Under Australia’s federal system of government, the Australian Government has jurisdiction over Commonwealth waters (extending from three nautical miles offshore to the edge of Australia’s continental shelf) and the states and territories have jurisdiction over onshore areas and coastal waters (up to three nautical miles). The development of legislative and regulatory systems in each jurisdiction is a matter for the jurisdiction concerned.

The Commonwealth is in the final stages of developing the Offshore Petroleum and Greenhouse Gas Storage (Injection and Storage) Regulations 2010, which will be the principal regulations regulating offshore injection and storage operations. A consultation draft was circulated to stakeholders and follow up workshops were held in November 2010 to address the issues raised. The regulations are now being redrafted to reflect the key issues discussed. There was majority agreement on the regulations.

The Offshore Petroleum and Greenhouse Gas Storage (Injection and Storage) Regulations 2010 are expected to be finalised by mid 2011. These regulations will cover six linked elements:

• Significant risk of a significant adverse impact test.
• Declaration of a storage formation
• The site plan for greenhouse gas injection and storage.
• Incident reporting.
• Decommissioning.
• Discharge of securities.

Under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, the Commonwealth will take over common law liabilities no less than 20 years after injection ceases, subject to the responsible Commonwealth Minister being satisfied as to any risks posed. This process involves:

• Once injection ceases, the title holder applies for a closing certificate. The Minister must make a decision within five years on whether to grant this certificate, and will only grant a certificate if post injection monitoring shows that the stored substance does not pose a significant risk to human health or the environment.
• A closing certificate will also require the pre payment by the operator of monies to fund a longer term monitoring program.
• Once the closing certificate is issued, the title holder’s statutory obligations cease but common law liabilities will continue.
• At least 15 years after the closing certificate is issued, and subject to the behaviour of the stored substance being as predicted, the Commonwealth will take over common law liabilities.

There is a difference in the treatment of long term liability between all states and territories and the Commonwealth, which has implications for cross boundary migration. The policy on cross boundary migration is currently being investigated by the CCS working group.

The competent ministries have comprehensively revised the 2009 draft CCS act. Co ordination within the federal government began in summer 2010. The draft was also forwarded to the federal Länder and relevant associations. In addition, hearings were held with the Länder and the associations.

The new draft act is scheduled to be adopted by the federal government in the coming spring, after which the parliamentary procedure (Bundesrat and Bundestag) will be initiated. It should be borne in mind that CCS technology – and hence the draft act itself – is a highly controversial topic of discussion in Germany (see Edition 1 of the CCS Review).

Under the draft, the operator has liability for the storage site during the operational phase, decommissioning and the aftercare phase. Before being granted approval for storage, operators must demonstrate that they are financially robust. Furthermore, there must be financial security to cover all relevant risks. This security can take the form of insurances, guarantees and other securities, or a combination of these. Additional liability for operators of the capturing installation (e.g. power plant operators) is not envisaged.

Under the draft, transfer of liability to the state shall only be possible at the earliest 30 years after the conclusion of the decommissioning phase. Another prerequisite for transfer is that the operator can prove the long term security of the storage site. In order to be able to cover any risks after the transfer of liability, the draft stipulates that the operator must save towards aftercare during the operational phase. To this end, the operator must deposit with the competent authority the equivalent of 3% of the emissions trading allowances which the storage saves each year. The amount saved plus interest is at the disposal of the competent authority for monitoring the site and repairing any damage in the time after the transfer of liability.

If the operator has given false or incomplete information in the proof of the storage site's long term security, or if it only becomes apparent after the transfer of liability that the operator has contravened the provisions of the storage approval, the draft specifies that the competent authority shall not be restricted to the sum saved by the operator for aftercare. In such a case, the draft lays down that damages can be sought against the operator retroactively for all costs arising.

The regulations envisaged for financial security and aftercare contributions aim to prevent, as far as possible, the transfer of the financial risks to the state and consequently to the taxpayer. In addition, operators know from the beginning what costs they will incur in the context of the transfer of liability. This increases the legal and planning certainty. All in all, the planned regulations for financial security and the aftercare contribution are an expression of the polluter pays principle.

There have been no substantial developments in the last six months.

In regards to our initial entry, we stated that CCS is contemplated as a carbon reduction activity in the NZ Emissions Trading Scheme (NZETS). The IEA have asked that we elaborate on this point in this edition of the CCS Review.

The NZETS recognises the removal of CO₂ through two mechanisms:

• Through the planting of forests.
• Producing products that either permanently embed carbon or temporarily embed carbon prior to export, or store CO₂ after capture (called ”other removal mechanisms”).

CCS is recognised in the Climate Change Response Act 2002 (the Act) as an “other removal mechanism”.

Section §168 (1)(n) of the Act states that the Governor General may, by Order in Council, make regulations prescribing criteria for registering as a participant in relation to an activity listed in subpart 2 of Part 2 of Schedule 4. Schedule 4 provides that the storing of CO₂ after capture will be considered a removal activity, where:

• A person is required to surrender units under the Act in respect of the emissions that would result if the CO₂ was not captured and stored.
• The result of the CO₂ being captured and stored is a reduction from emissions reported in New Zealand’s annual inventory report under the Convention or Protocol or any emissions report from New Zealand under a successor international agreement.
• Any prescribed threshold is met.

Effectively, the primary legislation, the Climate Change Response Act 2002, recognises CCS as a removal mechanism (and is therefore eligible for NZU’s), although the details of exactly how CCS will be managed under the regulations have not been developed. Once/if these regulations are developed, they will only become official if/when the Governor General brings them into force through an order in council.

There are no substantial developments expected in the next 6 months (especially as New Zealand has an election tabled for Saturday 26 November 2011).

The timing of inclusion of any CCS regulations in the ETS will ultimately be determined by the likelihood and timing of any CCS project in New Zealand. At this stage, it is considered unlikely that CCS regulations will be developed in the short term.

New Zealand continues to participate in a number of international CCS collaborations. New Zealand will look to these collaborations for support and advice when it is an appropriate time to develop a regime that manages long term liability for stored CO₂.

Legal developments

As mentioned in the first edition of the CCS Review, the Swiss government will develop guidelines regarding CCS if needed. Since no announcement on any specific CCS projects has been made by the Swiss energy industry so far, there is no evident need for developing such guidelines.

Development of research activities

A first assessment of the geological storage potential in Switzerland, commissioned by the Swiss Federal Office of Energy, was finalised in August 2010. The theoretical, effective storage capacity of the Swiss Molasse Basin is estimated to be 268 gigatonnes of CO₂ (based solely on geological criteria collated from the literature). This value corresponds to approximately sixty times Switzerland’s annual domestic CO₂ emissions. The report has been published.

Two studies conducted within the CARMA research project focus on knowledge and the public perception of CCS among Swiss laymen.

There are no ongoing legal or regulatory developments concerning CCS so far.

The Swiss Federal Office of Energy (SFOE) in co operation with swisselectric research (an organization of Swiss electricity grid companies, http://www.swisselectric research.ch/) has announced a CCS information event for stakeholders from the energy industry, scientific institutions and the federal administration, to take place in summer 2011. Details can be obtained from Gunter Siddiqi, SFOE Energy Economy Division (gunter.siddiqi@ bfe.admin.ch).

General Liability

Swiss law does not provide any liability regulation that has been designed for damages resulting from stored CO₂ in particular. There are, however, provisions regulating environmental liability and civil liability in general:

• Environmental liability: for factories or installations representing a special threat to the environment: the Federal Act of 7 October 1983 on the Protection of the Environment (Environmental Protection Act, EPA)53 provides general liability principles:
  • Article 59a: the operator of an establishment or an installation that represents a special threat to the environment is liable for the loss or damage arising from effects that occur when this threat becomes reality.
  • Article 59b: for the protection of injured parties, the Federal Council may require the operators of certain establishments or installations […] to provide a guarantee for their potential liability through insurance or in another manner.
• Civil liability:
  • Swiss Civil Code of 10 December 190754, Article 679: regulating the landowner’s liability.
  • Federal Act of 30 March 1911 on the Amendment of the Swiss Civil Code (Part Five: The Code of Obligations)55: Article 41 to 43: general liability principles to obligations in tort (incl. negligence); Article 58, 59: liability of property owners.

Liability under the Kyoto Protocol

Annex 1 of the Kyoto Protocol lists Switzerland as a country with a legally binding commitment to reduce its greenhouse gas emissions. Therefore in the event of leakage of stored CO₂, the Kyoto rules regarding accountability will apply. In addition the IPCC guidelines regarding CCS have to be taken into account.

Federal government

On 23 June 2010, the Government of Canada (GoC) announced that it is taking action to reduce greenhouse gas emissions in the electricity sector by moving forward with regulations on coalfired electricity generation. These regulations, which are expected to come into effect in 2015, would require all new coal fired units as wells as units reaching the end of their economic life to meet a stringent performance standard that would be based on parity with the emissions performance of high efficiency natural gas generation. Under the proposed regulations, new units that incorporate technology for CCS would receive a temporary deferral from the compliance requirement until 2025.

• Speech by former Environment Minister Jim Prentice: www.ec.gc.ca/default.asp?lang=En&n=6F2DE1CA 1&news=BB5AC3DC 837A 406E AD28 B92ED80F5A81.
• EC news release:
  www.ec.gc.ca/default.asp?lang=En&n=714D9AAE 1&news=E5B59675 BE60 4759 8FC3 D3513EAA841C.

The GoC is working with London Protocol parties to update the guidance on the assessment and permitting of the storage of CO₂ streams in sub seabed geological formations, with a view to considering movement and how that should be addressed in terms of information sharing, consent, mitigation and longer term monitoring. GoC officials are engaged in Alberta’s CCS Regulatory Framework Assessment.29 The GoC is an active member of the IEA International CCS Regulatory Network and collaborates with the United States through the Clean Energy Dialogue’s CCS Working Group, where one activity is working towards compatible CCS rules, standards and regulations:

• www.climatechange.gc.ca/default.asp?lang=En&n=C688B4C3 1.

Provincial governments

British Columbia (BC) is developing a CCS policy framework. Work undertaken has focused on review and analysis of the existing oil and gas legal and regulatory framework to identify issues, gaps and changes needed to facilitate CCS project development. Research on CCS regulatory and policy models in other jurisdictions has been conducted including review of recommendations on best practices put forward by international organisations. A cross government working group has been formed to aid in review and development of policy areas. In January 2011, the Ministry of Energy and Mines facilitated a one day workshop on risk and risk assessment for CCS projects for BC government decision makers and regulators, facilitated by IPAC CO₂ Research Inc. The province is also a participant in the Alberta CCS Regulatory Framework Assessment.

CCS in Saskatchewan has been regulated under The Oil and Gas Conservation Act (the Act), enforced by the Ministry of Energy and Resources. In March 2011, the amendment of the Act passed the second reading. The amendment accomplishes the following:

• Clarifies the legal language of the Act, by changing the description of injected substance from “non oil and gas waste” to “non oil and gas substance”. The intention of this provision is to avoid the debate about whether the injected substance is waste or a valuable commodity, such as CO₂, solvent, etc.
• Clauses were added to clarify the regulation of the sequestration and withdrawal of CO₂ and other greenhouse gases and the disposal of other non oil and gas substances (such as waste from an oil refinery).
• Expands the regulation making power of the Ministry of Energy and Resources to properly regulate and measure the withdrawal and sequestration of substances (such as CO₂) from and to a well for commercial, industrial or other uses (such as enhanced oil recovery).

Bill 157, The Oil and Gas Conservation Amendment Act, 2010 can be found at the following link:

• www.qp.gov.sk.ca/documents/english/FirstRead/2010/Bill 157.pdf

Saskatchewan is also a participant in the Alberta CCS Regulatory Framework Assessment.

