Directive 2009/31/EC on the geological storage of carbon dioxide
Introduction
The EU Directive on the geological storage of carbon dioxide was definitively adopted by the Council of Ministers on 6 April 2009, and published in the Official Journal on 5 June 2009, entering into force twenty days later. Member States have until 25 June 2011 to transpose it into their respective national laws. The Directive forms part of the EU's Climate Change Package, developed in the context of the recognised need for developed nations to achieve greenhouse gas emission reductions of 30% by 2020 and 60-80% by 2050. Preliminary estimates indicate that up to 160 million tonnes of CO2 could be stored by 2030, accounting for some 15% of the European Union's required reductions. The Preamble to the Directive describes CCS as a 'bridging technology', which 'should not serve as an incentive to increase the share of fossil fuel power plants.'
While the Directive focuses primarily on the storage aspect of CCS, it does briefly address the capture and transport elements. Importantly, CCS is removed from the scope of EU waste and water laws to provide certainty as to the legality of CCS activities. The Directive is often described as 'enabling' legislation, opting not to make CCS mandatory but to provide the necessary regulatory framework upon which CCS deployment could move forward. Through amendments to the EU's Emission Trading Scheme (ETS), however, efforts have been made to incentivise investment in CCS.
The European Commission has published a series of guidance documents on some of the more technically demanding aspects of the regime. These documents cover: the CO2 storage life cycle risk management framework; characterisation of the storage complex, CO2 stream composition, monitoring and corrective measures; criteria for transfer of responsibility to the competent authority; and financial security and financial mechanisms.
Scope and purpose
The Directive applies to geological storage of CO2 within the territory of the Member States, their exclusive economic zones and on their continental shelves, thus envisaging storage both onshore and offshore. Member States retain the right not to allow storage in their territories, in whole or in part, although those that choose to permit storage must carry out an assessment of their region's potential CO2 storage capacity.
The underpinning aim of the Directive is the 'environmentally safe' storage of CO2, meaning the permanent containment of CO2 'in such as way as to prevent and, where this is not possible, eliminate as far as possible negative effects and any risk to the environment and human health'.
Removal of legal barriers
The removal of legal barriers to CCS within existing EU law was necessary in order to clarify the legal position concerning CCS activities. For details of these, see the section on EU Water law and EU Waste law.
Capture
The capture process of CCS will primarily be regulated through incorporation within the EU's Integrated Pollution Prevention and Control (IPPC) Directive (Art 37). IPPC imposes a permitting regime on a range of specified industrial activities, controlling the release of contaminants into air, water and land. As such, all operators of capture installations will be required to obtain a IPPC permit, which will demand the use of 'best available techniques' (BAT) for CO2 capture, impose clean-up requirements in cases of unauthorised release and site closure, and involve important rights to public participation (Arts 3, 9 and 15 IPPC).
Operators will also be required to carry out an assessment of the likely significant effects on the environment of any capture facilities in accordance with the provisions of the Environmental Impact Assessment (EIA) Directive (Art 31). Importantly, public consultation will be required, and the assessment carried out must be taken into account when permitting the facility under IPPC.
The CCS Directive also lays down, through an amendment to the Large Combustion Plant (LCP) Directive, a 'Carbon Capture Readiness' (CCR) requirement. That means, in essence, that new combustion plants with an output of 300 MW or more should be capable of being fitted later (retrofitted) with capture technology, by setting aside suitable space on the site for the necessary capture and compression equipment. The CCR requirement will only be imposed, however, if three conditions apply: suitable storage sites are available and both transport facilities and the retrofit of capture technology are technically and economically feasible. Notably, there are no potential timescales for the retrofit for CCS, and there is no mechanism for requiring an actual retrofit in the future.
By 2015, the European Commission is to carry out an assessment or review of, among other things, the CCR provision (Art 38). Provided the technical and economic feasibility of CCS has been demonstrated at this stage, this review will include consideration of the need for, and practicability of, imposing CO2 emission performance standards (EPSs), which would place a quantitative limit on the amount of CO2 which can be emitted from the regulated combustion plants. EPSs are posited by some as an alternative to CCR, effectively requiring CCS from the outset while also promoting other cleaner power generation, including renewable energy and efficient gas. The CCLP Bibliography has a search criterion of CCR in order to draw together important articles and papers on the topic.
See also the UK's responses to its consultation on CCR and its proposed regulatory requirements relating to the timescales of CCS retrofit here.
