The Act provides a regulatory framework for the licensing of offshore carbon dioxide storage, with further detail to be provided shortly by way of Regulation. The Energy Act 2008 is considered further within the Offshore section of this website.
Current Status:IN FORCE (8 April 2010 - apart from those sections indicated in paragraph 38)
The Energy Act 2010 establishes a financial incentive to support four CCS demonstration projects at coal-fired power stations through a levy on electricity suppliers which will be managed by Ofgem, the regulator for the gas and electricity market. This incentive will also support the retrofit of additional CCS capacity to these projects in the future. According to the Act, the Government is required periodically to submit a report on the progress of decarbonisation of electricity generation and CCS deployment. The UK government, in its March 2011 budget, announced that it would not be pursuing the levy as a method of funding the demonstration programme, and would instead provide funding from general taxation.
Mandatory social prices for energy are established to address and reduce fuel poverty. This provision will replace the current voluntary agreement due to expire in 2011.
The 2010 Act clarifies Ofgem's remit in relation to reducing carbon emissions, improving energy security and protecting consumers and market competition. Ofgem is given additional powers to tackle market abuses and impose penalties on energy companies found in breach of their licence conditions.
Finally, the Act establishes a period of time within which energy companies must notify their customers of any change in tariffs and gives the Secretary of State the power to ban unfair cross-subsidies between gas and electricity supply.
Energy Act 2008 (Consequential Modifications) (Offshore Environmental Protection) Order 2010
Current Status:IN FORCE (1 July 2010)
This Order follows the adoption of the Energy Act 2008 and amends a number of Regulations concerning the protection of the offshore environment so that they apply to activities relating to (a) permanent storage of CO2 (Chapter 3 of the Energy Act) and (b) importation and storage of combustible gas (Chapter 2 of the Energy Act 2008). In particular, this Order transposes Article 31 of the European Union CCS Directive (amending the EIA Directive) into UK law, through a modification to the Offshore Petroleum Production and Pipeline (Assessment of Environmental Effects) Regulations 1999.
Energy Act 2008 (Storage of Carbon Dioxide) (Scotland) Regulations 2011
Current Status:IN FORCE (1 April 2011)
The Energy Act 2008 prohibits the exploration or storage of CO2 without a licence. These Regulations extend the territorial scope of the Act to onshore Scotland and its internal waters (from 0 - 12 nautical miles).
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The Storage of Carbon Dioxide (Licensing etc.) Regulations 2010
Current Status:IN FORCE (1 October 2010)
The Regulations partially fulfill the UK's obligation to transpose the EU Directive on the geological storage of carbon dioxide (Directive 31/2009/EC - 'CCS Directive') into UK domestic law. In relation to the CCS Directive, the Regulations cover: the conditions for granting licences and exploration permits; the obligations of the storage operator; the closure of the storage site; the post-closure period; and financial security. However, the Regulations do not cover licences granted by the Scottish Minister for CCS activities undertaken in the territorial waters adjacent to Scotland (See Scottish Regulations below).
In order to implement Article 34 of the CCS Directive, the Regulations also amend the Environmental Damage (Prevention and Remediation) Regulations 2009 which implement the Environmental Liability Directive. As a result, 'the operation of storage sites' is added to the list of 'activities causing damage' (Schedule 2) for which liability can be triggered under the Environmental Damage (Prevention and Remediation) Regulations 2009.
These Regulations were one of the matters considered in the UK Government's 'Consultation on the proposed offshore licensing regime' (see Consultation section below).
The Storage of Carbon Dioxide (Licensing etc.) (Scotland) Regulations 2011
Current Status:IN FORCE (1 April 2011)
These Regulations are enacted under the authority of the Energy Act 2008 and implement part of the provisions of the EU CCS Directive (Directive 2009/31/EC). They establish a dedicated licensing regime for carbon capture and storage in Scotland. Details are provided for: the application process; the content of and conditions for granting a licence and a storage permit; corrective measures; review, modification and revocation of the permit; and a post-closure plan. The regulations also address the obligations and liability of the operator after site closure. Under the Energy Act 2008, the Scottish Minister is the granting authority for CCS activities undertaken in the UK territorial sea adjacent to Scotland.
In February 2011, the Environmental Liability (Scotland) Regulations 2009 implementing the Environmental Liability Directive (Directive 2004/35/EC), were also amended to include the operation of carbon storage sites in the lists of activities covered by the Regulations. This amendment, which was required in order to implement Article 34 of the EU CCS Directive, will enter into force on 25 June 2011, which is also the deadline for transposition of the Directive by the Member States.