CCS Nova Scotia, a non profit public private academic research consortium, is in the final stages of the development of a legal report (including gap analysis for legislation) plus a regulatory roadmap for implementation of a pilot CCS project in Nova Scotia.

In BC, a draft CCS Policy Framework is expected to be completed within the next six months.

In Saskatchewan, the third reading of the Act is expected to be in the spring of 2011, with no major controversy foreseen. It is expected that the Act will be proclaimed by fall of 2011.

The expected completion date of CCS Nova Scotia’s legal report and regulatory roadmap is spring of 2011, for release in summer of 2011.

In BC, a proposed CCS long term liability model is being developed, as part of the CCS Policy Framework.

The long term liability for storing CO₂ in the geo formation in Saskatchewan is currently borne by individual well license holders, regulated under The Oil and Gas Conservation Act. When a well is abandoned, the well license holder will need to go through a proper process to abandon a well, as requested by the Ministry of Energy and Resources. After the Ministry approves the abandon plan, a letter of approval will be issued to the well license holder. The Ministry holds the right to audit the abandoned well. If remediation is required after abandonment, the Ministry will hold the last well license holder responsible. If the last well license holder is not able to afford such financial responsibility, the previous well license holder will assume such liability.

The EU CCS Directive, published on the Official Journal on June 5 2009, became effective on 25 June 2009. The Environmental Commission of the Italian parliament proposed to implement such directive – to be adopted by June 2011 by Law “Comunitaria 2009” (all European directives are implemented in Italy by means of Law Comunitaria which is adopted each year).

Drafting work on the CCS law resumed in September 2010. The Ministry of Economic Development and the Ministry of Environment have improved the draft with regard to some legal aspects, together with the respective legal offices of the two Ministries. A final draft was sent at the end of 2010 to the Department for EU policies, which is the structure used by the Presidency of the Council of Ministers in the framework of relations between the Italian Government and the European institutions, and performs co ordination activities in the transposition of European legislation into Italian law.

There are no publically available CCS legal and regulatory documents.

Consultations at the Department of EU policies will continue. The final revised draft CCS law will be sent also to regional governments before the CCS law moves to the parliamentary process. The conclusion of the EU CCS Directive's transposition into the Italian legal framework is envisaged within June 2011, in time with directive’s requirements.

The draft CCS law foresees that a CO₂ storage site can be closed after authorisation from the Ministry of Economic Development in partnership with the Ministry of the Environment, if the conditions set out in the authorisation as regards the closure are fulfilled, on the reasoned request of the operator, or in consequence of the withdrawal of the storage permit in the event of default or negligence. It is expected that in the latter case, the Ministries are responsible for monitoring and remedial action and the obligations arising out of the Decree, by recovering the costs incurred by the operator, while in the first two cases and up to the authorisation for the transfer of the responsibility of the site, the storage site continues to be the responsibility of the operator.

The operator must fulfil all obligations and actions foreseen in the plan for the post closure phase, which is prepared in accordance with the criteria approved in the granting of storage permits. It is expected that such an interim plan is updated, if necessary, taking account of the risk analysis, best practice and technological improvements.

It is also expected that the operator has the right to call upon after a period of at least 20 years after the closure of the site the transfer of the site to the state, which will assume its responsibilities. The operator shall submit a detailed report demonstrating the long term safety of the CO₂ storage site, the payment of a financial contribution to the post closure phase, the sealing of the site and the decommissioning of injection plants. The Ministry of Economic Development in partnership with the Ministry of the Environment may authorise the transfer before the period of 20 years, where the operator has met all the obligations required.

The Ministry of Economic Development provides the European Commission with reports that justify the transfer of responsibility and any other related information taken into account when approving the transfer. The Ministry also takes note of any non binding opinion expressed by the European Commission on the approval before taking the final decision and notifying the final decision to the European Commission.

It is expected that after the transfer of responsibility, periodic inspections and monitoring can be reduced to a level that allows the recognition of leakages or significant irregularities. In case of leakages or significant irregularities, monitoring is intensified by supervisory bodies in ways that are appropriate to assess the magnitude of the problem and the effectiveness of remedial action.

It is expected that in the event of a fault of the operator, including incomplete information provided, concealment of useful information, negligence, fraud or failure to exercise due diligence, the Ministry of Economic Development recovers the costs incurred by the operator after the transfer of responsibility.

As stated above, the EU CCS Directive is being implemented in Italy by Law “Comunitaria 2009”. For different parts of the CCS value chain, the following legislation will apply:

• Capture: current legislation: DLGS n. 372 approved 4 August 1999, “Implementation of Directive 96/61/CE concerning Integrated Pollution Prevention and Control”, DLGS n. 59 approved 18 February 2005, “Full implementation of Directive 96/61/CE concerning Integrated Pollution Prevention and Control”.
• Transport: current legislation concerning gas transport: DLGS n. 152 approved 3 April 2006 “Environment matter laws”, DLGS n. 4 approved 16 January 2008 “Further corrective and supplementary displays concerning DLGS n. 152 approved 3rd April 2006 about environment laws”.
• Storage: the Ministries of Economic Development and of Environment are drafting a framework law on storage exploration licenses, according to the EU CCS Directive.

Italy’s preparation for a CCS law started in September 2009. The Ministries in charge the Ministry of Environment and the Ministry of Economic Development worked in close co operation and a working group composed of experts belonging to the two Ministries was established. The first draft was prepared in March 2010. The main provisions were:

• National storage site potential analysis.
• National register and data base establishment for CO₂ storage.
• Procedure for exploration permit (each storage site requires prior exploration).
• Licensing process through a comprehensive plan approval procedure for storage permit conditions.
• Obligations for operators of CCS storage sites (i.e. responsibilities, removal, remediation, reporting).
• Liabilities during injection, after decommissioning and up to transfer of responsibility.
• Conditions for decommissioning and long term monitoring.
• Condition for the transfer of responsibilities from operator to state not earlier than 20 years after closure.
• Modification of existing regulatory framework for Environmental Impact Assessment; capture readiness for large combustions plants.

Consultations with main industrial and R&D stakeholders started in April 2010 and continued up to July 2010. The draft CCS legal framework was generally well received by experts. Many CCS workshops have been organised in Italy in the last two years, with a relevant participation of main stakeholders.

The Ministry of Petroleum and Energy and the Ministry of Labour continue to work on the new regulations on transport and storage of CO₂ in subsea reservoirs on the Norwegian Continental Shelf. The work has been somewhat delayed, due to internal considerations in the Ministries involved on the formulation of the draft regulations. Consequently, no draft regulations have as yet been submitted for public consultation.

The plan is still to submit two new sets of regulations relating to transport and storage of CO₂ in sub sea reservoirs on the Norwegian Continental Shelf for public consultation at the same time. These regulations will be drafted by the Ministry of Petroleum and Energy and the Ministry of Environment, respectively. The draft worked out by the Ministry of Petroleum and Energy will regulate transport and storage of CO₂ in relation to managing the CO₂ and the geological reservoirs as natural resources (resource management), as well as issues related to health, safety and work environment in this respect.

The Ministry of Environment will regulate the environmentally safe storage of CO₂.

The two drafts are planned to be submitted for public consultation within the next few months.

This issue has not yet been finally decided in Norway. However, the aim is to include the EU CCS Directive in the EEA (European Economic Area) Agreement and implement the directive into Norwegian law. The draft new regulations that are presently being developed are therefore based on this assumption. Thus, the draft provisions on long term liability for stored CO₂ entail that the responsibility for stored CO₂ in sub sea reservoirs on the Norwegian Continental Shelf will be transferred to the state twenty years after closure of the storage location, subject to the operator being responsible for at least the cost of monitoring the storage location for the first thirty years following such transfer, and subject to all conditions in respect of such transfer having been fulfilled by the operator.

Since 2007 the UK government has introduced a range of measures to facilitate and encourage investment in CCS. This started with a review of existing regulation to identify gaps in the existing regulation. This review identified a requirement for specific legislation to regulate the environmental impact of long term storage of CO₂. This was implemented in the 2008 Energy Act, and has subsequently been further developed through implementation of the EU CCS Directive. The development of the legislative and regulatory framework has progressed in parallel with arrangements to test the technology through a programme of publicly supported demonstration projects. The competition to select the first of these projects was announced at the end of 2007, and in October 2010, the new Coalition Government announced GPB 1 billion for the first fullscale demonstration of the capture, transport and storage chain. Soon after coming to power in May 2010, the Coalition Government also committed to 3 additional demonstration projects. The scope of this programme has been extended to include gas as well as coal fired power stations.

Requirements have also been put in place to ensure that new combustion power stations (>300MW) are constructed in a way that can be readily converted to CCS once it is demonstrated (carbon capture readiness or CCR) and the Coalition Government has stated that no new coal fired power station will be consented without CCS on at least 300MW (net) of its output.

In the last six months, progress has taken place across a number of areas:

CCS Specific Regulation

The UK government is finalising the implementation of the EU CCS Directive through a number of regulations. These are:

• The Storage of Carbon Dioxide (Licensing etc.,) Regulations 2010 www.legislation.gov.uk/uksi/2010/2221/contents/made.
• An informal consultation on CO₂ storage site licence termination has just closed and a government response is in the process of being prepared.
• Consultation on Third Party Access to CO₂ infrastructure (closed 4 February 2011): www.decc.gov.uk/en/content/cms/consultations/ccs_3rd_party/ccs_3rd_party.aspx.
• The Storage of Carbon Dioxide (Licensing etc) (Scotland) Regulations 2011:
• www.legislation.gov.uk/ssi/2011/24/contents/made.
• The Environmental Liability (Scotland) Amendment Regulations 2011:
• http://www.legislation.gov.uk/ssi/2011/116/contents/made.

Power Station Consents

In October 2010, the UK government published the draft National Policy Statements (NPS) for consultation, which closed 24 January 2011. The NPS is crucial for the development of a green economy and giving confidence to investors by expediting the planning process for Nationally Significant Infrastructure. The NPS place a significant emphasis on CCS and CCR, and states that all combustion power stations of at least 300 MW capacity will be required to be CCR. This is articulated in Scotland in its National Planning Framework 2.

Electricity Market Reform

On 16 December 2010 the UK government launched the Electricity Market Reform consultation which provided for an emissions performance standard to be applied to all newly built fossil fuel power stations. This was part of a package of measures which also includes the introduction of feed in tariffs, carbon price support and capacity payments.

Two proposals were put forward for the EPS, one designed to limit emissions to the equivalent of a new coal fired power station equipped with 300MW of CCS and a second option at a lower level, but with an exemption for CCS demonstration purposes.

Pipeline Safety Regulation

The consultation on the proposed amendments to onshore and offshore pipeline safety regulation in the UK, including the treatment of pipelines carrying Carbon Dioxide under those regulations (namely the Pipelines Safety Regulations (PSR) 1996) ended on the 1st March 2011. An analysis to the responses to the consultation and updates can be viewed on the Health and Safety Executive website.

Scotland

In anticipation of several large scale CCS projects coming forward in Scotland, the Scottish Government formed a Regulatory Group in 2009 to consider the various permits required across the entire chain of CCS activities from capture, transport and storage through to final decommissioning. The group continues to meet every 3 months to map the permits required and ensure the necessary legislative provision is aligned with the EU CCS Directive.

In August 2010 the Scottish Regulatory Group carried out a dry run of the regulatory system, taking a CCS project application through every stage of the approval process. This test exercise maximised learning opportunities by involving organisations, government departments, regulatory agencies and NGOs. An output report was also published. Following the success of this test exercise the Scottish Government in conjunction with the Scottish Centre for Carbon Storage published a CCS Regulatory Test Toolkit. This Toolkit was fully sponsored by the Global CCS Institute, which also proactively participated in the test event held in Glasgow. The Toolkit was endorsed by the European Commission as a model of best practice for regulation that could be used by other EU member states.