Transport
Transport of CO2 from capture facilities to storage sites is most likely to be through pipeline networks. The Directive addresses the transport aspect of CCS with few provisions, relying principally on national pipeline regulations, and property and planning laws, together with existing European legislation. Transport of CO2 via pipeline will be subject to an EIA, as above with regard to capture facilities. While the Directive does not require a permit for pipeline transport of CO2, any assessment carried out pursuant to the EIA Directive will need to be taken into account in the respective consenting procedures within the Member States.
The Directive deals with third-party access to both transport networks and storage sites, both of which will be addressed here (Art 21). Member States must ensure that potential users can obtain fair and open access to transport and storage facilities, on the basis of transparent and non-discriminatory criteria. In doing this, they can take into account certain factors, such as the storage and transport capacities that can reasonably be made available, the proportion of the Member State's CO2 reduction obligations that it intends to achieve through CCS, the need to refuse access on grounds of technical incompatibility which cannot reasonably be overcome, and the need to respect the reasonable needs of storage and transport owners and operators, and of all other uses of the network. Provided the composition of the CO2 stream meets the required acceptance criteria (see below), operators will be permitted to refuse access to transport networks and storage sites on the grounds of lack of capacity. However, an operator may be required to make any necessary enhancements 'as far as it is economic to do so', or if the potential customer is willing to pay for such changes. Member States are obliged to implement dispute settlement arrangements for third party access and the Directive lays down briefly conditions for cross-border disputes (Art 22). More generally, in cases involving transboundary transport or storage of CO2, the competent authorities of the relevant Member States must act jointly to meet the requirements of the Directive (Art 24).
Storage
Site selection and exploration
The Directive requires that injection and storage of CO2 may only take place in sites that are suitable, meaning that storage in a site must not pose any risk of leakage or damage to the environment and human health. This is determined through a detailed process of 'site characterisation' outlined in Annex I, where data is gathered in order to create a computerised three-dimensional model of the storage area, which is then used to predict and model the way in which CO2 will behave in the formation. A distinction is drawn between the storage site (a defined space within a geological formation into which CO2 is to be injected, together with its associated surface and injection facilities) and the storage complex (the storage site and the surrounding geological features which can affect storage integrity). Site characterisation will involve a consideration of the entire complex, and the Directive recognises that more invasive activities (such as drilling into the subsurface) may be necessary to obtain sufficient information. As such, this process of exploration will be allowed, but it must not be carried out without an exploration permit. Member States must ensure that these permits are open to all those with the necessary expertise, and are granted on the basis of objective, published and non-discriminatory criteria.
Storage permits: applications, contents and conditions
Once site characterisation, perhaps accompanied by exploration, has demonstrated the site's suitability, then a potential operator may apply for a storage permit. Holders of exploration permits are afforded priority in applying for a storage permit in order to provide the necessary commercial incentives. As with exploration, Member States are to ensure that no storage site is operated without a permit. The Directive provides minimum criteria for the contents of a permit application, and for the conditions and contents of any permits eventually granted (Arts 7, 8 & 9). Importantly, the Directive requires all storage sites to be assessed in accordance with the EIA Directive (Art 31). The results of this will need to be submitted as part of the permit application.
Operators must be able to demonstrate that they are technically competent and reliable to operate storage sites, including that necessary technical training and development of staff has been provided. Additionally, operators are required to show that they are financially sound and provide financial security to cover the costs relating to the operation and post-closure periods of the storage site until responsibility is transferred (see below). This financial security can be drawn upon by the competent authority should the operator default on its obligations under the Directive. Proof that this can be established must be submitted with the permit application. It must be valid and effective before injection commences and must be maintained thereafter.
A major part of the risk management scheme adopted under the Directive is the process of developing a series of plans concerning the operation and closure of the site. In these plans, operators are to outline the proposed method of monitoring the site, details of the corrective measures to be taken in the case of CO2 leakage, risk of leakage or risk to health or the environment, and the proposed course of action for the post-closure period. Approved versions of these plans form part of the final granted permit. The monitoring plan is to be designed in accordance with Annex II to the Directive, which in turn is linked to the site characterisation methodology provided for in Annex I.
