Project The Australian Government announced that it would share long term liability for the stored CO2 with the Western Australian Government on the basis of a 80:20 Federal-State ratio.
  • Japan has offshore CCS activities regulated by amendments to an existing law – the Law Relating to the Prevention of Marine Pollution and Maritime Disaster.

In the European Union, a series of directives on CCS have been passed. These allow for CCS under the IPCC GHG Guidelines and OSPAR (see below) with the objective of permanently storing CO2. The directives cover access to transport networks, site selection, characterisation, risk assessment, monitoring, corrective measures, post-closure, financial security and liability.

CCS is carried out offshore in Norway as part of the Sleipner and Snøhvit projects under the Norwegian Petroleum Act and the Pollution Control Act.

In economies without specific legislation for CCS, laws relating to underground injections provide experience that can help in the development of appropriate regulations for CO2 storage, and/or act as an existing framework within which CO2-specific regulations can be instituted within that economy. In some economies around the world, injection of waste underground is a regulated method for waste disposal. A common practice for disposing of acid gas, a mixture of H2S and CO2, involves injecting it underground. In addition to waste disposal, CO2 is currently being injected into the subsurface to enhance oil recovery (EOR). While some monitoring of the injected gas is required in some instances, existing laws do not require the same extent of monitoring and storage assurances that would be required for CO2 storage.

Guidelines for building an effective regulatory system

An effective regulator system must take into consideration the additional attributes of CO2 injection and storage as well as the evolving nature of the technology.

Although CO2 injection and storage is similar in some respects to common practices that are regulated, they also have unique attributes that must be reflected in regulation. These unique attributes include:

  • The scale of the activity – CO2 projects will be larger in scale than most activities currently covered under legislation;
  • The need to monitor and verify containment and leakage of the buoyant fluid – not all existing regulations require monitoring and verification of containment to take place, many regulations for underground disposal were designed to manage liquids rather than buoyant gasses; and
  • Different risk management requirements - CO2 storage poses risks that are different from many of the other fluids that are now disposed of underground.
  • Regulation needs to be responsive to the evolving nature of the technology. Some of the key issues related to the degree of development of the technology are:
  • Uncertainties associated with containment – This is a key factor associated with the effectiveness of geological storage. Regulation designed to manage CO2 storage should be adaptive and should emphasize learning-by-doing;
  • Be flexible to ensure safety but enable learning to take place - In the near term, a regulator framework for managing geological storage must ensure projects provide acceptably safe CO2 storage while maximizing the ability to learn through experience. Regulations must also be flexible to enable effective management of the diverse array of possible storage projects, accommodating both diversity in scale and diversity in the geological setting ;
  • Provide access to data - Provisions related to access to data, including the ability to gather new data, could be built into the rules under which existing facilities should be incorporated into a CO2 storage protocol; and
  • Enable public input and comment - Strong public concerns about the local and global risks of CO2 storage and also about the wisdom of using CO2 storage as a means to continue the use of fossil fuels should be anticipated. As such, another critical condition is that the management of CO2 storage should be transparent Information about all projects should be made available to the public and input from the public should be facilitated.

Existing international laws

An economy's regulation relevant to CO2 storage should be consistent with international laws related to CO2 injection and storage. This section outlines existing international regimes and explains their relevance to CCS. International laws are particularly critical for managing the risks associated with CO2 storage in geologic areas underneath oceans where no single economy has complete jurisdiction.

  • The United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol place requirements on signatories to reduce greenhouse gases, among other commitments. Both agreements anticipate, and could encourage, the practice of CO2 storage. Nonetheless, neither the text of the Convention or the Protocol explicitly provide for storage to be used in order to meet greenhouse gas emission reduction commitments at this time (see Module 11).
  • The London Convention and is an international treaty that entered into force in 1975. It prohibits "dumping" in the ocean, defined as: "any deliberate disposal at sea of wastes or other matter from vessels, aircraft, platforms or other man-made structures". The London Protocol has succeeded the London Convention in March 2006 and expands the definition of "dumping" to apply to all marine waters and the seabed and subsoil thereof. It was amended in 2006 to cover CO2 streams from CO2 capture processes for sequestration. The amendment allows sub seabed geological storage, injected matter must be overwhelmingly CO2 and there should be no other wastes added. However, some other substances are allowed to be in the CO2 stream if they are derived from the source or the process or they enable or improve the CCS process. There are issues still to be resolved in relation to transport of CO2 across boundaries and subsurface migration of CO2 (Dixon, 2009).
  • The Convention for the Protection of the Marine Environment of the North-East Atlantic (OSPAR Convention) is a regional convention that could be relevant to geological CO2 storage. OSPAR requires its Contracting Parties to take all possible steps to prevent and eliminate pollution from land-based sources of dumping or from offshore sources. In 2007, amendments were adopted to allow for CO2 storage in sub-seabed reservoirs (Kerr et al, 2009).
  • The Basel Convention is designed to control the transboundary movement of hazardous wastes and other wastes by requesting consent from both the economy of origin and the destination economy. Within this convention, the transboundary movement of hazardous wastes and other wastes from OECD economies to non-OECD economies for the purpose of disposal and recovery and recycling is prohibited. The current language of the Convention does not provide any indication that CO2 captured from fossil fuel combustion sources would be defined as hazardous waste, and only if it were would the restrictions of the Basil Convention apply.
  • The Convention on Biological Diversity requires its Contracting Parties to take measures toward the conservation and sustainable use of marine biological diversity. Leakage from CO2 storage sites could affect marine biological diversity, and therefore could be seen as opposing the Convention. When undertaking a geological CO2 storage project in a economy that has signed the Convention, or promoting its use, proponents would be obliged to review the components identified by their economy as important for conservation and sustainable use, identify how CO2 capture and storage projects might have significant adverse impacts on the conservation and sustainable use of significant biological diversity, and monitor its effects.
  • The United Nations Convention on the Law of the Sea (UNCLOS) (1994). UNCLOS is a global framework convention that has, among other things, established areas of coastal jurisdiction for coastal States. Several articles of UNCLOS define States' obligations to protect the marine environment, making it possibly relevant to geological CO2 storage in offshore subsurface geological reservoirs. Under UNCLOS, States must take measures to prevent, reduce and control pollution of the marine environment. An additional section of UNCLOS specifies that marine scientific research must be conducted in compliance with all relevant regulations, which could restrict the research and demonstration of CO2 storage in off-shore environments. Freedom of navigation, the laying of cables and pipelines, and the construction of artificial islands and other installations are allowed provided that have regard for the interests of the other states.