Another outcome from the Regulatory Group has been to set up a Programme Monitoring Board. This group first met in January 2011 and its overall objective is to ensure that government, regulators and developers agree a timetable for project delivery that is consistent with the requirements of funders and with the statutory processes set out in regulations. This objective will be reconciled with a strong focus on community engagement, considering and recommending how to ensure that communities affected by the project are properly engaged by developers and regulators across the whole CCS activity chain.

These are other regulatory activities have been informed by the detailed assessment of regulatory requirements that has come from the detailed design of the first demonstration project through the ‘FEED’ process.

It is likely that the main developments will be driven by the requirements of those projects seeking funding from the UK government and the EU. After having completed consultation on the third party access provisions of the EU CCS Directive we shall be laying legislation in June 2011 to create a regulatory framework for third party access. This is UK wide legislation.

The UK government also launched a “Call for Evidence on the long term development of CCS infrastructure”. This consultation closed on 4 March 2011. The responses to this consultation will help the UK government decide how best to organise the long term investment in CCS infrastructure. The government’s response will be issued later this year.

Through connections set up by the Global CCS Institute, the Scottish Government will engage with representatives from Romania and Alberta, Canada who have expressed an interest in using the CCS Regulatory Test Toolkit. The Scottish Government is also working with the European Commission (DG Energy and DG CC) to promote the Toolkit amongst other member states and amongst networks of EU energy and environment regulators.

The United Kingdom’s long term CO₂ liability regime will follow the requirements of the EU CCS Directive on the geological storage of carbon dioxide. This directive specifies four phases of operation for a CO₂ storage site: exploration; operational; post closure; and post handover. The UK government are currently looking at how best to take this forward.

EU CCS Directive

Based on the outcome of consultations with stakeholders and member states (MS), the Commission services have finalised the four guidance documents on various elements of the EU CCS Directive, covering CO₂ storage life cycle risk management, characterisation of the storage complex, CO₂ stream composition, monitoring and corrective measures, transfer of responsibility, financial security and financial mechanisms. Following a consultation of other Commission services, the documents were published on 31 March 2011.91 The purpose of the guidance documents is to support MS in the implementation of the EU CCS Directive and ensure a uniform implementation of the directive across Europe.

The Commission services have also prepared a questionnaire for MS reporting on the implementation of the EU CCS Directive. The questionnaire was adopted by the Commission on 10 February 2011 and published on 11 February 2011.92 MS have six months to prepare and submit their reports to the Commission, the deadline for reporting being 11 August 2011.

The Commission services have also prepared for a number of upcoming tasks related to the implementation of the EU CCS Directive, including conformity checking of transposition legislation, which has to be notified to the Commission by 25 June 2011, and Commission review of draft storage permits.

A further meeting of the Information Exchange Group (IEG) with MS took place on 16 March 2011.

NER 300 programme

In the past couple of months, the architecture of the NER 300 programme, which was established to fund both CCS and innovative renewable energy source demonstration projects from the proceeds of 300 million allowances reserved in the new entrants reserve under the EU Emissions Trading Scheme (ETS), has been completed. Commission Decision 2010/670/EU setting out details of the selection process and of the monetisation of the allowances (“NER 300 Decision”) was adopted on 3 November 2010.93 In parallel, a Co operation Agreement between the Commission and the European Investment Bank (EIB) (which is taking on important tasks in support of the Commission in the NER 300 process both regarding the selection of projects and on the monetisation of allowances and management and disbursement of revenues) was concluded, signed and published.94 As a third step, the First Call for Proposals under the NER 300 programme was launched on 9 November 2010.95 Project Sponsors had until 9 February 2011 to submit their proposals to MS for further assessment. Pursuant to MS reports, submitted to the Commission before 9 March 2011, a total of 153 Project Proposals were received, including 22 CCS proposals. Summary information on the number of Project Proposals received per category and sub category can be found on the NER 300 website.

The Commission services have provided extensive assistance to Project Sponsors and MS since the launch of the Call, including through responding to around 250 questions on the NER 300 website to date.

The EU CCS Directive has to be transposed by 25 June 2011. Timely and correct transposition of the directive is particularly important in view of the NER 300 programme, as funding of CCS demonstration projects under the programme will be conditional, amongst other things, upon all relevant national permits beings issued in line with relevant EU requirements, within 24 or 36 months (for saline aquifers) upon adoption of the award decision. The Commission will therefore closely monitor the timely communication of national transposition measures, and will assess the conformity of the communicated transposition measures with the requirements of the EU CCS Directive in due course. It is also expected that between one and two draft national storage permits will be submitted to the Commission for review in the coming six months. Finally, the Commission will have to evaluate the reports on the implementation of the EU CCS Directive, which MS have to submit by 11 August 2011, with a view to preparing a report on the implementation of the directive to be submitted to the European Parliament and the Council by May 2012.

On NER 300, MS now have until 9 May 2011 to assess the Project Proposals received for their eligibility under the NER 300 programme, and to submit those eligible Projects they wish to support to the EIB for the Due Diligence assessment. The Commission services have started to elaborate structures and procedures for knowledge sharing under the NER 300 programme.

The EU CCS Directive addresses long term responsibility for CO₂ stored through transfer of responsibility under the conditions set out in Article 18 of the EU CCS Directive. Further information is provided in Guidance Document 3.

2011: prepare technical and procedural documents for review of the environmental impact assessment report and the monitoring plan for storage permits.

• Ref: Article 18.9 and 18.12 of the Marine Pollution Prevention Law and the related ordinance

2011 – 2014: accumulate knowledge about the marine ecosystem in waters around Japan, which is essential for the environmental impact assessment review.

• Ref: Article 18.12 of the Marine Pollution Prevention Law.

2011 – 2014: discuss the long term management system of the storage site, such as the postinjection monitoring period and liability transfer, to ensure the smooth implementation of offshore CCS.

Relevant government departments

• Ministry of the Environment of Slovak Republic (www.enviro.gov.sk/):

  1. is the authority of state control;

  2. determines exploration territories and specific exploration territories for geological purposes;

  3. evaluates and approves the final reports containing calculation of the volume of natural geological formation and the underground areas;

  4. issues the final positions on the assessment of assumed environmental impacts

  5. operating the information system;

• The Slovak inspection of the Environment (http://www.sizp.sk) is the authority of the state control (supervision).
  
  
• Ministry of Economy of the Slovak Republic (http://www.economy.gov.sk) represents a central authority of public administration for the purposes of CCS (Carbon capture and storage system):

  1. administrates and supervises the execution of the public administration

  2. is the authority of state control;

  3. provides duty coordination in cooperation with the authorities of public administration in Slovak Republic and the authorities of European Union;

  4. a central authority providing the international exchange of the information according to the international agreements binding the Slovak Republic;

  5. provides the consultations and cooperation in case of the transboundary effects of the storages;

  6. submits the reports to European Commission related to the application of this law;

  7. issues certificates of the suitability of geological formations and underground areas.

• State mining authority (http://www.hbu.sk):

  1. decides on the appeals of decisions made by District mining authorities issued in accordance with this law;

  2. is the authority of state control;

  3. administrates the overall storage evidence.

• District mining authority:

  1. determine, change or call off specific protected areas against intervention to the Earth’s crust for CO₂ storage purposes;

  2. permit creation, use, changes and closure of the storage site;

  3. approve the storages closure and manage the post closure obligations;

  4. accept the operator announcement of creation of specific account to which a financial fund will be put, controls the amount of financial means and approve the use of this financial means;

  5. inform the Ministry of Economy of Slovak Republic about the actualities indicating that operation of the storage site or some serious damage in storage site may have transboundary impacts;

  6. provide the information system with the relevant data;

  7. represent authorities of state control according to individual regulations;

  8. carry out other task related to CCS in accordance with the law.

• Dionýz Štúr State Geological Institute (http://www.geology.sk/CO₂neteast/CO₂neteast.htm):

  1. mapping the potential storage sites CO₂ on the territory of the Slovak Republic;

  2. determine the storage sites that are in accordance with the requirements of the Directive 2009/31/EC and also with the Concept of the Energy security of Slovak Republic, that means they are not in competition with the storage of natural gas;

  3. mapping CO₂ resources intended to be geologically stored- large sources of pollution (data are available at the Department of Atmosphere protection, Ministry of the Environment, Slovak Republic);

  4. determination of those sites/formations that needs to be examined due to potential and suitability of CO₂ storage, including the specification of assumed time schedule exploration and financial expenses estimation for this procedure.

• Preparation of the working paper of transposition of Directive 2009/31/EC of the European Parliament and of the Council of 23. April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006.
• Upcoming changes in the legislation related to the content of the Directive 2009/31/EC:
  • Act (Law) n. 245/2003 coll. on the integrated prevention and control of the environmental pollution and amending other acts;
  • Act n. 24/2006 coll. on assessment of influences on environment and amending some other acts;
  • Act n. 223/2001 coll. on waste and amending some other acts;
  • Act n. 359/2007 coll. on prevention and correction of environmental damages and amending other acts;
  • Act n. 364/2004 coll. on water and amending the law of Nation Council of Slovak republic n. 372/1990 on misdemeanours in the latest amendments.

Regulation 338/2009 executing some regulation of Act on the atmosphere

• Completion of the transposition of the Directive 2009/31/EC into the Slovak legislation and addition of others laws regarding this Directive.
• Implementation of Law- revision of data of CO₂ resources appropriate for geological storage, information analysis of the operators of CO₂ resources.
• Evaluation of the investment connected to the preparation and transport of the gas (CO₂) regulated by the requirements of the Law (after January 2011).

On November 22 2010, the Environmental Protection Agency (EPA) Administrator signed the Federal Requirements under the Underground Injection Control (UIC) Program for Carbon Dioxide (CO₂) Geologic Sequestration Wells, Final Rule, as authorised by the Safe Drinking Water Act.83 The final rule was published in the Federal Register on December 10 2010.84 The rule establishes new federal requirements for the underground injection of CO₂ for the purpose of long term underground storage, or geologic sequestration, and a new well class – Class VI – to ensure the protection of underground sources of drinking water from injection related activities. The Class VI rule builds on existing UIC Program requirements, with extensive tailored requirements that address CO₂ injection for long term storage to ensure that wells used for geologic sequestration are appropriately sited, constructed, tested, monitored, funded, and closed. The rule also affords owners or operators injection depth flexibility to address injection in various geologic settings in the United States in which geologic sequestration may occur, including very deep formations and oil and gas fields that are transitioned for use as CO₂ storage sites.

On November 22 2010, the EPA Administrator also signed a final rule under authority of the Clean Air Act that requires facilities that conduct geologic sequestration of CO₂ and all other facilities that inject CO₂ underground to report greenhouse gas data to EPA annually. The final rule was published in the Federal Register on December 1 2010.85 This rule amends the regulatory framework for the Greenhouse Gas Reporting Program. This programme requires reporting of greenhouse gases and other relevant information from certain source categories in the United States, including suppliers of CO₂. Subpart RR of this programme requires greenhousegas reporting from facilities that inject CO₂ underground for geologic sequestration,86 and Subpart UU requires greenhouse gas reporting from all other facilities that inject CO₂ underground for any reason, including enhanced oil and gas recovery.87 Subpart RR requires facilities conducting geologic sequestration of CO₂ to develop and implement an EPA approved site specific monitoring, reporting and verification plan, and to report the amount of CO₂ sequestered using a mass balance approach. This rule is complementary to and builds on UIC requirements.

EPA will continue its efforts related to the safety and effectiveness of geologic sequestration, including developing guidance materials for the Class VI rule, evaluating risks to human health and the environment, and working to address other key issues.