Storage permits are also to include details relating to the CO2 that is to be injected (Art 12). This includes the total quantity to be stored, its sources and transport methods, and the composition of CO2 streams to be injected. The term 'CO2 streams' recognises the fact that there may be incidental substances from the capture process and that substances may need to be injected into the formation for the purposes of monitoring. The Directive will therefore allow such substances to be injected, provided their concentration poses no risk to transport infrastructure and the storage site or to the environment and human health. Nonetheless, a stream is to consist 'overwhelmingly' of CO2, and must not contain waste or other matter which is added for the purpose of disposal. Operators are required to carry out a risk assessment in respect of the stream composition and maintain a register of the quantity, properties and composition of streams injected.
Competent authorities are to submit each draft storage permit to the Commission, who may give a non-binding opinion on it (Art 10). The competent authority may depart from the opinion, but must give reasons for its decision. This is to ensure consistency in the granting of storage permits across the EU, as well as to promote public confidence in the storage permit regime. Importantly, storage permits are 'living' documents, subject to mandatory periodic review during the operational phase, and may be changed, updated or withdrawn in response both to technological developments and to matters giving rise to concern about the operation of the site and its integrity (Art 11).
Operation
Once a storage permit has been granted, the operator may begin injection of CO2 into the storage site. This period of operation is characterised by a regime of monitoring, reporting and inspection. These are the key methods by which problems with the storage site, namely, significant irregularities or leakage (see below), are to be identified and addressed.
As above, monitoring (Art 13) is carried out in accordance with the approved monitoring plan. The Directive sets out the purposes of this monitoring: in essence, to detect any problems affecting the storage integrity of the site and potential impacts on the surrounding environment, including drinking water, human populations and users of the surrounding biosphere. Operators are obliged to submit reports at least annually (Art 14), based on the monitoring of the storage site, as well as details relating to CO2 stream acceptance, proof of continued financial security and any other matters that the competent authority considers relevant.
Importantly, competent authorities must design a system of routine and non-routine inspections for all storage complexes within the scope of the Directive (Art 15). Routine inspections must be carried out at least annually. The Directive provides a list of events/situations which trigger a duty on the competent authority to carry out a non-routine inspection. A competent authority must carry out an inspection of the site if, for example, it has been notified or made aware of leakages or significant irregularities, and must investigate serious complaints related to the environment or human health. Following every inspection, the competent authority is to prepare a report on its findings, evaluating the operator's permit compliance and indicating whether further action is necessary. This is to be made publicly available within two months of the inspection.
Closure, post-closure and transfer of liability
Upon the definite cessation of injection, the site may be closed (Art 17). Before this can take place, the operator must review, and if necessary update, the provisional post-closure plan submitted as part of the permit application. It must then be re-submitted to the competent authority for adoption as the definitive post-closure plan. The Directive provides very little detail, though the operator will be responsible for sealing the storage site and removing the injection facilities.
In order to address the reluctance on the part of potential operators to retain responsibility for a storage site indefinitely, together with the shorter life-span of corporations when compared with the life of a storage site, the Directive provides for the eventual transfer of responsibility for the site to the competent authority (Art 18). Upon this transfer, the operator is released from obligations relating to monitoring and corrective measures under this Directive, together with any liabilities under the EU ETS and the Environmental Liability Directive (discussed in more detail below).
However, the full extent of potential legal liabilities under the CCS Directive is not transferred, with the Directive making specific reference to a number of situations where any costs incurred by the competent authority are to be recovered from the operator. These relate to fault on the part of the operator, including wilful deceit, negligence, a lack of due diligence or the provision of deficient data. This is an important clarifying provision not included within the original proposal, which should help to address any perverse incentives relating to, for example, false reporting or a lack of due care in the management of the site.
Transfer from the operator to the competent authority can take place when four main conditions have been met.
The overarching qualitative condition is that 'all available evidence indicates that the stored CO2 will be completely and permanently contained'. The operator is to prepare a report documenting that this threshold has been met for approval by the competent authority. At a minimum, the report must demonstrate: conformity between the actual behaviour of the CO2 and the expected modelled behaviour; the absence of any detectable leakage; and that the storage site is 'evolving towards a situation of long-term stability'.
The Directive provides a minimum default period of twenty years from when the site is closed before the transfer can be made. Transfer may occur sooner, however, provided the competent authority is satisfied as to the complete and permanent containment of the stored CO2. There is no maximum time limit after which a transfer must be made.
The operator must also make available to the competent authority a financial contribution to cover at least the anticipated cost of monitoring the site for a period of 30 years. This financial mechanism (Art 20) is to be put in place on the basis of arrangements to be decided by Member States and is an important addition to the originally proposed Directive, which included a mechanism to cover costs until the transfer of responsibility but not thereafter.
The site has been sealed and injection facilities removed.
Once satisfied that these conditions have been complied with, the competent authority will adopt a draft approval of transfer. This is also, in a similar fashion to draft storage permits, to be submitted to the Commission, who may issue a non-binding opinion on it. The competent authority may depart from this, giving reasons. After the transfer, routine inspections will cease, and monitoring may be reduced to a level which allows for the detection of leakage and significant irregularities.
(For more details about the liability regime in the CCS Directive, please click here)
Compliance, penalties and liability (what happens if something goes wrong?)
Careful site selection is the primary means by which the Directive seeks to avoid any leakage of CO2 or other environmental damage from a storage site. However, the criteria for site selection do permit some risk of leakage, and this cannot be entirely ruled out even with full compliance. The obligations to monitor, report and inspect are important tools in ensuring early detection of problems regarding integrity of the storage site.
Any leakage or significant irregularities must be reported to the competent authority immediately (Art 16). Leakage is defined as any release of CO2 from the storage complex. Significant irregularities refer to abnormalities in the injection and storage operations, or the condition of the complex itself, which suggest a risk of leakage or risk to the environment and human health (Art 3). Detection of either will also require a review of the storage permit and, where necessary, updating of the permit (Art 11).
As a last resort, the competent authority may withdraw the storage permit. If this is the case, the competent authority must either issue a new permit or close the site. In either case, the competent authority will temporarily assume all responsibilities relating to the management of the site, although continuing to hold the former operator liable for any costs involved. If the competent authority chooses to close the site, then once all available evidence indicates permanent and complete containment, the site has been sealed and injection facilities removed, the final transfer of responsibility must be deemed to have taken place (Art 17).
Crucially, a significant irregularity or leakage triggers the duty of the operator to take corrective measures (Art 16). These are actions to prevent or stop release of CO2 from the storage complex, or to remove risks of harm to the environment or human health. As the competent authority takes over legal responsibilities relating to the management of the site if a storage permit has been withdrawn, the competent authority in those circumstances must take the corrective measures itself. Significantly, if an operator fails to take the necessary corrective measures, the competent authority has a duty to carry out the measures itself. Whenever a competent authority takes corrective measures, it is to recover the costs incurred from the operator, if necessary by drawing on the operator's financial security.
A storage permit must include an obligation to carry out corrective measures (Art 9) and, as such, the duty to take corrective measures and measures related to the protection of human health, are matters of compliance with the storage permit. However, while the Directive has within its purpose the prevention of any negative effects on the 'environment' (undefined), the duty to take preventive and remedial action in relation to wider environmental harm (beyond the immediate corrective measures) is treated as a liability issue to be covered by the application of the Environmental Liability Directive (ELD) to the 'operation of storage sites' (Art 34). The ELD places a duty on operators to take preventive and remedial action in respect of imminent 'environmental damage' or damage which has already occurred (Art 5 and 6 ELD). Environmental damage has a threefold categorisation, relating to protected species and habitats, water and land contamination which is harmful to human health (Art 2 ELD). Notably, under the ELD, a competent authority may take preventive and remedial measures at any time, but is not compelled to do so, whereas, under the CCS Directive, the competent authority has a duty to carry out corrective measures, including measures to protect human health, where the operator fails to do so.
Liability for localised environmental damage under the ELD is complemented by financial liability under the EU ETS for 'climate damage'. Operators will be required to surrender purchased EU emissions allowances in respect of any leaked CO2 (Art 1 ETS). It has been noted that the requirement to purchase allowances is not a penalty in itself, and there is the potential for perverse incentives should the price of carbon allowances fall below a level which would address any financial gain of non-compliance.
Civil liability for harm to individual human health such as personal injury (as opposed to the duty to take measures to protect human health), together with private rights relating for example to property damage, will also fall to be addressed outside the CCS Directive, though in this case under existing national laws.
Member States are also to lay down rules for, and implement, penalties for infringements of national provisions adopted under the Directive. Those penalties must be 'effective, proportionate and dissuasive' (Art 28).
(For more details about the liability regime in the CCS Directive, please click here)
Guidance Documents
The European Commission has published a set of four guidance documents to assist stakeholders in the implementation of the CCS Directive in order to promote a consistent approach throughout the European Union. These documents cover: (1) the CO2 storage life cycle risk management framework; (2) characterisation of the storage complex, CO2 stream composition, monitoring and corrective measures; (3) criteria for transfer of responsibility to the competent authority; and (4) financial security and financial mechanisms.