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THE LONG-TERM STEWARDSHIP OF CARBON DIOXIDE STORAGE SITES : EVERS : (2008) 20 ELM 131
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On 30 June 2008, BERR published a consultation of Carbon Dioxide and Amending Council Directives 85/
paper on a regulatory framework to facilitate CCS. 20 337/EEC, 96/61/EC, Directives 2000/60/EC, 2001/
Amongst other issues, the consultation paper discusses 80/EC, 2004/35/EC, 2006/12/EC and Regulation (EC)
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the options for de-licensing, the conditions to be met for No 1013/2006 (Draft CCS Directive). The Draft CCS
the transfer of liabilities to the government, financial Directive requires Member States to establish a permitting
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security arrangements, the scale of the obligations and system for CO storage activities. Article 18(1) of the
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contingent liabilities associated with CO storage sites, Draft CCS Directive provides that once a storage site has
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and how to provide for the obligations and contingent been closed after the relevant conditions in the storage
liabilities resulting from CO storage. The consultation permit have been met or, at the request of the operator,
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paper identifies that under the ‘polluter pays’ principle, after authorisation by the competent authority, legal
the operator should be responsible for CO both during liability will be transferred to the competent authority if
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the licensing period and beyond, but that operators are and when all available stored CO will be completely
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unable to accept unlimited liability for stored CO in contained for the indefinite future. The Draft CCS
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perpetuity. One of the key regulatory issues is therefore Directive requires the Member State’s competent
to devise a mechanism to transfer long-term legacy authorities to review and, where necessary, update or
liabilities from operators to government. The government’s withdraw storage permits in various situations, such as
favoured approach is for de-licensing and the transfer of where they are notified of a ‘significant irregularity’ or
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long-term liabilities to it to take place only once the leakage, if monitoring reports show non-compliance with
available evidence demonstrates the long-term security permit conditions or risks of significant irregularities or
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of the store. This also accords with the European leakages, or if they are aware of any other failure by the
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Commission’s proposals, discussed below. However, operator to meet the permit conditions. Article 18(7)
periodic monitoring may be required indefinitely to ensure then provides that where a storage site has been closed
that the CO remains stored. The government proposes as a result of a decision by the competent authority
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that the cost of this monitoring could be borne by it, following withdrawal of a storage permit, transfer of
recovered from the original operator, or the estimated cost responsibility for the site shall be deemed to take place if
recovered from the operator via a ‘transfer payment’ at and when all available evidence indicates that the stored
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the time the store is de-licensed. However, the last CO will be completely contained for the indefinite future,
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mechanism would have to be carefully structured so as to and after the site has been sealed and the injection
be compatible with Article 18(6) of the European facilities have been removed.
Commission’s proposed directive on CCS, discussed below. Interestingly, Article 18(6) of the Draft CCS Directive
The consultation paper identifies two potential provides that there is no recovery of costs permitted from
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models for financial security for CO storage sites. The former operators after the transfer of responsibility for
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first follows the decommissioning legislation that currently closed storage sites. Member States will therefore not be
applies to offshore oil and gas installations under the able to rely on indemnities from operators to cover
Petroleum Act 1998. The second follows that for nuclear potential future remediation costs, although this provision
decommissioning set out in the White Paper on Nuclear would seem not to preclude the creation of a ring-fenced
Power. However, the consultation paper correctly identifies fund as described above, provided that the fund was
that both of these models are designed to fund liabilities created prior to the transfer of liability and it is made
that will inevitably arise once the relevant revenue earning clear that the fund belongs to the state and not to the
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activities have come to an end. Possibilities for dealing former operator.
with the contingent liabilities which may potentially arise
from the storage of CO include increasing the value of
2 CCS and the EU ETS
any guarantee to include a risk-adjusted amount for
contingent liabilities and the development of other The Draft CCS Directive does not address the treatment
financial products such as insurance. 26 of CCS under the EU ETS. This issue is addressed instead
in the Commission’s Proposal for a Directive of the
Europe’s solution European Parliament and of the Council Amending
Directive 2003/87/EC so as to Improve and Extend the
On 23 January 2008 the European Commission, as part Greenhouse Gas Emission Allowance Trading System of
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of its ‘Climate Action and Renewable Energy Package’, the Community, also published on 23 January 2008.
issued a Proposal for a Directive of the European Currently, CO storage is not expressly included as an
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Parliament and of the Council on the Geological Storage

21 ibid p 52 para 4.35. 29 ibid art 11(3)(a).
22 ibid p 53 para 4.38. 30 ibid art 11(3)(b).
23 ibid p 53 para 4.39. 31 ibid art 11(3)(c).
24 ibid p 56–57 paras 4.56–4.57. 32 COM(2008) 16 final (available at: http://ec.europa.eu/environment/
25 ibid p 57 para 4.58. climat/emission/pdf/ets_revision_proposal.pdf).
26 ibid p 57 para 4.59. 33 ibid p 5.
27 COM(2008) 18 final (available at: http://eur-lex.europa.eu/LexUriServ/ 34 ibid annex 1(4).
LexUriServ.do?uri=CELEX:52008PC0018:EN:NOT). 35 ibid p 5.
28 ibid art 6. 36 The European Parliament’s rapporteur on the Draft CCS Directive,
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