On February 3 2010, President Obama sent a memorandum to the heads of fourteen Executive Departments and Federal Agencies establishing an Interagency Task Force on Carbon Capture and Storage. The goal was to develop a comprehensive and co ordinated Federal strategy to speed the commercial development and deployment of clean coal technologies. The Task Force, co chaired by the Department of Energy and the EPA, was charged with proposing a plan to overcome the barriers to the widespread, cost effective deployment of CCS within ten years, with a goal of bringing five to ten commercial demonstration projects online by 2016.

On August 12 2010, the Task Force delivered a series of recommendations to the President on overcoming the barriers to the widespread, cost effective deployment of CCS within ten years.88 The Task Force recommended that efforts to improve long term liability and stewardship frameworks should continue. The Task Force recommended that by late 2011, EPA, Department of Energy, Department of Justice, Department of the Interior, and Department of the Treasury should further evaluate and provide recommendations to address long term liability and stewardship in the context of existing and planned regulatory frameworks. Of the seven options identified by the Task Force, the Task Force recommended that the following four approaches, or combinations thereof, should be considered: (1) reliance on the existing framework for long term liability and stewardship; (2) adoption of substantive or procedural limitations on claims; (3) creation of an industry financed trust fund to support long term stewardship activities and compensate parties for various types and forms of losses or damages that occur after site closure; and (4) transfer of liability to the Federal government after site closure (with certain contingencies). The Task Force recommended that open ended Federal indemnification should not be used to address long term liabilities associated with CO₂ storage.

Over the last six months, France has been progressing on the transposition of the EU CCS Directive. The General Directorate for Energy and Climate Change30 is in charge of this work. EU CCS Directive requirements fall within the categories of law, regulation or administrative provisions, depending upon the principles and level of details they introduce. While the entry into force of law type provisions is now effective31, the last six month period was dedicated to the transposition of regulatory provisions. A first regulation has been drafted. It aims at finalising the transposition of the EU CCS Directive in accordance with the transposition deadline set by Article 39 of the directive (25 June 2011).

While finalising the transposition work, including reference to annexes, this draft regulation does not cover some of the topics unsorted by the directive itself, including the calculation method for financial security or financial mechanism, criteria for the composition of CO₂ stream, storage perimeter, etc. However, it brings complementary provisions related to injection tests which can take place under the exploration permit. These complementary provisions address, among other things, CO₂ stream quantity injection threshold and the necessary protection of underground waters. Provisions introduced by this regulation will be hosted by the Environmental Code. Provisions will also bring changes in the Mining Code. The draft regulation is not publicly available yet. It will be available within the next six months.

The draft regulation will be presented to the State Council early summer before entering into force. In parallel, a working group started early this year, made up of public related organisations involved in geological storage of CO₂, is expected to hand out its work related to CO₂ storage risk assessment and related approaches to demonstrate the safety of a storage site. This work may contribute to revising administrative provisions for CO₂ storage. Such provisions will not be drafted during the next six month period.

Long term liability provisions in France are those set by the EU CCS Directive, which means a transfer of responsibility to the state after a minimum monitoring period has elapsed and provided that the provisions of Article 18 of the directive are met, including that all available evidence indicates that the stored CO₂ will be completely and permanently contained. Available evidences are brought together by the operator in a report that shall demonstrate, at least:

• The conformity of the actual behaviour of the injected CO₂ with the modelled behaviour.
• The absence of any detectable leakage.
• That the storage site is evolving towards a situation of long term stability.

The public is generally reluctant to the idea of transfer of responsibility to the state, given that the state ends up with potential troubles left by the private sector. However, the true philosophy of this procedure is based on a different concept, aimed at bringing safety guaranties and confidence to the public in a sense that at any time after closure, there will be someone responsible (the state) for the storage site beyond the lifetime of the former operator.

As far as the responsibility transfer is concerned, it is worth noting that the responsibility transferred to the state only covers:

• Monitoring, prevention and corrective measures fulfilled on the basis of the post closure plan.
• All obligations relating to the surrender of allowances in case of leakages pursuant to Directive2003/87/EC.

Environmental liability32 still falls within 30 years to the former operator of the site.

Key transfer of responsibility provisions can now be found in the Environmental Code. Complementary regulations are under preparation. They mainly consist in giving details about the transfer procedure. The end of injections and the entrance into the long lasting monitoring and further transfer of responsibility period is critical, as revenues from storage end and expenditure will continue (monitoring, reports, transfer of responsibility studies, financial mechanism ...). Financial securities bring a guarantee that the operator will face its responsibilities.

Key transfer of responsibility provisions can now be found in the Environmental Code.33 Complementary regulations are under preparation. They mainly consist in giving details about the transfer procedure. The end of injections and the entrance into the long lasting monitoring and further transfer of responsibility period is critical, as revenues from storage end and expenditure will continue (monitoring, reports, transfer of responsibility studies, financial mechanism ...). Financial securities bring a guarantee that the operator will face its responsibilities.

A minimum monitoring period conducted by the operator following the end of injections is set for 30 years34. It can be reduced down to a bottom line of 10 years under strict conditions under ministerial decision,35 having in mind that the reduction of a monitoring period will most probably trigger the transfer of responsibility procedure.

A financial mechanism on the basis of which the operator contributes financially to the cost incurred by the transfer of responsibility to the state has been introduced. This financial mechanism encompasses costs over a 30 year period resulting from monitoring and any other necessary actions, to bring confidence that the CO₂ will be permanently stored. As part of the financial mechanism, the former operator shall also give to the state, on a cost free basis, all relevant data and equipment necessary to undertake its new responsibilities.

After the transfer of responsibility, no other costs can be recovered by the state from the former operator, unless there has been fault on the part of the operator, including cases of deficient data, concealment of relevant information, negligence, wilful deceit or a failure to exercise due diligence. Financial security and the relevant storage lease will cease at the time the transfer of responsibility decision is taken. The situation where the storage permit has been withdrawn from the operator is also taken into consideration. If all available evidence indicates that the stored CO₂ will be completely and permanently contained, the decision to transfer is made.

Finally, transfer of responsibility is the legitimate outcome of any CO₂ storage. Therefore, this decision, taken at ministerial level by the Ministry of Mines and Environment, must be anticipated and prepared from the time the storage permit is instructed and granted and through continued follow up of the storage site (including update of storage permit, reporting, inspections, etc.).

Korea has undertaken a research project titled “A review on CCS legal & regulatory system” which has three phases: 1) review on standard regulatory frameworks published by the IEA (2010) and the Global CCS Institute (2009); 2) identify the gap between existing regulations (of Korea) and other model frameworks; and 3) suggest recommendations for proper CCS regulatory frameworks in Korea.

Korea has a proper regulatory system in the areas of capture, compression, and transportation. Amendments of existing regulations would be sufficient for the purpose of constructing CCS demonstration plants beginning 2012 (10MW scale, amine absorption and dry sorbent).

Korea does not have experience in injecting and storing CO₂ at this time. An international, collaborative storage project started at the end of 2010. Offshore storage projects are being considered for future integration with capture facilities (2017).

In September 2010, the “Marine Environment Management Law” was amended to provide a legal ground on which CO₂ stream produced in capture facilities can be disposed of in the ocean.

The research project “A review on CCS legal & regulatory system in Korea” will be concluded in September 2011. Recommendations for the Korean CCS legal and regulatory framework will be suggested.

The expected outcomes of the study will be guidance on amending and/or developing CCS legislations and regulations. Also, this study will be the legal foundation for beginning construction of 10MW pilot scale capture plants in 2012.

In addition, recommendations on the financial, incentive and investment systems will be suggested to encourage investment in CCS demonstration plants.

At this time, and given that Korea does not have experience in injecting and storing CO₂, there is not much discussion on the long term liability issue.

However, the Korea National Oil Corporation will be responsible for the construction and operation of offshore storage facilities in the future and long term liability will need to be addressed at that time.

There is a possibility that a number of neighbouring Asian countries will construct and operate joint offshore CO₂ storage facilities. In this case, long term liability will be one of the key issues among countries.

Transposition into national law of directives relating CCS

The EU CCS Directive has been transposed into national law. The 40/2010 Act, 29 December sets the regulatory framework regarding storage of CO₂ and offers some general principles concerning capture and transportation of CO₂. It does not change any existing law, because it offers new regulation across the entire life of CO₂ storage plants. Only available in the Spanish legal languages:

• www.boe.es/diario_boe/txt.php?id=BOE A 2010 20049.

The Royal Decree 1733/2010, 17 December, declares in favour of the state and identifies as provisional reserve an area in the Palencia province where there is a geological structure with potential CO₂ storage capacity. Only available in Spanish:

• www.boe.es/aeboe/consultas/bases_datos/doc.php?id=BOE A 2010 19695.

The first preliminary study about the CO₂ storage capacity of Spain was carried out in 2006 2007 by the Spanish Geological Survey (IGME) and a national research centre, the CIEMAT. The conclusion of this study was that the main storage capacity of Spain is of the saline aquifer type and is mostly situated within the principal Tertiary sedimentary basins of the Iberian Peninsula. The total capacity of these structures was estimated at approximately 45 50 Gt.

A second, more detailed study has been carried out by the Geological Survey lately. During this investigation, 103 structures suitable for CO₂ storage have been identified, with a total capacity of 13,4 Gt. Most of the structures are situated in the following geological units: Cantabrian Mountains and Duero Basin (34), Iberian Mountains and Tajo and Almazan Basins (31), Pyrenees and Ebro Basin (19), and Baetic Mountains and Guadalquivir Basin (19). Of the 103 studied structures, 55 have capacities higher than 50 Mt. The total storage capacity of these 55 structures is estimated to be around 12 Gt.

This figure is probably lower than the real capacity, taking into consideration that the geological data of these basins is rather scarce and unevenly distributed. Another factor to consider is the offshore capacity of the country, which was not included in either of the mentioned studies.

The Technological Development Plant that CIUDEN is constructing at the underground structure of Hontomín (Burgos) for development of injection and monitoring techniques for supercritical CO₂ (1500 m depth; on Lower Jurassic carbonate formations) will highly improve the national capacity for the evaluation of industrial storage complexes and surrounding areas, especially required by the Annex I of Law No. 40/2010.

Also, the monitoring techniques to be developed and applied to this Project will lead to the improvement of criteria for the establishment and actualisation of monitoring plans and postclosure monitoring, required by Annex II of the same Law.

These two Annexes, which require the development of standards and regulation, form the base for the fulfilment of Articles 10.2, Storage permit, and 19.2, Monitoring, respectively.

The geological formation used by CIUDEN for its experimental programme is one of the best options for geological CO₂ storage in Spain, and will probably be a target formation for several industrial projects, which will have to comply with Law No. 40/2010.

The 40/2010 Act, 29 December describes the regulatory permitting needed throughout the life of a storage plant. A CO₂ storage facility approved by the state has a 30 year operation period which could be extended to a maximum of 20 years more. When the operational period ends, responsibility is transferred to the state.

The 40/2010 Act also regulates obligations after the closure of the storage site (Article 23) and requisites for transferring responsibility for the site to the state (Article 24), both in line with the EU CCS Directive (Articles 17 and 18). In principle, a period of 20 years should elapse after the closure before responsibility for the site can be transferred. The transfer of responsibility does not operate automatically: it requires a previous resolution by the Spanish authority, after an indepth analysis to check that the stored CO₂ will be completely and permanently contained.

The 40/2010 Act, 29 December describes general principles about the need for a long term financial instrument to ensure security of CO₂ storage sites.

In November 2010, the United States Environmental Protection Agency (EPA) provided guidance to owners of facilities that will be regulated under its new final Tailoring Rule for regulating emissions from major stationary sources of greenhouse gases.57 This guidance enumerated examples of mitigation measures that would be acceptable under the Tailoring Rule. CCS is considered to be an option for some industries under this guidance.

