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1 1 1 1 13 33 30 0 (2008) 20 ELM : THE LONG-TERM STEWARDSHIP OF CARBON DIOXIDE STORAGE SITES : EVERS
The model that BERR is proposing is designed to The Energy Bill is currently silent on the issue of long-
provide for the transfer of the long-term term liabilities for CO storage sites, and it is anticipated
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responsibilities and liabilities relating to the store from that this issue will be addressed in secondary legislation.
the licensee to the state, whilst ensuring that for the However, it should be noted that Clause 19(3) provides
period the licensee is in charge of the store it is that a CO storage licence granted by the Secretary of
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incentivised to manage the store with regard to its long- State may include provision about the circumstances in
term management, and that the transfer arrangements which financial security to cover the licence holder’s
do not pass undue risk to the public purse. obligations under the licence may be required and
The operator will remain responsible for the released. Additionally, clause 29 of the Energy Bill applies
maintenance, monitoring and control of the store until Part 4 of the Petroleum Act 1998 (which deals with the
the regulator has agreed that the permit may be decommissioning of offshore oil and gas installations) to
surrendered. The period between the permanent the decommissioning of CO storage sites.
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cessation of injection and the surrender of a permit The issue of financial security also arises in the context
will be at the discretion of the regulatory authority, of the long-term stewardship of closed CO storage sites
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taking into account the stability of the store and its once liability for the sites has transferred to the state.
behaviour compared with appropriate technical models. Although the state should hopefully never go insolvent
Once a permit has been surrendered, any residual or cease to exist as a legal entity in the same way as a
responsibility for the monitoring or contingent company, it may be considered politically unacceptable
liabilities associated with the CO store will transfer for future generations of taxpayers to bear the cost of
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to the state (via The Crown Estate, which will own or dealing with the remediation of leaking CO storage sites.
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otherwise have the right to license the use of the The questions of whether the state should make its own
relevant area of the seabed). The Crown Estate may financial provision for covering the risk of storage site
also require payment to compensate for the risk of leakage once it has become liable for the stewardship of
accepting these contingent liabilities. the sites and, if so, how this should be funded, therefore
In addition to its responsibilities for the store, the arise. In this regard it may be possible to draw an analogy
operator will also be required to provide for the with the proposals contained in the government’s White
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decommissioning of the structures and pipelines used Paper on Nuclear Power, that operators of new nuclear
to inject the CO . The Energy Bill proposals will power stations should pay into a ring-fenced fund to be
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include a provision to extend the arrangements that used for the decommissioning of those power stations
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already apply to existing offshore facilities (such as and the disposal of the waste they produce. However,
oil rigs) to facilities used for the purpose of CO the disposal of nuclear waste and the storage of CO are
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transport and injection. 17 two very different activities in that nuclear waste must be
disposed of and costs will inevitably be incurred in its
The Project Information Memorandum goes on to state disposal within foreseeable timescales; whereas if a CO
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that ‘[a] consultation on the details of the proposed storage site is properly selected, closed and
regulatory regime will be published in January 2008’, decommissioned and never leaks then there will never be
although the consultation paper was published on 30 June any call on the funds set aside to cover any remediation
2008. This consultation paper is discussed below. required as a result of a leak (which may occur hundreds,
The Energy Bill was, however, published in January if not thousands, of years in the future. What should
2008 and was introduced into the House of Commons therefore happen to the fund in the long term? It may be
on 10 January 2008. Chapter 3 introduces a regulatory that such funds could be released back to the operator
regime for the offshore geological storage of CO . Clause after a certain period or, if the operator is no longer in
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16 requires a licence to be obtained for the following existence, released to the state for the benefit of taxpayers.
activities carried out in, under or over the territorial sea Clause 32 of the Energy Bill provides that the licensing
or waters in a ‘Gas Importation and Storage Zone’: requirements for CO storage sites set out in Chapter 3
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of the bill only apply to the use of CO for enhanced
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(a) the storage of CO with a view to its permanent petroleum recovery in circumstances specified by the
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disposal or as an interim measure prior to its Secretary of State by order. If the CO storage site
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permanent disposal licensing requirements are not applied to the use of CO
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(b) the conversion of any natural feature for the purpose for enhanced petroleum recovery, who is then responsible
of storing carbon dioxide with a view to its permanent for the injected CO when petroleum extraction operations
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disposal or as an interim measure prior to its cease and the petroleum field is decommissioned? It is
permanent disposal not clear in the Energy Bill whether the state will be
(c) exploration with a view to or in connection with responsible for the long-term stewardship of these sites
carrying on the activities in (a) or (b) and as well, or whether they will not be regulated at all.
(d) the establishment or maintenance of an installation
for the purposes of the activities in (a)–(c).

20 ‘Towards Carbon Capture and Storage’ (available at http://
www.berr.gov.uk/files/file46810.pdf).
7296 (available at: http://www.berr.gov.uk/files/file43006.pdf).
19 ibid p 147 para 3.46 and 3.48.
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