The Storage of Carbon Dioxide (Termination of Licences) Regulations 2011
Current Status:IN FORCE (11 July 2011)
These Regulations are enacted under the authority of the Energy Act 2008 (Part 1, Chapter 3, Section 31) and transpose into UK law Articles 18 and 20 of the EU CCS Directive (Directive 2009/31/EC). Article 18 concerns the requirements that must be met prior to the transfer from the operator to the competent authority of obligations for residual monitoring, corrective measures and surrender of emissions allowances. Article 20 requires the operator to make a financial contribution to the competent authority to cover post-transfer monitoring costs.
The Regulations extend to all of the United Kingdom and apply to licences granted by the Secretary of State and by the Scottish Ministers.
The new Energy Act 2011 received Royal Assent on 18 October 2011. Sections 107 and 108 address compulsory acquisition of land for CO2 pipelines (amending the Pipe-line Act 1962) and decommissioning of offshore infrastructure to be converted for CCS demonstration projects (amending the Energy Act 2008), respectively.
Section 107 gives the Secretary of State discretionary authority to designate installations and pipelines, including offshore, eligible for CCS. These powers are limited in the case of installations licensed by or located in Scotland. Pipelines and installations designated for CCS qualify for change of use relief if: during a CCS demonstration project they are used, and captured CO2 is first presented at an installation or pipelines used as part of the demonstration project. Section 107 imposes limitations on the requirement to submit an abandonment programme for a designated installation or pipeline qualifying for change of use relief. It also imposes limits on a decommissioning obligation in specific situations. These limitations, however, do not prevent an organisation that could have been made liable for decommissioning of an oil and gas facility, from liability for decommissioning when it is used for CO2 storage, for other bases.
Section 108 gives the Secretary of State discretionary authority to make an order that grants rights over land for CO2 pipelines. The Secretary of State will be able to make such an order where there is an intent to convert an existing pipeline (or part thereof) to convey CO2. Procedural provisions and procedures under section 12 of the Pipelines Act 1962 will still apply.
Storage of Carbon Dioxide (Amendment of the Energy Act 2008 etc.) Regulations 2011
Current Status:IN FORCE (11 October 2011)
These regulations form part of the UK's implementation of Directive 2009/31/EC. They extend the geographical scope of the prohibition on carrying out CO2 storage activities without a licence under Part 1, Chapter 3 of the Energy Act 2008. The prohibition is extended in application to onshore England and Wales and Northern Ireland, and adjacent internal waters. The regulations also, inter alia, extend environmental impact assessment requirements under the Pipeline Works (Environmental Impact Assessment) Regulations 2000 (S.I 2000/1928) to pipelines that convey CO2.
Storage of Carbon Dioxide (Access to Infrastructure) Regulations 2011
These regulations implement Articles 21 and 22 of Directive 2009/31/EC, on third party access to CO2 storage sites and transport networks. The regulations provide a designated "authority" ability to grant consent for relevant infrastructure, and to include conditions of consent therein. The regulations assist persons attempting to secure access to relevant pipeline or storage sites, and impose certain information requirements from owners regarding available capacity of infrastructure. The regulations also set penalties for failing to comply with requirements set under the regulations.
In November 2007, the UK government launched a 'CCS demonstration competition' for the funding to build the UK's first full-scale CCS demonstration plant. The winner will receive financial support (about £1 billion) to test the technical and commercial viability of the technology, and the adequacy of the regulatory framework.
In November 2008, the government announced the 4 companies who pre-qualified for the competition: BP Alternative Energy International Limited; E.On UK plc.; Peel Power Limited and Scottish Power. BP and Peel Power pulled out of the competition in 2008 and 2009 respectively.
In March 2010, funding was awarded to 2 remaining bids - E.On for the Kingsnorth project and Scottish Power for the Longannet project - to support front end engineering and design (FEED) studies as part of the competition. Following the results of these technical studies, the winning project was to be announced. However, E.On withdrew from the competition in October 2010 leaving Longannet as the only candidate. The Department of Energy and Climate Change (DECC) announced that, although Scottish Power is the only company eligible for the award of the government's funding, 'it does not guarantee the company will satisfy all the conditions to secure the money'.
A second competition will select up to 3 further CCS demonstration projects. This would complete the previously announced UK policy of implementing at least 4 CCS demonstration projects by 2020. Selected projects from the second competition will receive financial support from a levy on electricity suppliers as established under the Energy Act 2010 (the "CCS levy").