The EPA had issued that final Tailoring Rule in May 2010.58 This final rule “tailors” the requirements of these CAA permitting programs to limit which facilities will be required to obtain permits. It is therefore referred to as the “Tailoring Rule.” Facilities responsible for nearly 70 percent of US greenhouse gas emissions from stationary sources will be subject to permitting requirements under this rule. This includes the nation’s largest greenhouse gas emitters—power plants, refineries, and cement production facilities.

Regulation under the Tailoring Rule is being phased in over time. The Tailoring Rule focuses the CAA permitting programs for greenhouse gases from January 2 2011 to June 30 2011 on the largest sources with the most CAA permitting experience. From July 1 2011 to June 30 2013, the rule expands to cover the largest sources of greenhouse gases that may not have been previously covered by the CAA for other pollutants. The schedule is as follows:

Step 1 (January 2 2011 – June 30 2011)

• Only sources subject to the current permitting programme (i.e. those sources that are newly constructed or modified in a way that significantly increases emissions of a pollutant other than greenhouse gases) would be subject to permitting requirements for their greenhouse gases.
• For these projects, only greenhouse gas increases of 75,000 tons per year (tpy) or more of total greenhouse gases, on a CO₂e basis, would need to determine the Best Available Control Technology (BACT) for their greenhouse gas emissions.
• Similarly, for the operating permit program, only sources currently subject to the programme (i.e. newly constructed or existing major sources for a pollutant other than greenhouse gases) would be subject requirements for greenhouse gases
• During this time, no sources would be subject to Clean Air Act permitting requirements due solely to greenhouse gas emissions.

Step 2 (July 1 2011 to June 30 2013)

• Step 2 will build on Step 1. In this phase, PSD permitting requirements will cover for the first time new construction projects that emit greenhouse gas emissions of at least 100,000 tpy, even if they do not exceed the permitting thresholds for any other pollutant. Modifications at existing facilities that increase greenhouse gas emissions by at least 75,000 tpy will be subject to permitting requirements, even if they do not significantly increase emissions of any other pollutant.
• In Step 2, operating permit requirements will, for the first time, apply to sources based on their greenhouse gas emissions even if they would not apply based on emissions of any other pollutant. Facilities that emit at least 100,000 tpy CO₂e will be subject to title V permitting requirements.

EPA is committed to undertake another rulemaking, to begin in 2011 and conclude no later than July 1 2012. That action will consider an additional step for phasing in greenhouse gas permitting, and may discuss whether certain smaller sources can be permanently excluded from permitting.

While no federal long term liability legislation has been enacted, six states have enacted legislation covering long term liability for stored CO₂:

• Illinois: under the Clean Coal FutureGen for Illinois Act, Public Act 095 0018, enacted July 7 2007, the state of Illinois assumes liability for stored CO₂ from the FutureGen project after injection. The liability assumption applies only to the FutureGen project. The state shall also provide insurance for the operators of the project.59
• Louisiana: HB 661, the Louisiana Geologic Sequestration of Carbon Dioxide Act enacted August 15 2009, establishes liability limits for operators with transfer of liability for storage operations to the Geologic Storage Trust Fund (run by the state) after a specified time
• Montana: as noted in the section below on Comprehensive State Legal Frameworks for CCS, SB 498 provides a framework for transfer of long term liability to the state.61
• North Dakota: Chapter 38 22 of the North Dakota Century Code includes appropriations for a Carbon Dioxide Trust Fund and the Carbon Dioxide Storage Facility. The storage operator has title to the CO₂ until the North Dakota Industrial Commission issues a certificate of project completion. Responsibility transfers to the state after the issuance of the certificate of completion. S.B. 2095 also addresses other aspects of regulation of CCS, as is discussed in the section below on Comprehensive State Legal Frameworks for CCS.
• Texas: two Texas laws provide for transfer of long tem liability:
  • HB 149. Legislative Session 79(3) enacted September 1 2006, states that the Railroad Commission of the state of Texas shall acquire title to CO₂ captured by “clean coal” projects. This law is specifically targeted at furthering the Texas bids for FutureGen. The state is also authorised to sell the carbon and deposit revenues from the sale in a general revenue fund.6
  • HB 1796 covers transfer of liability for offshore storage of CO₂. This law requires the Texas Commissioner of the General Land Office to conduct a study and recommend suitable offshore sites for CO₂ storage. The state may then establish an offshore repository for CO₂ and, for a fee, accept CO₂ for storage. Standards for measurement, monitoring and verification are to be established. The state shall acquire title to the CO₂ in the repository based on a determination that permanent storage has been verified and the storage location has met all applicable state federal requirements for closure.
• Wyoming: HB 58 addresses ownership and liability of sequestered CO₂. It directs that whoever injects CO₂ underground is legally responsible for it, which means that the owner of the pore space will not be liable if the owner is different from the injector of the CO₂.

A number of US states have enacted elements of legal frameworks for CCS. These elements include comprehensive state frameworks for regulating pore space ownership, eminent domain for CO₂ pipelines, facility performance standards, portfolio standards, and a fund for administering state activities on CCS.

State frameworks for regulating geologic storage

Six states have enacted comprehensive legislation on regulation of geologic storage:

• Kansas: HB 2419, enacted in 2007 as statute 55 1638, establishes in the state treasury a CO₂ injection well and underground storage fund. This fund is to cover permitting costs to the state of activities to support regulation of geologic storage. These activities include permitting, compliance monitoring, inspections, well closures, underground storage closures, long term monitoring, remediation activities and enforcement actions.
• Louisiana: HB 661, the Louisiana Geologic Sequestration of Carbon Dioxide Act, enacted August 15 2009, establishes a regulatory programme for the control of injection, storage, and use of CO₂ under the state’s Office of Conservation within the Department of Natural Resources. HB 661 also provides the authority for the expropriation of pipelines, storage facilities and other facilities necessary for carbon sequestration upon a determination of public convenience and necessity. This law also provides that CO₂ pipelines are not to be common carriers.
• Montana: S.B. 498, enacted in 2009, regulates carbon sequestration. This act requires a permit for a CO₂ injection well; authorises the Montana Board of Oil and Gas Conservation to regulate the injection of CO₂; affirms the dominance of a mineral estate; establishes fees for administering a carbon sequestration programme and long term oversight of wells; requires notice of CO₂ injection wells; requires the Board to solicit and consider comments from the Montana Department of Environmental Quality prior to issuing an injection permit and prior to issuing a certificate of completion; requires the board to solicit and consider comments from the Department of Environmental Quality prior to transferring liability to the state; requires testing after issuance of a certificate of completion and prior to transfer of liability; allows for the transfer of title to sequestered CO₂ to the state after board certification; and allows unitisation for geologic storage reservoirs.68
• North Dakota: chapter 38 22 of the North Dakota Century Code, enacted July 1, 2009, creates a regulatory framework for geologic storage of carbon dioxide and priorities in permitting CO₂ geologic storage projects. This law gives the North Dakota Industrial Commission authority over the construction, operation and closure of a CO₂ storage facility. The law also sets out the permitting requirements, criteria, fees and process to be followed by the Commission as well as penalties for non compliance. This law states that the storage operator has title to and liability for the injected CO₂ until it receives a certificate of project completion. As noted above, it also addresses long term liability.
• Oklahoma: SB610, the Oklahoma Carbon Capture and Sequestration Act, enacted in 2009, gives permitting authority for storage in fossil energy bearing formations to the Oklahoma Corporation Commission. The Oklahoma Department of Environmental Quality has responsibility for other types of formations such as saline formations. The injection facility operator has ownership of the CO₂.
• Texas: SB 1387, effective September 1 2009, gives the Texas Railroad Commission jurisdiction over the injection and geologic storage of CO₂ in, and the injection of CO₂ into, a reservoir that is initially or may be productive of oil, gas, or geothermal resources or a saline formation directly above or below that reservoir. This law also establishes the Anthropogenic Carbon Dioxide Trust Fund to finance these regulatory activities.71

Pore Space Ownership

Ownership of the subsurface in the United States is usually privately held when the surface owner is a private entity. A complex set of state laws on mineral rights has evolved over the years, with laws varying in each state. Three states have developed laws addressing pore space ownership for storage of CO₂.

• Montana: SB498, enacted May 6 2009 gives authority regarding underground CO₂ sequestration to the state land board and provides surface owners with pore space ownership.72
• North Dakota: SB 2139 enacted 9 April 2009 defines pore space for CO₂ in geological storage and establishes the pore space as property of the surface owner.
• Wyoming: HB57, enacted 1 July 2009, states that a surface owner is presumed to own the geologic pore space below the surface, but adds that mining and drilling rights will be given a higher priority than geologic sequestration activities.

Eminent Domain for CO₂ Pipelines

Three states have acted to give rights of eminent domain to developers of CO₂ pipelines:

• Oklahoma: SB610, Oklahoma Carbon Capture and Geologic Sequestration Act, authorises a CO₂ storage or pipeline operator, after obtaining the required Oklahoma Corporation Commission and Department of Environmental Quality permits and certificates, to exercise the power of eminent domain to acquire surface and subsurface rights and property interests necessary for the purpose of constructing, operating or modifying a storage facility or carbon dioxide transmission pipeline.
• North Dakota: NDCC 49 19 01 et seq. is a ruling of the North Dakota Public Service Commission which specifies that CO₂ pipelines can be considered "common carriers" with eminent domain rights if they choose to accept the duties and obligations set out by the Commission
• Texas: H.B. 1356 gives CO₂ pipeline operators the option to become common carriers entitled to the right of eminent domain.

Facility Performance Standards for CCS

Two states have facility performance standards for new coal fired power plants that require the use of CCS:

• California: SB 1368 prohibits California electricity buyers from purchasing base load electricity on long term contracts from coal fired plants located outside of California with CO₂ emissions above a performance standard. However, CO₂ captured from the emissions of a power plant and permanently disposed of in geological formations in compliance with applicable laws and regulations is not counted as emissions from the power plant, thereby allowing the purchase of base load electricity by California electricity buyers from out of state coal fired power plants that employ CCS with performance below the emissions standard.78
• Montana: House Bill 25 mandates that any coal fired electrical generation project to be built in the state after October 2007 must capture and sequester at least 50% of the CO₂ produced in order to be approved by the Montana Public Service Commission

Portfolio Standards for CCS

Three states require power generators to have a minimum mix of low emissions generation of specified types that allow power plants with CCS to be included in that mix:

• Illinois: The Clean Coal Portfolio Standard Law, Public Act 095 1027, enacted January 12 2009 requires any new coal fired power plants to sequester an increasing amount of its CO₂ emissions and also compels Illinois electric retailers to purchase up to 5 percent of their requirements from “clean coal” facilities. The law also entitles one “clean coal” facility with a final air permit, to enter into 30 year purchase agreements for sale of its output. The sequestration requirements are: 50 percent for plants starting operation before 2016, 70 percent for plants starting in 2016 and 2017, and 90 percent for plants starting after 2017.8
• Pennsylvania: HB1202, enacted July 10 2008, authorises the substitution of coal to liquids non sulfur diesel in place of biodiesel to meet the requirements of the state’s biodiesel mandate, provided that the fuel’s carbon emissions are fully offset, either through carbon sequestration or by participation in the carbon offset programs of the state.
• Utah: S.B. 202 mandates that starting in 2025, 20% of an electrical corporation or municipal electric utility's retail electric sales come from qualifying low carbon sources such as renewables or plants utilising CCS

On 10 September 2010, the South African Minister of Energy, Ms. Dipuo Peters, launched the Atlas on Geological Storage of Carbon Dioxide in South Africa (the Atlas). The Atlas is a publicprivate partnership of South African entities, namely government, state owned entities and industry; it provides an overview of the country’s economy, a roadmap on carbon capture and storage, and progress achieved. It includes geological maps with reference to the potential and estimated CO₂ storage capacities of the geological formations found in South Africa. The Atlas was supported by the South African Centre for CCS (SACCCS). SACCCS was set up in 2009 and is responsible for co ordination of CCS activities in South Africa. The Technical report on the geological storage of carbon dioxide in South Africa was released in January 2011.

