12 Months in CCS legislation - A period of consolidation and reflection

A year may be an era in politics but it is not a long time when it comes to developing new legislation.  In the past we have flurries of legal activity with rapid agreements to CCS specific legislation - amendments to the London Dumping Convention and OSPAR Conventions, the European Union Directive, and significant Australian laws. In contrast the last twelve months have been relatively quiet - a period of consolidation and reflection, with both positive and negative news.

The 2010 Cancun agreements finally broke the deadlock on the possible inclusion of CCS within the UN CDM mechanism, but much remains to be agreed before Certified Emissions Reductions are finally secured for CCS projects.

In North America US Federal legislative initiatives on climate change have ground to a halt. The spotlight at Federal level now shifts to the Environmental Protection Agency (EPA), which in 2010 issued various rules requiring large scale producers of greenhouse gas to obtain licences under the Clean Air Act and to show they were using the best available control technologies to deal with emissions. However, actual permitting will be done at State level under EPA guidance, and it is at this level that we still see developments in CCS specific legislation. In March 2011 legislation in Mississippi came into force giving the State the authority to regulate the storage of CO₂.

But it is Canada that saw the most legislative activity last year. In Alberta the Carbon Capture and Storage Amendment Act 2010 came into force in December, vesting pore space for CCS and licensing powers with the Alberta Government. That Government has now established an impressively ambitious Regulatory Framework Assessment process, including international experts and designed to ensure the development of a sound and effective regulatory regime for CCS projects.

2010 saw two significant legal developments in Australia. Victoria passed legislation establishing a new regime for the regulation of offshore CCS and broadly following the principles of the existing Commonwealth offshore CCS legislation. In Queensland regulations were adopted in 2010 fleshing out the requirements for CCS exploration and storage permits under the Greenhouse Gas Storage Act.

At European Union level, Member States are obliged to implement the 2009 CCS Directive within their national systems by 25 June 2011. It is clear that few will meet the precise deadline. More worryingly it seems that some countries (i.e. Germany and Poland), alarmed by public opposition to CCS, intend to restrict any transposition to demonstration projects only. The Directive expressly does not oblige Member States to permit storage within their territory, but as a matter of EU law it is less clear whether this entitles them to pick and choose how to implement the Directive.

On the positive side the European Commission issued four Guidance Documents in 2011, designed to flesh out key provisions of the Directive and ensure more consistent implementation within Member States. At the same time the Commission has set up a group allowing the authorities in Member States to exchange information on how they will go about implementing the Directive. These developments are to be welcomed, as they represent a positive change from the past where there have been too many instances of EU laws being agreed and Member States were then left to their own devices by the Commission in developing national law - conflicts between the Commission and Member States could then arise far too late in the process when it was too difficult to change direction.

Law by itself cannot possibly resolve all the economic, technical and political challenges inherent in the deployment of CCS. But it can provide both an essential framework for decision-making and the system stability needed for investment. Much of the legal progress to date at both international and national level has been impressive. Even more so the willingness of governments and expert authorities to share knowledge and experience through fora such as the IEA CCS Regulatory Network. But difficult issues still remain in terms of legal design and a number of these will be especially important in the coming years. Developments to date have largely focussed on site selection and storage, often modelled on the familiar structures of oil and gas legislation. In future we will need to ensure that the whole cycle of CCS, including capture and transport, is adequately reflected in the legal framework. Long-term liability issues, which can have an enormous impact on financing, are being treated rather differently in different jurisdictions and there will be demands for greater attention and consistency.  Public engagement and confidence in the technology will be vital. Signals to date in a number of countries on demonstration projects have not been positive, but we will need greater thought to the role of law and legal process, such as rights of participation in fully engaging with public concern.