In the context of the competition process, DECC carried out a Market Sounding process (8 July - 15 September 2010) engaging with the private sector to help the department identify the best options for the selection and financing of the 3 further CCS demonstration projects. DECC also published a document to provide guidance on the EU funding mechanism - NER300 - which can be combined with the CCS levy.
A consultation is an important element of the UK policy-making process. It is a formal, written and public process launched by a government department (e.g. DECC) to seek stakeholders' views and evidence on a proposed policy or draft regulation on a particular topic. It is mainly addressed to parties interested and affected by the proposal.
Often a consultation is a statutory requirement, but in other cases the government has discretion in launching one. The process allows the government to take into account the broader impact of its proposed policies or regulations, adjust them in view of the responses received, and achieve a more effective and transparent outcome.
A consultation starts with a document, which explains the proposal. The consultation period normally runs for 12 weeks. Following an analysis of the submissions, the government publishes its response to the consultation. The consultation outcome will inform the final UK policy or regulation for that topic.
The following is a list of CCS-related consultations, with a short summary for each of them.
Consultation: Towards Carbon Capture and Storage
Consultation period: 30 June - 22 September 2008 Government Response: published on 23 April 2009 Consulting authority: Department for Business Enterprise & Regulatory Reform (BERR), replaced by the Department of Energy and Climate Change (DECC) in October 2008. Content: New Policy on Carbon Capture Readiness requirement for all new generating stations with an electricity generating capacity at or above 300 MW (in force from April 2009).
Guidance on Carbon Capture Readiness and Applications under Section 36 of the Electricity Act 1989: a consultation
Consultation period: 23 April - 22 June 2009 Government Response: published on 19 November 2009 Consulting authority: Department of Energy and Climate Change (DECC) Content: Guidance on the information required to fulfill the carbon capture readiness requirement in the application process for obtaining the development consent to construct power generating stations under section 36 of the Electricity Act 1989.
Consultation on a Framework for the Development of Clean Coal
Consultation period: 17 June - 9 September 2009 Government Response: published on 9 November 2009 Consulting authority: Department of Energy and Climate Change Content: The government announced a new policy to implement up to 4 commercial-scale CCS demonstration projects in the UK. Under this policy, any new coal-fired power station to be built in England and Wales will be required to demonstrate the full-chain of CCS (i.e. capture, transport and storage) at commercial scale for at least 300 MW of its electricity generation capacity. Following the consultation, this requirement was extended to existing power stations that are upgraded to supercritical technology. In addition, the Government announced a long-term transition to clean coal, with CCS technologies ready for deployment by 2020 and all installations retrofitted with CCS by 2025. These policies have been in force since November 2009. In the light of the requirement to demonstrate CCS on 300MW of any new coal-powered generating capacity, the government launched another consultation on additional guidance for application under Section 36 of the Electricity Act 1989 (see Consultation on Draft Supplementary Guidance for Section 36 Applications: New Coal Power Stations, below).
Consultation on Draft Supplementary Guidance for Section 36 Applications: New Coal Power Stations
Consultation period: 9 November 2009 - 1 February 2010 Government Response: awaiting Consulting authority: Department of Energy and Climate Change Content: Supplementary information is provided to allow applicants to fulfil requirement in the application process for obtaining development consent from the Secretary of State to construct power generating stations under s.36 of the Electricity Act 1989. This is the result of the new policy requiring any new coal-fired power station built in England and Wales to demonstrate full-chain CCS (capture, transport and storage) at commercial scale for at least 300 MW of its electricity generation capacity.
Consultation on the proposed Offshore Carbon Dioxide Storage licensing regime
Consultation period: 25 September - 30 December 2009 Government Response: published on 27 August 2010 Consulting authority: Department of Energy and Climate Change Content: The government consulted on a framework for the transposition of a number of the provisions contained in the EU CCS Directive into UK law. Following the response to the consultation, the UK Parliament adopted the Storage of Carbon Dioxide (Licensing etc.) Regulations 2010, in September 2010, which entered into force in October 2010.
Consultation on draft National Policy Statements for Energy Infrastructure
First round
Consultation period: 9 November 2009 - 22 February 2010 Government Response: 18 October 2010
Second round
Consultation period: 18 October 2010- 24 January 2011 Government Response: June 2011
Consulting authority: Department of Energy and Climate Change Content: The Planning Act 2008 established a new body, the Infrastructure Planning Commission (IPC), responsible for decisions on applications for development consent for nationally significant infrastructure projects, which include CCS projects. The IPC will decide on the merit of any such application insofar as a relevant National Policy Statement (NPS) is in force. The Planning Act requires a consultation for the adoption of all NPSs, and so the government has launched these two rounds of consultation.