South Africa’s Second National Communication (SNC) on national climate change development has been drafted as required by the UNFCCC, to update the Initial National Communication (INC). The country’s understanding of climate change issues has developed significantly since the initial national communication. The government plans for the reduction of the country’s greenhousegas emissions are shown in the Long Term Mitigation Strategy scenarios and the National Climate Change Response Green Paper 2010. It highlights the development of a legislative policy and regulatory framework to support CCS as a key action area in the energy sector.

In December 2010, the World Bank with support from IMBEWU Sustainability Legal Specialists completed a review of the legal, regulatory and institutional framework for the implementation of CCS projects in South Africa.

As a priority, the Department has officially incorporated CCS regulatory framework development in the 2011 work plan.

The United Kingdom funded a SACCCS project on “An effective CO₂ storage capacity assessment of the Zululand Basin”. This project was started in September 2010 to establish the effective storage potential of this basin and was completed during April 2011.

A workshop, in conjunction with the IEAGHG Executive Committee meeting, was held in April 2011 to address the SACCCS work programme. The workshop was geared to get input from international experts on the scope and direction of the SACCCS work plan and to ensure that relevant stakeholders are aware of future developments.

IEA DoE CCS Legal and Regulatory workshop was held in Johannesburg on 7 April 2011. The purpose of the workshop was to discuss CCS legal and regulatory developments and next steps for South Africa, including how international organisations could potentially provide support.

A Draft CCS Concept Note is under discussion between DoE, with support from SACCCS, and the World Bank for possible funding of the CCS activities. This document contains the list of CCS activities to be undertaken in South Africa, including the development of a CCS regulatory framework.

The following academic institutions are undertaking CCS research:

• The Council for Geoscience Storage capacity (the Atlas).
• University of the Witwatersrand (Absorption of carbon dioxide onto coal and ash at high pressures [up to 190 bar]).
• University of the Western Cape and the University of Stellenbosch are also starting to address bio char and mineralisation as a means of storing CO₂.

The World Bank will host a CCS workshop: Perspectives for the Southern African Region in Johannesburg on May 31 and June 1.

The SACCCS has the following CCS projects in the pipeline:

• The Europe Aid supported the “South Africa Europe Cooperation on Carbon Capture and Storage (SAECCS)” project. This project started in March 2011 to establish the effective storage potential of the Outeniqua Basin.
• The project, “Scoping Study for the Test Injection Experiment of Carbon dioxide into a geological formation” was started during January 2011 and is due for completion during late 2011. This is the first phase of the CO₂ injection experiment.
• The project “Plant Readiness” started during January 2011 and is due for completion during 2011.
• A planned CCS week is scheduled for October, 2011. This will be a CCS Conference in South Africa to build capacity on technical and legal issues.

Furthermore, South Africa will host the Conference of the Parties (“COP 17”) on Climate Change in Durban from 28 November to 9 December 2011. The overall objective of the UNFCCC is twofold:

• Stabilising greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous interference with the climate system.
• Ensuring that the stabilisation process takes place within a timeframe sufficient to allow ecosystems to adapt to climate change, to ensure that food production is not threatened and to enable sustainable economic development.

South Africa is currently working towards reviewing the current legislative system in order to assess the framework for CCS regulation, taking into consideration other studies that have already been carried out. It is therefore still premature for a decision to be taken before the ongoing processes and engagements are finalised. The exact modalities and corresponding legislative framework need to be determined. Many unanswered questions exist, such as the magnitude of the financial burden to future governments and generations as well as that of hidden costs.

Over the period since July 2010 the following CCS legal and regulatory developments have occurred in the Netherlands. Two changes to the Implementation Proposal (IP) of the EU CCS Directive in the Mining Act were sent to parliament (Second Chamber) (the IP was originally sent to parliament on 17 March 2010 – implementing the EU CCS Directive, as well the OSPAR requirements). An explanatory note on the IP answering written questions of members of parliament was also sent. The IP was the subject of a plenary debate on 20 January 2011. Parliament took a positive vote on the IP on 25 January 2011. No amendments to the proposed text were accepted. Then the IP was sent to the First Chamber of Parliament.

Publically available CCS legal and regulatory documents released over the period since July 2010:

• 26.7.2010: https://zoek.officielebekendmakingen.nl/dossier/32343/kst 32343 7?resultIndex=24&sorttype=1&sortorder=4 (note containing changes to the IP).
• 26.7.2010: https://zoek.officielebekendmakingen.nl/dossier/32343/kst 32343 6?resultIndex=25&sorttype=1&sortorder=4 (explanatory note on the IP answering written questions of members of Parliament).
• 28.9.2010: https://zoek.officielebekendmakingen.nl/dossier/32343/kst 32343 8?resultIndex=23&sorttype=1&sortorder=4 (2nd note containing changes to the IP).
• 2.2.2011: https://zoek.officielebekendmakingen.nl/dossier/32343/kst 32343 An1? resultIndex=4&sorttype=1&sortorder=4 (the IP such as proposed to the First Chamber/Senate).

All publically available documents regarding the IP and parliamentary debate can be found using the following web link:

• https://zoek.officielebekendmakingen.nl/dossier/32343?_page=1&sorttype=1&sortorder=4.

The IP will be first discussed in the First Chamber/Senate in a commission meeting on 15 March. The First Chamber/Senate will vote on the IP (date yet to be decided upon) after which the IP will enter into force by a date to be set by a royal decision.

To further implement some details of the EU CCS Directive the Mining Decree and the Mining regulation will be amended, as well the “Besluit milieueffectrapportage” (environmental impact report) and the “Besluit emissie eisen stookinstallaties milieubeheer A” (emission requirements combustion plants). These changes of regulation will come into force together with the change of the Mining Act.

Regarding long term liability in case of damage of CO₂ storage the Ministry of Security and Justice is currently preparing new legislation: see “Part 2: Long term liability for stored CO₂”.

Steps will be taken to ratify the amendment to Article 6 of the London Protocol.

In accordance with the procedures for NER300 a framework for NER300 subsidies was published end of 2010.

Under the current IP no special rules on long term liability are introduced. Therefore, in all cases of damage caused by CO₂ storage the liability rules of the Civil Code (Burgerlijk Wetboek) apply. It will depend on the precise circumstance if and when damage occurs, who will be liable during the period after the responsibility for a storage location has been transferred to the state. For environmental damage, special rules are applicable on the basis of the EU CCS Directive on Environmental liability.

The Ministry of Security and Justice is currently preparing new legislation to introduce special liability rules. This will introduce a special regime for CO₂ storage. Expectations are that a proposal could be ready to be presented to the Council of State mid 2011.

Like many jurisdictions around the world, Alberta has been working to address policy and regulatory barriers facing the deployment of commercial scale CCS. In mid 2009, the government of Alberta received a number of recommendations from the Alberta CCS Development Council, many of which related to existing policy and regulatory gaps.89

Building on advice from the Council, the government of Alberta passed the Carbon Capture and Storage Statutes Amendment Act, 2010 in December 2010 to address uncertainty related to pore space ownership and the management of long term liability.90 This Act amended five existing pieces of provincial legislation that contribute to the regulation of Alberta’s existing oil and gas sector with a view to addressing many of the regulatory barriers facing the first wave of projects being deployed in Alberta.

This Act:

• Declares that all pore space is owned by the province.
• Enables the Minister of Energy to enter into agreements to grant pore space rights.
• Allows the province to accept long term liability for properly sequestered CO₂.
• Creates the Post Closure Stewardship Fund to ensure that money is available when the province assumes liability for a site.

This legislation was essential to enable the Government of Alberta to proceed with four carbon capture and storage projects that will reduce greenhouse gas emissions by five million tonnes annually beginning in 2015.

Over the next six months, the province will undertake two key steps as it continues to develop a CCS regulatory framework:

• The passage of a new regulation that will grant tenure agreements for pore space access.
• The Regulatory Framework Assessment (RFA), a thorough review of Alberta’s regulatory framework that relates to CCS, will commence in March 2011.

The new regulation will outline the administrative details necessary for the Minister to issue agreements for pore space access. Two agreement types are being established: one for shortterm evaluation tenure and another for the long term tenure needed for a commercial project.

Details around the term, maximum area, annual rentals, etc. are being established in the regulation. This regulation will also require the submission of measuring, monitoring, verification and closure plans that will be updated regularly as a commercial project proceeds.

In spring 2011, Alberta will commence its RFA, which will examine in detail the environmental, safety and assurance processes that exist and determine what, if any, new processes need to be put in place. This process will be guided by an expert panel that will consist of world renowned scientists who are internationally recognised for their experience and expertise in CCS issues and in developing energy and environmental policy. This panel will act as a third party advisor and will peer review work. A final report is expected to be delivered to the Alberta Government in the fall of 2012.

While the technical performance standards for closure remain to be worked out with industry during the RFA, the province is now able to accept long term liability for stored CO₂ sites once they have been properly closed and the operators have demonstrated through long term monitoring that the stored CO₂ is stable. This step has removed yet another barrier to the deployment of CCS in Alberta.

A commercial CCS operator will require a number of permissions prior to and during injection, including a commercial pore space lease that will grant sequestration rights. The issuing of this lease is the first signal to the province that at some point in the future an operator intends to obtain a closure certificate and transfer site responsibility to Alberta.

Over the operational phase of a project, all liability will reside with the lessee and operator of the project, which is consistent with Alberta’s approach to most forms of liability. At the conclusion of operations, the lessee will be able to apply to Alberta for a closure certificate. A number of conditions will need to be met before a certificate can be issued, but perhaps the most important is that sequestered CO₂ is behaving in a stable and predictable manner. Once a closure certificate has been issued, Alberta becomes the owner of the sequestered CO₂ and assumes a number of obligations as set out under various pieces of provincial legislation.

Key to Alberta’s acceptance of long term liability is the establishment of the Post closure Stewardship Fund which will ensure funds are available to the province for ongoing monitoring and any required remediation. Commercial projects will pay a set rate per tonne of CO₂ injected over the life of the project to the province. This money will be directed into the fund, accumulate over time, and be available when Alberta takes over responsibility for a storage site.

The methodology for setting the rates to be paid into the fund will be established in the 2011 12 fiscal year. The rates will be based on the costs associated with ongoing measuring, monitoring and verification and the costs of any remedial actions after a site is closed. It has yet to be determined if the rates will vary by facility and be directly linked to the unique challenges posed by each commercial operation, or if a general rate will be set for the entire industry. To help establish rates, Alberta is participating in a multi stakeholder study, led by the Global CCS Institute, to produce a peer reviewed model for determining liability rates and applying the model to real sites. Alberta will also be undertaking a study that will focus on gaining a better understanding of the future costs of monitoring and verification.

Alberta will also examine in detail some of the elements necessary for site closure as part of the RFA, including:

• The technical requirements and performance criteria that need to be met prior to a site closure.
• The regulatory process that needs to be followed to issue a closure certificate.
• The minimum timeframe that must lapse after a final injection before an application for a closure certificate can be submitted.

Alberta is committed to sharing its experience with others in the global CCS community. The province will provide periodic updates, as well as share reports, data and the lessons that are learned through the RFA and the four projects that are being funded through a $2 billion commercial demonstration program.

The Government’s Interdepartmental Committee on CCS co ordinates the technical, legal and regulatory work that is required to implement CCS in Ireland.

Allocation of responsibilities for various aspects of CCS implementation is being finalised.

No relevant documents have been published in the last six months.

Transposition of the EU CCS Directive is planned for 2011.

The matter of long term liability for CO₂ storage is under consideration by the Interdepartmental Committee on CCS.

Geological studies of suitable sites have been undertaken.

