1. © OECD/IEA 2013 CCS Regulatory Framework Development: An IEA Perspective ADB Roadmap for CCS Demonstration and Deployment in the People’s Republic of China 26 April 2016 Samantha McCulloch CCS Unit, IEA

2. © OECD/IEA 2013 CCS is an important part of the global climate solution Percentages represent cumulative contributions to emissions reduction relative to 6DS 6DS 2DS

3. © OECD/IEA 2013 Industry and power are equally important: China leads the world Almost 30% of CO 2 captured in 2050 is in China Source: IEA Energy Technology Perspectives, 2DS

4. © OECD/IEA 2013 Retrofitting CCS on coal-power in China In 2020, China will have 330GW of coal-fired plant that is larger than 600MW younger than 15 years within 250km of potential storage Refurbishing an existing plant and adding CCS can be a relatively inexpensive way to get low-emissions power without losing a capital asset Strategy requires the development of significant storage resource in China Launch of IEA China Retrofit Report: 18 May, Beijing

5. © OECD/IEA 2013 Drivers and supportive policies are essential Permitting framework Technology RD&D framework Incentive framework Long-term vision for CCS deployment Regulation for safe, effective storage Efficient resource management Prices or limits on emissions Targeted deployment incentives Demonstration funding Research and development policy and programmes

6. © OECD/IEA 2013 A decade of IEA analysis has informed legal and regulatory developments 6 20042006200820102012201420052007200920112013 2015

7. © OECD/IEA 2013 Since 2005, over 50 legal instruments relating to storage have been adopted National (and regional, if required) National and/or some regions National or regional in development 7

8. © OECD/IEA 2013 Pioneer Projects: Testing the Regulatory Framework 8 Gorgon Western Australia Chevron Operated LNG project Permitted under Barrow Island Act (2003) Project-specific legislation facilitated an early-mover project ROAD Netherlands Proposed to capture from new E.ON 1100 MW coal plant Permitted in 2012 under Dutch Mining Act (i.e., EU directive transposed) Worked out financial assurance and closure provisions ADM Decatur Illinois, USA Capture from ethanol fermentation Two Class VI permits issued in 2014 under Safe Drinking Water Act UIC Program Obtained reduced Post Injection Site Care period (10 years) Quest Alberta, Canada Capture from hydrogen production Granted storage tenure in 2011; permitted in 2012 under multiple acts. Fleshed out details of the Alberta long-term liability regime

9. © OECD/IEA 2013 Key Lessons for Regulation 1. Developing regulations for geologic storage is complex and time consuming. 2. There is never a blank slate: every country must build on a set of existing laws and legal precedents, and may adapt existing regulations to make them fit-for-purpose. 3. Similarities and differences between geologic storage and related activities (e.g., CO 2 -EOR) should be clearly recognized and treated appropriately in regulation. 4. One-size does not fit all: flexible regulation at the project level is needed to manage uncertainties inherent in storage. 5. Don’t let the perfect be the enemy of the good: aim for an adaptive framework that facilitates learning-by-doing. 9

10. © OECD/IEA 2013 Targeting “Sweet Spots”  Targeted regulation and incentives can play an important role in supporting the early deployment of (relatively) low-cost CCS – “sweet spots”  For example:  Gorgon LNG Project Barrow Island Act 2003 (WA) Gorgon Gas Processing and Infrastructure Project Agreement  Sleipner Norwegian CO 2 Tax 10 Image courtesy of Statoil Image courtesy of Chevron

11. © OECD/IEA 2013 Storing CO 2 through EOR EOR is driving early deployment of CCS globally Enormous potential for CO 2 storage through EOR Up to 3x the requirements of the IEA 2 degree scenario Additional activities to transform EOR to permanent storage: 1.Additional site characterisation and risk assessment 2.Additional measurement of venting and fugitive emissions 3.Monitoring and enhanced field surveillance 4.Changes to abandonment processes Regulation or incentives will be required to support these additional activities 11 EOR: Large Technical Potential for Storage

12. © OECD/IEA 2013 Legal and Regulatory Review: 5 th Edition Regulatory activity shifted from broad frameworks to permitting specific projects Pace of activity has slowed Lack of experience to adequately ‘test’ regulatory frameworks in many regions Permitting processes: key examples:  Netherlands  United Kingdom  United States  Province of Alberta, Canada 12

13. © OECD/IEA 2013 Thank you! Samantha McCulloch Telephone: +33 (0)1 40 57 67 79 Email: samantha.mcculloch@iea.org Web: www.iea.org/ccs/