Implementing the CCS Directive in the UK

The UK government has always considered legal and policy developments to be pivotal in enabling CCS deployment. Over the last year this has become even more important, in light of its obligations under European Union (EU) law to implement the 2009 Directive on geological storage of carbon dioxide (Directive 2009/31/EC).

The Directive requires all EU Member States to adopt domestic measures to implement its provisions within national law (‘transposition’) by a deadline – 25 June 2011. Although the official conformity-check for such measures will be conducted by the European Commission in the following months, this seems a good time to provide an overview of the UK transposition process, its peculiarities and issues that remain to be resolved.

As of today, the UK transposition process has almost been completed, but some final adjustments have yet to be made. As a result, technically it cannot be said that the UK has been able to meet the deadline for transposition.

The UK transposition has been carried out through the Energy Act 2008, its enabling regulations and various amendments to existing legislation.

The 2008 Energy Act was one of the first pieces of CCS legislation worldwide and was passed shortly before the adoption of the Directive. This was due to the UK’s concerns that delays in reaching an agreement at EU level might prevent the UK from being a first-mover on the technology, but the legislation was sufficiently flexible to provide for the transposition. As a result, once the Directive was adopted in April 2009, the UK was in a better position, compared to other Member States, to ensure smooth implementation.

The Energy Act establishes a licensing framework for offshore CO₂ storage activities (from exploration to post-closure), based upon its well-established licensing regime for oil and gas activities. The Act requires a licence to be obtained to carry out specified activities, which gives a time-limited right to apply for a storage permit. It recognises the Secretary of State and Scottish Ministers as competent authorities, depending on where the activity takes place. Interestingly, the Act also requires a lease or authorisation from the Crown Estate to be obtained in parallel with the licence. This is a peculiarity resulting from the fact that property rights over the seabed and sub-seabed in the UK are vested in the Crown and managed by the Crown Estate, which is an entity with no equivalent in other jurisdictions around the world.

The Energy Act partially transposes the Directive, but the details are established by secondary legislation. Over the past 18 months, the UK adopted a series of regulations, mainly governing licensing (‘The Storage of Carbon Dioxide (Licensing etc.) Regulations 2010’ and ‘The Storage of Carbon Dioxide (Licensing etc.)(Scotland) Regulations 2011’), financial contribution, and transfer of responsibility (‘The Storage of Carbon Dioxide (Termination of Licences) Regulations 2011’).

Additionally, a wide series of amendments to existing legislation was necessary to implement the Directive and harmonise the regulation of CCS activities with pre-existing legislation. These mainly concern environmental liability, pollution prevention and control, and environmental impact assessment. Following the Directive’s approach, the UK CCS regulations are silent on public participation in the decision-making concerning CCS projects, as this aspect will be addressed in the context of the Environmental Impact Assessment and Integrated Pollution Prevention and Control regulations.

Overall, the UK implementation of the Directive has not posed novel legal and regulatory issues. The decision to implement the EU requirements by means of a licensing framework mirroring the familiar oil and gas experience facilitated the process. This is mainly due to the acquired expertise of both the regulator and the UK industry with such licensing regime. Conversely, the integrated scale of the CCS projects, requiring close collaboration and interaction between very different entities (e.g. utilities and oil and gas companies) that do not typically work so closely together, is rather unprecedented in the UK context. The question arises whether the existing legal and regulatory regime is fit-for-purpose for dealing with the challenges of such integration.

Another interesting peculiarity of the UK context is the devolution, where legislative powers for some matters (‘devolved matters’) are given to devolved administrations (the Scottish Parliament, Welsh Assembly and Northern Ireland Executive), while for other matters (‘reserved matters’) are retained by the UK Parliament. What is peculiar in this transposition process is that, CCS being a novel technology, the competence for its regulation lies at the intersection between a series of reserved (i.e. energy and climate change) and devolved (i.e. planning, environment, electricity). To complicate the situation, not all matters are equally devolved for all administrations. This has resulted in particularly complex legal work to ensure full transposition for the whole of the UK territory. Interestingly, a devolved administration could also theoretically prohibit CCS in its territory, if such decision falls entirely within a devolved matter, although this is quite unlikely in the UK due to overall political support for CCS.

To wrap up, I would say that in terms of the concrete legal and regulatory choices, the UK is well advanced in its reading of the Directive, compared to other Member States. In some instances, implementation goes beyond what is required by the Directive. For example, from 2009, the UK has implemented a more stringent reading of the Carbon Capture Readiness requirement than Article 33 of the Directive, mandating for all new combustion-power plants, in combination with an obligation for all new coal-fired power plants, to demonstrate CCS at a commercial scale (300 MW or more). 

That said, further steps are still to be taken. Some aspects, such as the details on financial security and the inspection regime, are yet to be finalised. Regulations on third party access to storage sites and transport networks have been finalised, but have yet to be passed. Finally, the limited geographic scope of the Energy Act must be fully extended to comply with the Directive, which also covers onshore CO₂ storage.

A detailed analysis of the UK legal and regulatory choices in transposing the Directive is provided in a report to be published in Autumn 2011 by the UCL Carbon Capture Legal Programme as part of the CCLP European Case Study Project. Check out the website for more information, or leave a comment on this blog and I will respond to your query.