 Understanding the Legal and Liability Challenges of CO 2 Storage in Europe From the Industry’s Viewpoint Marko Maver University of Sheffield School of Law Contact: Twitter: Marko_Mav

Outline  Briefly identify the main barriers to CCS deployment, examine the current legal and regulatory landscape in Europe, and identify the main legal and regulatory issues, as perceived by the CCS industry.  Explain and acknowledge the role of monitoring and verification as a a key regulatory component.  Conclusions.

Obstacles to commercialisation of CCS Security and lack of storage sites Lack of technology Public awareness/acceptability Capital Expenditure Lack of financial incentives Legal and regulatory requirements?

Legal and Regulatory Landscape for CCS in Europe  Transposition of 2009 EU CCS Directive differs across Europe; an on-going process.  Common denominator: an authorization/permit- based approach, underlined by risk assessment procedures.  Overall, the landscape is built – at the EU level at least

Main remaining legal and regulatory issues/challenges for CCS  Long-term (open-ended) financial liability  Financial security and financial mechanism uncertainty - Art. 19 & 20 in EU CCS Directive  Lack of clear calculation method for amount of financial security required, and uncertainty in amount and form of financial contribution for post-transfer of liability costs  Transfer of responsibility  The minimum 20 years rule and lack of clear criteria – delays investment decisions  Third-party access  Art. 21 in EU CCS Directive  Regulations in UK fairly well understood and considered fair, but potential issues could arise in the future  Fundamentally, nothing is missing, but clarity on certain issues is necessary

Third-party access: Industry responses  “To date the issue has not come up yet, but once CCS takes off, this might prove to be the largest source of commercial uncertainty for the industry...the Commission will really need to address this, once the Directive comes under review in 2015”.  “If you build up the infrastructure and another power station wants to tap in your infrastructure, how do you decide the revenue or the tariff?”  “If something happens to your storage facility, after you take on the third party, who is responsible for that? In other words, where does the responsibility and accountability come from for the molecules coming from various pipelines and/or parties?”

Open-ended liability: Industry responses  “…need some government back-stop, and it needs to be clear when this back-stop kicks in.”  “…to remove this stupid requirement from the CCS Directive in 2015 when the Directive comes up for its 5 yearly review.”  “…we understand the polluter pays principle, but you’ve created such a stupid hurdle that you’re preventing CCS from happening.”

Overcoming legal/regulatory challenges?  “I don’t see any major issues in the regulatory framework…it is more about the education and familiarity.”  Can be overcome best by close collaboration between project developers and the relevant authorities  Key steps:  Work on reducing bureaucratic obstacles (i.e. streamline the permitting process)  Remove or fix the open-ended liability issue  Increase investment support for monitoring and verification technologies

Monitoring and Verification: key to the legal and regulatory framework  Once CO 2 injection is occurring, as well as once injection ceases, M&V is the main regulatory aspect along with inspections.  Innovation is crucial – think outside the box

Conclusions  Legal and regulatory landscape in Europe is for the most part complete; Main issues: open-ended liability; bureaucracy  Overall, no un-surmountable challenges, but greater clarity on certain aspects is needed  Monitoring and verification will be a key component in making the regulatory system work  Move beyond CCS on power, and expedite CCS for industrial CO 2 emitters

Thank You "Two roads diverged in a wood, and I... I took the one less traveled by, and that has made all the difference." --Robert Frost