Consultation on Amendments to the Pipeline Safety Regulations 1996 and the Health and Safety (Fees) Regulation
Consultation period: 7 December 2009 - 1 March 2010 Government Response: March 2010 Consulting authority: Health and Safety Executive Content: The government consulted on a proposal to classify CO2 as a 'dangerous fluid' under the Pipelines Safety Regulations 1996. This consultation showed there was general agreement amongst stakeholders with this proposal. However, the HSE has decided that it is still too early in the process of developing CCS to legislate in the area of CO2 pipelines and has postponed this amendment. HSE intends to review this decision as the science and evidence base develops.
Consultation on Environmental Permitting (England and Wales) (Amendment) Regulations to transpose the directive on carbon capture and storage, and to encourage anaerobic digestion
Consultation period: 3 September 2010 - 26 November 2010 Government Response: awaiting Consulting authority: Joint consultation with DECC, Department for Environment, Food and Rural Affairs (DEFRA), Welsh Assembly Government and Environment Agency. Content: This consultation is on some amendments to be made to the Environmental Permitting (EP) Regulations 2010, in order to transpose the EU CCS Directive into national law. The consultation only covers England and Wales.
Consultation on Third Party Access Provisions of the CCS Directive and Call for Evidence on Long Term Development of CCS Infrastructure
Consultation period: 10 December 2010 - 4 February 2011 (for Third Party Access Provisions) and 4 March 2011 (for Call for Evidence) Government Response: Response to Third Party Access Provisions published on 8 April 2011 Consulting authority: Department of Energy and Climate Change Content: On 10 December 2010, the UK Department of Energy and Climate Change (DECC) launched a new consultation on CCS entitled 'Developing Carbon Capture and Storage (CCS) Infrastructure: Consultation on Implementing the Third Party Access Provisions of the CCS Directive and Call for Evidence on Long Term Development of CCS Infrastructure'.
This consultation was structured in two parts. The first was a formal consultation on the transposition of the third party access requirements of the EU CCS Directive. These require Member States to (i) take the necessary steps 'to ensure that potential users are able to obtain access to transport networks and to storage sites' (Article 21); and (ii) establish dispute settlement mechanisms to address disputes regarding third party access (Article 22). The second part was not a formal consultation but sought stakeholders' views on which measures the UK Government should adopt to support the development of a long-term investment framework for CCS infrastructure. Responses to the first part of the consultation were due by 4 February 2011, while views on the second part were due by 4 March 2011.
DECC's response to the formal consultation was published on 8 April 2011. DECC received twelve stakeholder responses. Further to the consultative process, the draft Regulations attached to the consultation were amended slightly to reflect stakeholder concerns about storage site capacity.
DECC has decided that guidance is necessary on the approach for determining access and the principles against which financial conditions will be established. The guidance will be developed and published for consultation later this year.
Consultation period: 16 December 2010 - 10 March 2011 Government Response: awaiting Consulting authority: Department of Energy and Climate Change and HM Treasury Content: In addition to the CCS infrastructure consultation, the UK Government has also launched a consultation on electricity market reform. This statutory consultation is designed to identify the key steps to achieve the government's targets on decarbonisation, renewable energy, security of energy supply and consumer affordability. The consultation is preliminary to the publication in late spring 2011 of a White Paper setting out the context for legislation to implement the reforms.
Consultation on The Environmental Liability (Prevention and Remediation) (Amendment) Regulations (Northern Ireland) 2011; Groundwater (Amendment) Regulations (Northern Ireland) 2011; The Pollution Prevention Control (Amendment) Regulations (Northern Ireland) 2011
Consultation period: 28 February 2011 - 22 April 2011 Government Response: awaiting Consulting authority: Department of the Environment (Northern Ireland) Content: This consultation is on amendments to be made to: Groundwater Regulations (Northern Ireland) 2009; Pollution Prevention and Control Regulations (Northern Ireland) 2003, and; Pollution Prevention and Control Regulations (Northern Ireland) 2003. These amendments are necessary in order to transpose Articles 32, 34 and 37 of the CCS Directive under powers devolved to the Northern Ireland Assembly.
Informal Consultation on the Storage of Carbon Dioxide (Termination of Licences) Regulations
Consultation period: 9 December 2010 - 9 January 2011 Government Response: Not available Consulting authority: Department of Energy and Climate Change Content: Ten responses were received from, mainly from oil and gas companies, industry associations and The Crown Estate. Respondents were supportive of the proposed regulations but requested some clarifications regarding transfer of liabilities, which are reflected in the final regulations.