CCS Policy and Regulation
The CCS Directive
The main piece of regulation for CCS across Europe is the EU CCS Directive on Geological Storage of Carbon Dioxide (Directive 2009/31/EC), which came into force on 25 June 2009. This Directive is an enabling Directive, which means it does not require CCS to be developed, but if an EU Member State or company chooses to develop a CCS project, then the provisions of this Directive must be followed. The Directive establishes a legal framework for the environmentally safe geological storage of carbon dioxide (CO2) – and does not cover capture or transport in great detail. It lays down extensive requirements for storage covering the entire lifetime of a storage site with detailed focus on selection of storage sites (Art. 4), exploration permits (Art. 5), storage Permits (Art. 6) along with operation, closure and post-closure obligations (Chapter 4) and provision for transfer of responsibility (Art. 18).
The CCS Directive is implemented in the UK mainly through the Energy Act 2008 (Chapter 3), which introduces a new regulatory framework to facilitate the offshore storage of carbon dioxide.
In addition, Section 36 of the UK Electricity Act 1989 (licensing of power plants), has been amended to implement the CCS Directive requirement that all new combustion power plants over 300MW must be constructed as CO2 Capture Ready (CCR). The Department for Energy and Climate Change (DECC) published a guidance note on CCR in 2009.
The EU ETS
On 25 October 2003 the EU Emissions Trading Directive (Directive 2003/87/EC) (EU ETS) entered in force, which “establishes a scheme for greenhouse gas emission allowance trading within the Community in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner” (Article 1). CCS was not included in the original 2003 Directive however it was later included in the revised 2009 version: EU Emissions Trading Directive (Directive 2009/29/EC). This version includes CCS explicitly in Annex I (activities which are covered by the EU ETS), and emissions captured, transported and stored according to the CCS Directive are considered as not emitted. However, the EU ETS does require that if any stored CO2 does escape to atmosphere – allowances must be purchased (at current market prices) and surrendered to cover the release of emissions.
Health & Safety Legislation
The UK also has legislation in place to effectively regulate CCS with regard to health & safety issues. In particular the Health & Safety at Work etc. Act 1974 (HSWA) applies to CCS processes onshore and offshore (from April 2013). Sections 2 and 3 of the HSWA require employers to ensure the health and safety of workers and members of the public, so far as is reasonably practicable.
Regulation of other CCS health & safety issues can be found in the following documents:
- Control of Major Accident Hazards Regulations 1999 (COMAH) Where CO2 capture sites use dangerous substances (such as amine solvents above a certain threshold), COMAH will apply to the whole site. In these cases the site operator will be required to submit a safety report to the Health & Safety Executive (HSE).
- Offshore Installations (Safety Case) Regulations 1995 (OSCR) Where Enhanced Oil Recovery (EOR) is undertaken at an offshore installation as part of the CO2 storage process OSCR will apply and the operator will be required to submit an offshore safety case to HSE.
In addition to specific pieces of legislation that regulate CCS activity, the UK has implemented a number of high-level policy decisions to encourage the deployment of CCS:
The CCS Roadmap
Firstly, DECC published the CCS Roadmap in April 2012 along with an Action Plan to support the commercial deployment of CCS in the UK by 2020. The Roadmap includes a commitment to five key interventions, which will help deliver cost-competitive CCS in the 2020s:
- CCS Commercialisation Programme with £1bn in capital funding
- £125m, 4 year, co-ordinated R&D and innovation programme establishing a new UK CCS Research Centre
- Development of a market through EMR with a focus on long-term contracts (FiT CfDs)
- Intervention to address key barriers to the deployment of CCS
- International collaboration to facilitate knowledge sharing
The CCS Commercialisation Programme
The UK Government launched a CCS Commercialisation Programme Competition in April 2012, for which they allocated £1bn in support. This, combined with incentives being developed under Electricity Market Reform (EMR), forms the package of funding available for up to four commercial-scale CCS projects – to be in operation by 2016-2020. According to DECC’s announcement on 30th October 2012, four bidders out of eight have been shortlisted for the next phase of the competition. Find out more about these and other projects.
Electricity Market Reform
In July 2011 DECC published the Electricity Market Reform (EMR) White Paper - the most significant change to the UK electricity market after privatisation - which contains several measures to deliver secure, affordable and low-carbon electricity. One of the main objectives of the package is to encourage investment in proven low-carbon generation technologies, as well as supporting new technologies such as CCS.
In terms of CCS, the EMR package provides:
- Long-term contracts in the form of Feed-in Tariffs with Contracts for Difference (FiT CfD) to provide clear, stable and predictable revenue streams for investors in low-carbon electricity generation including CCS;
- A Carbon Price Floor (CPF) to reduce uncertainty, put a fair price on carbon and provide a stronger incentive to invest in low-carbon generation now;
- An Emissions Performance standard (EPS) set at 450g CO2/kWh to limit CO2 emissions from new coal-fired power stations;
As part of the financial commitment under EMR, the Government announced an Agreement on Energy Policy on 23 November 2012, which allocates a total budget for low carbon electricity generation of £7.6bn in the Levy Control Framework in 2020.
On 29th November 2012, the Government introduced the Energy Bill into parliament. This is the key piece of legislation which will implement EMR and when enacted, will provide Government with the powers to issue FiT CfD contracts to generators of low-carbon electricity.
National Policy Statements
The UK has implemented a policy requiring any new coal-fired power station built in England and Wales to demonstrate full-chain CCS at commercial scale on at least 300MW of its electricity generating capacity. This policy and the policy on CCR mentioned earlier are now enshrined in primary legislation as part of the six National Policy Statements (NPS), which came into force in July 2011. First introduced in the Planning Act 2008, the NPSs set out the planning policy framework for nationally significant infrastructure projects in the following areas: Fossil Fuel Electricity Generation, Renewable Energy, Gas Supply Infrastructure and Oil & Gas Pipelines, Electricity Networks, and Nuclear Power Generation. CCS and CCR activities are covered in the following NPSs: