Recent legal developments at European level have paved the way for the creation of a regulatory framework for offshore Carbon Capture and Storage (CCS) within the European Union whilst amendments to the London Protocol and OSPAR Convention, to allow sub-seabed geological storage, provide an international regulatory dimension. These developments have been made in parallel with advances in several other jurisdictions, such as the United States, Australia and Norway.
The United Kingdom championed amendments to both the London Protocol and the OSPAR Convention and, in 2007, announced a competition for funding a full-scale CCS demonstration project. In early 2008, the Energy Bill was unveiled and detailed a framework for the licensing, enforcement and registration of CCS. The Department for Business, Enterprise & Regulatory Reform (BERR) expected that the Bill would provide a sound system, which would 'enable private sector investment in CCS projects' and, along with the Planning and Climate Change Bills, 'ensure ... legislation underpins the long term delivery of our energy and climate change strategy'. The Bill received Royal Assent in November 2008 becoming the Energy Act 2008, which contains complete provision for the offshore storage aspect of CCS.
In November 2009, the Marine and Coastal Access Act received Royal Assent. This Act expressly excludes carbon dioxide storage activities from the requirement of obtaining a marine licence, as they are governed by the licensing requirements of the Energy Act 2008. However, a marine licence is still necessary for undertaking offshore CCS activities or related activities 'in, under or over any area of the sea which is within the Welsh inshore region or Northern Ireland inshore region'.
The Energy Act was introduced into Parliament in January and received Royal Assent in November of 2008. The Act establishes a regulatory framework for the licensing of the offshore storage aspect of carbon capture and storage.
The Act asserts the rights of the Crown to an Exclusive Economic Zone (EEZ) (200 nautical miles), in accordance with Part V of the United Nations Convention on the Law of the Sea (UNCLOS) 1982, for the 'storing of gas' (whether or not with a view to its being recovered). The government may also designate 'Gas Importation and Storage Zones' within the EEZ. For operators seeking to undertake CCS activities within the newly designated EEZ, a lease will be required from the Crown Estate.
A regime based upon licensing is introduced requiring that activities relating to the storage of carbon dioxide (with a view to its permanent disposal) will need a licence from the relevant authority. These activities also include the conversion, exploration and maintenance of the 'controlled place' which is to be used for CO2 storage. The controlled place refers to a site which may be found 'in, under or over' the territorial sea or waters within a Gas Importation and Storage Zone.
The Act provides further details relating to the granting of licences, their content and the terms and conditions which may be attached to them. The licensing authority responsible for the granting of licences will be either the Secretary of State or the Scottish Ministers, depending upon the location of the proposed activity. When granting a licence, the authority may attach particular requirements for a specific applicant or for the licence to be granted. A licence may include provisions relating to financial security in respect of future obligations, as well as obligations between the closure of an installation and the termination of the licence. Under the Act, each licensing authority may make further regulations regarding the terms and conditions of licences that it grants.
The Act introduces a detailed section relating to the enforcement of licences and criminal offences, and sanctions are introduced, in instances where activities are undertaken without a licence or where a licence holder fails to abide by its prescribed conditions. The licensing authority may make a direction requiring the licence holder to take any particular steps that it deems necessary; failure to comply with an order of this nature will be an offence. In order to assist in carrying out the functions described in the Act, inspectors may be appointed by the Secretary of State or Scottish Ministers.
The Act applies Part 4 of the Petroleum Act 1998 (which concerns the abandonment of offshore installations) to carbon storage installations. A detailed programme of plans and approvals is prescribed under the 1998 Act, which requires persons seeking to abandon an installation offshore to provide an 'abandonment programme' which sets out the 'measures proposed to be taken in connection with the abandonment of an offshore installation or submarine pipeline'. In addition, the Energy Act makes provision for the licensing authority to formulate regulations regarding the termination of licences, which may include provisions relating to financial security.
In September 2010, the UK Parliament passed the Storage of Carbon Dioxide (Licensing etc.) Regulations 2010, which entered into force on 1 October 2010. These Regulations are enacted under the authority of the Energy Act 2008 and introduce a permitting regime for offshore CCS activities. They describe the requirements to be fulfilled for the granting of a licence or storage permit by the Secretary of State and the scope of these permissions (Schedules 1 and 2). They also govern the information to be included in the public register established under s. 29 of the Act.
The Regulations partially fulfil 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. Of the matters contained in 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 (see CCS Directive section). However, the Regulations do not cover licences granted by the Scottish Minister for CCS activities undertaken in the territorial waters adjacent to Scotland.