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Carbon Capture and Storage Legal and Regulatory Review (Edition 2) Summary

Core Content

The International Energy Agency (IEA) has released the second edition of the Carbon Capture and Storage Legal and Regulatory Review (CCS Review), focusing on long-term liability for stored CO₂. This publication aims to provide a global overview of CCS regulatory progress and assist countries in developing their own legal frameworks. It is produced every six months and includes contributions from national, regional, and international entities.

The IEA highlights that CCS is a key technology for reducing greenhouse gas emissions and mitigating climate change. It estimates that the widespread deployment of low-carbon technologies could reduce emissions to about half of 2005 levels by 2050, with CCS contributing approximately one-fifth of these reductions. However, achieving this goal requires a significant number of CCS projects to be implemented by 2020 and 2050.

Main Points and Key Information

Regulatory Frameworks and Progress

• The second edition of the CCS Review includes 38 contributions from 23 national governments, 6 regional governments, and 9 international organisations, showing increased global interest and progress in developing CCS regulations.
• EU member states are actively working to transpose the EU CCS Directive into national law, with a deadline of 25 June 2011.
• Australia, Canada, and the United States are also advancing their regulatory frameworks, with some states and provinces finalizing laws or preparing for them.

Long-Term Liability for Stored CO₂

• Long-term liability is a central theme of this edition, as it is a complex and critical aspect of CCS regulation.
• The issue revolves around whether liability for CO₂ storage should be transferred to the government or retained by the operator indefinitely.
• Australia, the EU, and several Canadian and U.S. states have adopted liability transfer mechanisms, though no consensus exists globally.
• Key requirements for liability transfer typically include:
  • Evidence of no significant leakage risk.
  • A minimum time period (ranging from 20 to 50 years) after injection cessation.
  • A financial contribution to long-term stewardship.

Financial Contributions and Stewardship

• All jurisdictions that accept liability transfer require financial contributions from operators to fund long-term monitoring and management.
• Mechanisms include royalties, fees, trust funds, and insurance.
• Trust funds are widely used, offering the benefit of pooling risk across multiple projects.
• Germany has already specified a 3% annual deposit of avoided emissions trading allowances for financial security.
• Alberta (Canada) is conducting a multi-stakeholder study to develop a peer-reviewed model for determining liability rates, and may impose a set rate per tonne of CO₂ injected.

Regional and International Contributions

• Regional jurisdictions such as Alberta, Queensland, South Australia, Victoria, and Western Australia in Australia, as well as European Commission, are contributing to the CCS Review.
• International organisations like CCSReg, CCSA, Global CCS Institute, UCL-CCLP, The World Bank, and WRI are also providing insights into CCS legal and regulatory developments.
• The EU CCS Directive is the primary legal framework guiding liability transfer and stewardship in Europe, with some countries like France and Germany requiring a 30-year minimum period before transfer.

Challenges and Considerations

• The IEA emphasizes that regulation must be fit for purpose, especially as CCS demonstration projects increase.
• Liability transfer is not automatic and depends on site-specific conditions and legal interpretations.
• Uncertainty remains regarding the magnitude and frequency of leakage events, which influences how liability is assessed.
• Public confidence is a key driver for extending liability periods, as seen in France and Germany.

Key Jurisdictions and Their Approaches

Conclusion

The second edition of the CCS Review underscores the increasing regulatory momentum for CCS globally, particularly in Europe. It highlights the complexity of long-term liability and the need for clear, consistent frameworks to ensure environmental safety and public confidence. While liability transfer is a growing trend, financial mechanisms and timeframes remain varied, indicating the ongoing need for research and stakeholder consultation. The IEA continues to play a central role in coordinating and informing these developments.