International guidelines

Consistent international methodologies to estimate monitor and report physical leakage from CO2 storage sites still need to be developed and adopted at the within an economy's legislation. Aiming for a storage performance of more than 99% of the stored CO2 likely to be retained over the first 1000 years (IPCC, 2005) presents a regulatory challenge.

The Intergovernmental Panel on Climate Change (IPCC) 2006 Guidelines for GHG Inventories provides reporting guidelines and standards for actual annual emissions of greenhouse gases by gas and by sector. These guidelines also include a methodology for CCS which covers site characterisation, risk assessment, monitoring and reporting (see Module 9).

Both the London Protocol and OSPAR have guidelines for risk assessment and management.

Summary

Regulation is an important tool in managing the risks from CO2 storage. Regulations at all levels of government will be required. In addition, regulation will serve as a means of promoting or frustrating CO2 storage projects. The technology cannot be successfully widely applied without an effective regulatory system.

The scale of CO2 storage activities, the timeframe under which they operate, their need for long-term monitoring and their potential impacts make CO2 storage a unique regulatory challenge.

Economies such as Canada, the United States, Japan and Australia, as well as the European Union and Norway are some of the economies that have established regulations or are currently developing regulations relating to geologic CO2 storage.

To account for the unique attributes of CO2 storage, regulation must:

  • Take the scale of activity into account;
  • Provide provisions for monitoring and verification of CO2 containment; and
  • Address the increased risks.

CO2 storage regulation should:

  • Be highly adaptive;
  • Take a "learning by doing" approach;
  • Ensure CO2 storage meets acceptable safety standards;
  • Enable access to data;
  • Apply to diverse scales and geological settings;
  • Be highly transparent; and
  • Provide for public input and comment.

Commitments made through international treaties, agreements and regulations must be reflected, or not compromised, in internal CO2 storage regulation. International treaties with text relevant to CO2 injection and storage are:

  • The United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol;
  • The London Convention and London Protocol; and
  • The Convention for the Protection of the Marine Environment of the North-East Atlantic (OSPAR).

Bibliography

Dixon, T. Carbon Capture and Storage. International Legal, Regulatory and Political Developments. Available at http://www.co2captureandstorage.info/SummerSchool/SS2009_Agenda.html, 2009.

Haefeli, S., M. Bosi et al, Carbon dioxide capture and storage issues - Accounting and baselines under the United Nations Framework Convention on Climate Change (UNFCCC). Paris, International Energy Agency, 37 pages, available at www.iea.org/dbtw-wpd/textbase/papers/2004/css.pdf, 2004.

Hoversten, S. Addressing long-term liability in carbon capture and storage legislation world-wide. CO2CRC internal communication. 2009.

Intergovernmental Panel on Climate Change (IPCC), Special Report on CO2 Capture and Storage, schedule for final release fall 2005, see www.ipcc.ch.

Kerr, T., Havercroft, I. and Dixon, T. Legal and Regulatory Developments Associated with Carbon Dioxide Capture and Storage: A Global Update, Energy Procedia 1 (1) pp 4395 – 4402, 2009.

Purdy, Rand Macrory, R. Geological carbon sequestration: critical legal issues, Tyndall Centre Working Paper number 45, available at www.tyndall.ac.uk, 2004.

Rubin E.S., D.W.Keith and C.F.Gilboy Eds. Proceedings of 7th International Conference on Greenhouse Gas Control TechnologiesVolume 1: Peer-Reviewed Papers and Plenary Presentations, IEA Greenhouse Gas Programme, Cheltenham, UK. Forthcoming from Pergamon Press, 2004.

Wilson, E. J., T. L. Johnson and D. W. Keith. "Regulating the Ultimate Sink: Managing the risks of geologic CO2 sequestration." Environmental Science and Technology 37(16): 3476-3483, available at www.ucalgary.ca/~keith, 2003.

Websites

IPCC Guidelines for GHG Inventories, Vol 2 Ch 5, CO2 Transport, Injection and Geological Storage Available at: www.ipcc-nggip.iges.or.jp/public/2006gl/vol2.html

London Protocol: www.imo.org/Conventions/contents.asp?topic_id=258&doc_id=681#2006

IEA publication on legal aspects of CCS: www.iea.org/textbase/nppdf/free/2007/legal_aspects.pdf

EcoENERGY CCS Task Force report (Canada): www.energy.gov.ab.ca/Fossil_energy_e.pdf

London Protocol: Specific guidelines for assessment of Carbon dioxide streams for disposal into Sub-seabed geological formations (Document on CD)

OSPAR Guidelines for Risk Assessment and Management of Storage of CO2 Streams in Geological Formations (Document on CD)

University College London's Carbon Capture Legal Programme website: www.ucl.ac.uk/cclp/ccsprotcol.php

Basel convention http://www.basel.int/convention/about.html

Convention on Biological Diversity http://www.cbd.int/