In June 2010, a draft of assumptions to the regulation transposing the EU CCS Directive was submitted for adoption by the Council of Ministers and is now waiting for adoption. The draft establishes, among other things, that in the transitional period to 2026 the provisions concerning CCS will only apply to the demonstration phase. Experience gathered by this time will be used to verify the safety, suitability and effectiveness of CCS and the existing legal system and help to make the decision on whether the commercial use of CCS technology should be allowed.

Current text can be found at the website at:

• www.mos.gov.pl/kategoria/2226_ustawy/.

In the near future it is expected that the assumptions will be adopted by the Council of Ministers. Then, on the basis of the assumptions, the Polish Government Legislation Centre will prepare a draft of an act, which will be forwarded to the parliament following government approval.

We also expect progress and initial conclusions from the national recognition programme of geological formations and structures for the safe geological storage of CO₂.

In the forthcoming months, development of works concerning Polish CCS demonstration projects should also be seen.

Under the proposed regulation on CCS, and in accordance with the requirements of the EU CCS Directive, when long term stability of the storage complex has been assured and the mandatory 20 year period of monitoring has elapsed, there will be transfer of responsibility to the competent authority – the Minister of the Environment. Its task will be fulfilled by a specially appointed entity, called the National Administrator of Underground CO₂ Storage Sites (KAPS CO₂). The main task of KAPS CO₂ will be ensuring adequate security of the sites, that is primarily: supervision and monitoring of closed storage sites with decreasing intensity. The conditions that must be fulfilled for the competent authority to take responsibility for a site will be, amongst other things, providing a financial contribution to the competent authority towards the posttransfer phase, including funds for monitoring of the storage site for at least 30 years.

In order to provide funding to the competent authority to operate after the transfer of responsibility, the operator will need to contribute a so called “guarantee fee” into a separate account. Other equivalent financial and insurance instruments can be also applied. Financial mechanisms will be periodically adjusted to the operation conditions.

Following the entry into force of the EU CCS Directive the Polish Ministry of the Environment has been preparing relevant regulations transposing the directive.

The main activities undertaken for the development of CCS include:

• In 2008, a document entitled: “Ministry of the Environment actions to identify geological structures for underground storage of carbon dioxide” was adopted, indicating the main lines of action for CCS, especially identification of geological structures for underground CO₂ storage in the country, support for national CCS demonstration projects and identification of the degree of public acceptance for the geological storage of CO₂: www.mos.gov.pl/kategoria/258_kierunki_dzialan_w_zakresie_geologii/.
• Launch of a four year (2008 2012) National Program by the Minister of the Environment “Assessment of formation and structures for safe geological storage of CO₂ including monitoring plan”, primarily to identify prospective locations for geological storage of CO₂ and implement an information campaign about CCS. More information at: http://skladowanie.pgi.gov.pl/.
• Since 2009, draft regulations transposing the EU CCS Directive are being prepared. Draft available at: www.mos.gov.pl/kategoria/2226_ustawy/.
• Preparations for the execution of at least two CCS demonstration projects under the EU flag program.

Preparation of the draft regulations transposing the EU CCS Directive:

• According to the Polish legal system, prior to the preparation of an act it is necessary to prepare assumptions to the relevant regulations. According to the above mentioned procedure, a draft of assumptions to amend the Polish Geological and Mining Law, which regulates activities related to geology and mining in Poland, and also amend some other laws, was prepared in 2009. In November and December 2009 there were public and inter ministry consultations. Currently the draft is waiting for adoption by the Council of Ministers

The main focus in the past six months has been on the need for a transparent, nationally consistent CCS legislation framework. This is intended to streamline the approvals process and provide a solid platform to build stakeholder and community confidence in the deployment of CCS. The framework underpins the desire for safe, secure storage of CO₂ without causing environmental harm.

The latest version of the Greenhouse Gas Storage Regulation 2010 was published and in force from 1 January 2011. Copies of the regulation document can be sourced at www.legislation.qld.gov.au.

An issues paper is to be drafted in the first quarter of 2011, to define further recommendations for cross jurisdictional studies. This will include an assessment of international approaches and case studies of cross jurisdictional resource regulation. An options paper is to be driven from this initial document. Work is also planned to look at the interaction between greenhouse gas legislation and other resource legislation to assess issues with potential resource conflicts and cross legislative approvals.

Under Sections 181 and 269 of the Greenhouse Gas Act 2009, the state will take ownership of injected greenhouse gas streams and injection wells. The minister may place a security requirement on the tenement owner, which may be held by the state for 1 year after injection authority has ceased. The surrender of an injection permit and/or the decommissioning of an injection well require satisfactory reporting under the relevant acts (this may include other legislation such as the Water Act in addition to the requirements of the Greenhouse Gas Act). The final report must include a detailed explanation of how any injected CO₂ has been monitored, the observed trajectory and spread of the plume and demonstration of long term containment. If the minister does not deem that reporting is satisfactory the state is not obliged to release the tenement holder from their obligations. The issue of long term liability remains complex.

On 22 February 2011 the draft Governmental Emergency Ordinance on the geological storage of carbon dioxide36 (GEO), which represents the transposition of the EU CCS Directive into Romanian national legislation, was published on the site of the Ministry of Environment and Forests for public consultation.

The draft GEO specifies the relevant competent authorities responsible for fulfilling the duties established, namely:

• The Ministry of Environment and Forests (including the National Environmental Protection Agency and National Environmental Guard).
• The Ministry of Economy, Trade and the Business Environment.
• The Ministry of Public Finance.
• The National Agency for Mineral Resources.
• The Romanian Energy Regulatory Authority.

It has to be mentioned that even if the GEO will not result in the establishment of new governmental authorities, the structure of the National Agency for Mineral Resources will need to be modified in order to extend its competence related to the geological storage of CO₂, namely:

• Selection of storage sites (areas at the national level which may be selected for storage sites and assessment of the available storage capacity).
• Granting/ updating/withdrawing exploration permits and storage permits.
• Checking compliance with legal requirements during the operation, closure and post closure periods.
• Reporting and notification to the European Commission.
• Establishing and maintaining a register of granted storage permits.
• Third party access to storage sites (specific procedures will be developed).
• Specific procedures for CO₂ storage activity.
• Approval of the transfer of responsibility.
• Checking the operator’s financial contribution.

The draft GEO also amends a number of other pieces of national legislation, in order to establish requirements on capture and transport operation and to remove existing barriers to the geological storage of CO₂.

In the next six months the following actions are expected to be undertaken:

• Government of Romania:
  • Approval of the GEO at governmental level.
  • Adoption of a new Government Decision related to the organisation and the structure of the National Agency for Mineral Resources, which will replace the existing one (GD no 1419/2009).
• National Agency for Mineral Resources:
  • Develop specific procedures for issuing exploration permits (90 days after adoption of the GEO).
  • Develop specific procedures for issuing storage permits (180 days after adoption of the GEO).

These two procedures will be overseen by the Ministry of Environment and Forests.

The EU CCS Directive was adopted on 23 April 2009 and has to be transposed and implemented into national law by EU member states by 25 June 2011.

CCS is expected to play a significant role in reducing the emissions generated by Romania’s electricity sector, taking into account that coal (especially local lignite with low calorific value and carbon content) is and will be a major player in the electricity market (coal represents around 41% in 2020).

For the Romanian Government it is of paramount importance to implement a CCS demonstration project as an indispensable contribution to its CO₂ reduction targets, taking into account the important strategic share of domestic lignite in power plants.

Despite of all of this, for a developing country like Romania, with low GDP per capita, implementation of this kind of technology will not be possible without supporting financial mechanisms to assure the required funds.

In this context, the funds provided by Directive 2009/29/EC37 NER Pool EUA 300 (NER300) was a powerful incentive for Romania, which decided to prepare an application for obtaining the NER300 funding for a Romanian CCS demonstration project.

The following measures confirm this intention:

• Action Plan to prepare Romania for “Energy Climate Change” Legislative Package Entry into Force and Implementation (the Ministry of Economy, Trade and the Business Environment, the Ministry of Environment and Forests, the Ministry of Public Finance), July 2009.
• Action Plan to implement a Demonstration Project regarding Carbon Capture and Storage (CCS) in Romania (the Ministry of Economy, Trade and the Business Environment), February 2010.
• Order no. 323/10.03.2010 related to establish the Working Group for transposition of the EU CCS Directive.
• Order no. 1508/17.08.2010 related to some measures for promoting the Project regarding Carbon Capture and Storage (CCS) in Romania (the Ministry of Economy, Trade and the Business Environment).

Romania’s preparation for transposition of the EU CCS Directive into national legislation started in early 2010.

The Ministry of Environment and Forests38 is in charge on this task and has set up a Working Group which involves several authorities such as:

• The Ministry of Economy, Trade and the Business Environment.
• The Ministry of Administration and Interior.
• The National Agency for Mineral Resources.
• The National Environmental Protection Agency.
• The National Environmental Guard.
• The Romanian Energy Regulatory Authority.
• The Department for European Affairs.
• The Ministry of Justice.
• The Ministry of Public Finance.

To assist in clarifying some technical aspects, Romanian companies with extensive expertise in reducing pollutant emissions from industrial activities, especially for power plants (ISPE48) and geological matters (GeoEcoMar49 and the University of Bucharest50) were invited to participate in the Working Group also.

The Ministry of the Environment submitted a proposed CCS law for approval by the government on 14 March 2011. The government’s Legal Council has sent the draft law back to the Ministry of Environment for revision. Since 2011, the Ministry of Industry and Trade has been a co sponsor of the law.

The Ministry of the Environment will submit a revised law for transposition of the EU CCS Directive to the government. After the government approves the proposal it will be forwarded to the parliament. It is expected that the House of Representatives will approve the proposal upon first reading. After the Senate approves the proposal, it will be signed by the President and come into force.

The most promising storage sites are currently considered to be aquifers in northern Bohemia and depleted oil fields in southern Moravia. Furthermore, several options of carbon capture and use are being evaluated.

The draft Czech act is in accordance with EU CCS Directive provisions regarding transfer of responsibility (i.e. Article 18 of the EU CCS Directive). Long term liability will transfer to the state 20 years after closure of a CO₂ storage site, provided that all prerequisites have been met:

• All available evidence indicates that the stored CO₂ will be completely and permanently contained.
• A minimum period, to be determined by the competent authority has elapsed. This minimum period shall be no shorter than 20 years, unless the competent authority is convinced that the criterion referred to in the previous point is complied with before the end of that period.
• The financial obligations have been fulfilled (financial contribution has been transferred).
• The site has been sealed and the injection facilities have been removed.

Transfer of liability to the state is obligatory according to the EU CCS Directive.

The injection and geological storage of CO₂ onshore in South Australia is regulated under the Petroleum and Geothermal Energy Act 2000 and associated Petroleum and Geothermal Energy Regulations 2000. These documents are available at:

• www.pir.sa.gov.au/petroleum/legislation/relevant_acts_and_regulations.

The Petroleum and Geothermal Energy Act provides compatible gas storage tenements that explicitly authorise and provide for:

• In the case of a gas storage exploration licence: the exploration for natural reservoirs for the purpose of storing CO₂ or other regulated substances.
• In the case of a gas storage licence: operations for the use of a natural reservoir for the storage of CO₂ or other regulated substances.
• In the case of a gas storage retention licence: protection of the interests of the licensee in the natural reservoir, to facilitate the testing of the natural reservoir for the storage of CO₂ or other regulated substance.

Gas storage within a gas storage licence is not subject to royalty payments.

All activities regulated under the Petroleum and Geothermal Energy Act must be undertaken in accordance with an approved Statement of Environmental Objectives, developed on the basis of an Environmental Impact Report. Activity approvals must also be granted by the Minister prior to the commencement of any regulated activity.

The Petroleum and Geothermal Energy Act also regulates the construction and operation of transmission pipelines for transporting CO₂ (and other regulated substances). Under the Act, the design, manufacture, construction, operation, maintenance, testing and abandonment of pipelines must be carried out in accordance with the relevant requirements of Australian Standard (AS) 2885 Pipelines – Gas and Liquid Petroleum unless otherwise approved by the Minister.

The status of gas storage licences in South Australia to end 2010 is as follows:

• Gas storage exploration licence applications in South Australia summed to a total area of 58,951 km².
• One gas storage retention licence was granted for a five year period.

One of the key roles of Primary Industries and Resources for South Australia is to engage and promote innovative new technologies in relation to activities regulated under the Petroleum and Geothermal Energy Act. As part of this role, Primary Industries and Resources for South Australia provides support to the development and ongoing work of locally based CCS research centres, including support of the Adelaide University node of the CO₂CRC.

The provisions of the Petroleum and Geothermal Energy Act 2000 are designed to minimise risks associated with all regulated activities, and minimise liability that may accrue to the state. In this regard, the Petroleum and Geothermal Energy Act sets up a risk management framework so that all risks are reduced to “As Low As Reasonably Practicable” (ALARP), requiring Licensees/proponents to:

• Identify threats and assess risks for the life cycle of the project (including decommissioning and abandonment) at the approvals phase, via the development of an Environmental Impact Report (EIR) and Statement of Environmental Objectives (SEO).
• Set clear objectives and measurement criteria, which are monitored over the life of the project through compliance with the SEO.

In addition to the risk management framework, licences granted under the Petroleum and Geothermal Energy Act incorporate a condition requiring the licensee to lodge security and hold insurance to cover potential liabilities associated with the storage activities.

The Petroleum and Geothermal Energy Act expressly vests ownership of the natural reservoir used for storage in the Crown. Gas stored in a natural reservoir is owned by the licensee who has injected it. On surrender or cancellation of the licence, it is considered that ownership of the stored gas reverts to the Crown.

Notwithstanding this, the Petroleum and Geothermal Energy Act specifies that a licensee or former licensee remains liable for the cost of environmental rehabilitation the state is reasonably required to carry out as a result of serious environmental damage arising from activities carried out under the licence.

A mechanism for the transfer of liability exists, whereby the Minister can limit or exclude a licensee’s liability on the basis of an independent risk assessment. For a CCS project, this risk assessment will require demonstration that the geological formation remains suitable for storage, and that future monitoring and verification is either not required long term, or is conditioned appropriately between the licensee and the state. This provision is only available to a licensee (not a former licensee) and therefore must be exercised prior to licence surrender. It is therefore in the licensee’s interest to demonstrate acceptable risk prior to license surrender so that it is not subject to ongoing liability under these provisions.

The State of Victoria has a comprehensive framework for the regulation of CCS (greenhouse gas injection and storage) activities both onshore and offshore, in state waters. The Australian federal government regulates CCS (greenhouse gas injection and storage) activities where they occur in Commonwealth waters.

The Victorian Greenhouse Gas Geological Sequestration Act 200898 received Royal Assent on 5 November 2008. The majority of this Act commenced operation on 1 January 2010. This Act regulates CCS (greenhouse gas injection and storage) activities in onshore Victoria (the Onshore Act). Regulations made under the Onshore Act, the Greenhouse Gas Geological Sequestration Regulations 2009, came into operation on 1 December 2009.

The Offshore Petroleum and Greenhouse Gas Storage Act 2010100 (the Offshore Act) received Royal Assent in March 2010. This Act regulates CCS (greenhouse gas injection and storage) activities and petroleum activities in offshore Victorian waters. In keeping with Victoria’s signatory obligations (in accordance with the Offshore Commonwealth Settlement) the Offshore Act predominantly mirrors the Commonwealth offshore CCS and petroleum legislation, the Offshore Petroleum and Greenhouse Gas Storage Act 2006. The Offshore Act will commence on 1 January 2012, unless proclaimed earlier. An extended commencement period was chosen to allow sufficient time for the requisite regulations, consistent with the Commonwealth, to be established.

Regulations subsequent to the Offshore Act are currently under development. These are expected to be made before the end of 2011 and are anticipated to largely reflect a consolidated version of the Commonwealth regulations. However, as the CCS related regulations within the Commonwealth jurisdiction are also currently undergoing consolidation, details cannot yet be confirmed regarding the structure of the Victorian offshore regulations.

Long term liability for stored CO₂ (greenhouse gas) is allocated in the same way under both the Victorian Onshore and Offshore Acts. Under both acts, if an injection licence is surrendered or cancelled the state (the Crown) becomes the owner of any greenhouse gas substance injected into an underground geological storage formation the subject of that licence, as the state is the owner of all underground geological storage formations.

• “Liability should be based on existing regulatory arrangements and common law. Thus the status quo should be adopted for all parts of a CCS project up until closure. Using this model, the practical consequence is that government may assume responsibility in the post closure period.”

The Victorian Acts also require the proponent to, prior to surrender of their licence, undertake post injection monitoring and verification at their own cost, until the relevant state Minister is satisfied that the stored gas is behaving (and will continue to behave) in a predictable manner and that storage related risks have been reduced to as low as reasonably practicable. Within the Onshore Act, the operator must also show that ongoing storage will not present a risk to public health or the environment, and that a long term monitoring and verification plan and risk management plan is adequate. Only then can the licence be surrendered. Similarly, within the Offshore Act, prior to issuing a site closure certificate, the Minister retains the discretion to:

• Direct the operator to satisfy the Minister that conservation and protection of the natural resources in the licence area have been adequately provided for.
• Undertake certain activities to eliminate, mitigate, manage and remediate eliminating; or the risk that a greenhouse gas substance injected into the identified greenhouse gas storage formation will have a significant adverse impact on, for example, navigation, fishing, the environment and human health or safety.

As already noted, after licence surrender, ownership of any greenhouse gas substance injected into an underground geological formation passes to the state, together with responsibility for long term monitoring of the stored substance. In order to ensure that the state can fund any potential liabilities arising from an adverse event to the environment or public health after licence surrender, the royalties power within each of the Acts enables the state to recover monies from proponents during the licence period. The relevant state Minister retains a discretion to require the operator to maintain insurance relating to “the clean up or other remediation of the effects of the escape of a greenhouse gas substance” while holding an injection authority.

Transposition of the EU CCS Directive into Finnish legislation is being undertaken by the Ministry of the Environment, in co operation with the Ministry of Employment and the Economy.

Transposition is relatively easy in Finland as the country does not have any suitable storage capacity. As studies indicate, underground storage requires sedimentary rocks with some porosity. These are not available inside Finnish territory. In Finland, all deep rocks are expected to be crystalline basement rock and not suitable for storage:

• Potential for CCS in the Nordic region, VTT research notes 2556, www.vtt.fi/inf/pdf/tiedotteet/2010/T2556.pdf.

Transposition of the EU CCS Directive into Finnish legislation will be done by 25 June 2011.

Right now, there are no CCS projects in Finland (see discussion under ‘Annex 1: Progress to 2011’), but the transposition of the directive is being undertaken to enable potential CCS with ship or pipe transport from Finland in the future.

In Finland, there has been one CCS project proposed, namely retrofitting the MeriPori coal powered plant (565 MW) on the West Coast of Finland with CCS. This project was called Finncap. It would have used ship transportation and the final storage of CO₂ was planned to be in the depleting oil and gas fields of the Danish North Sea. The project was discontinued in October 2010, based on power company Fortum’s (co owner of the plant) updated strategy:

• www.vtt.fi/files/projects/ccsfinland/seminaari2010/12 iso tryykari.pdf.

A small national CCS programme focusing on CCS in combined head and power and bio CCS is starting (five years, total volume EUR 20 M):

• www.vtt.fi/files/projects/ccsfinland/seminaari2010/13 nieminen.pdf.

Malaysia undertook a scoping study for CCS in Malaysia in 2010. The study was of a preliminary nature and touched on issues relating to emissions, probable storage sites in Malaysia, transportation, costs, etc.

The study also investigated the legal and regulatory aspects of the implementation of CCS in Malaysia and reported that there was a lack of strong existing legal and regulatory structure in Malaysia to address all three components of CCS, i.e. capture, transport and storage.

Thus, the establishment of an appropriate legal and regulatory framework would be a primary concern before Malaysia could proceed further on CCS implementation. This would involve concerted efforts by all the relevant stakeholders in Malaysia. In this regard, international co operation would also be necessary to build capacity in Malaysian stakeholders to prepare the framework.

In addition, Malaysia would also have to look into the other aspects of CCS implementation in the country, i.e. the commercial feasibility for CCS implementation in the related sectors of the economy, financing, public acceptance etc.

Thus, there is much preparatory work ahead for Malaysia before CCS can be implemented in the country.

The Ministry of Energy, Green Technology & Water is planning to establish an inter agency CCS Steering Committee to plan for the implementation of CCS in Malaysia.

The foremost activity of the Steering Committee will be to develop further capacity building programs in CCS for the stakeholders. In addition, there is much work to do on acceptance of CCS in Malaysia.

As the Scoping Study has implied, Malaysia also needs to establish an acceptable legal and regulatory framework for CCS in the country. This exercise would involve, amongst other things, the review of the related laws on emissions and the environment.

Malaysia is also contemplating a Storage Study with the assistance of the Global CCS Institute.

Malaysia has yet to address the issue of long term liability for storage of CO₂. This is an area proposed to be covered in the legal and regulatory framework to be established.

At the UNFCCC COP 15 in 2009 in Copenhagen, Malaysia made a conditional commitment to reduce the carbon intensity of the country by 40% in 2020 based on 2005 levels.

The power sector of Malaysia is the biggest emitter of CO₂ in Malaysia because, as of 2010, fossil fuels accounted for about 89.6% of the fuel mix and out of that, coal represented about 32.1%. It is anticipated that coal will continue to be one of the main fuels for the power sector accounting for 41.5% of the fuel mix by 2020. Thus, CCS technology poses an attractive option to be used by Malaysia to reduce CO₂ emissions from coal fired generation of electricity in the long run.

Acknowledging the future use of CCS, Malaysia joined the Global CCS Institute on 13 August 2009 and was the first governmental entity, outside of Australia, to join. Since joining the Global CCS Institute, a number of capacity building events in CCS have been held in Malaysia, with the close co operation of the Institute.

Malaysia has also laid the foundation for CCS implementation in the country by undertaking a scoping study for CCS in Malaysia in 2010. This study is discussed under “Part 1: Developments in last six months” above.

The government is currently trying to understand other countries’ regulatory frameworks for CCS, specifically countries with similar socio economic conditions to Vietnam.

Currently, Vietnam participates in the Asian Development Bank’s survey project to determine the potential for CCS implementation in Southeast Asia (focus on Vietnam, the Philippines, Thailand and Indonesia), in which both CCS potential and legislation related to CCS are subjects of study.

The Asian Development Bank’s survey outcomes in determining the potential and legislation for CCS implementation in Vietnam and other Southeast Asian countries.

Approval has been granted for the drafting of a Bill amending the state’s Petroleum and Geothermal Energy Resources Act 1967 to provide a legislative framework for the onshore transport and geological storage of greenhouse gases in Western Australia.

Potential Western Australian greenhouse gas storage projects requiring a greenhouse gas legislation framework include the Collie South West Hub and associated industrial projects.

For the drafting of the Bill, Western Australia has adopted the approach that the long term liability for injected greenhouse gases will be transferred to the state in the post closure period, following the surrender of an injection licence. This approach follows the Commonwealth statutory model in the Offshore Petroleum and Greenhouse Gas Storage Act 2006.

Work on the Bill has commenced and it is anticipated that drafting will be completed ready for the Bill’s introduction into Parliament in the second half of 2011.

The Western Australian legislative approach avoids any difference in the treatment of long term liability between the state and the Commonwealth. Western Australia is also assisting in the development of a policy on cross boundary migration.