Proposed EU Directive on the geological storage of carbon dioxide UCL – London Special Seminar: Current European Issues in Carbon Capture and Storage Regulation 16 June 2008 Mihai Tomescu Energy and Environment DG Environment European Commission

EU climate objective: stabilisation of GHG at 450 ppmv IPCC 4 Assessment Report Globally, emissions will need to peak within the next 10-15 years, followed by substantial reductions of 50-85% by 2050 to ensure that global average temperature increases do not exceed pre-industrial levels by more than 2.4°C 2 2

20% GHG reduction compared to 1990 Independent commitment EU-Objectives for 2020 20% GHG reduction compared to 1990 Independent commitment 30% GHG reduction compared to 1990 In the context of international agreement 20% Renewables 10% Biofuels 20% Energy Efficiency

What is in the package? Revision of EU Emissions Trading System (the ETS) Effort sharing in non ETS sectors Directive on promotion of renewable energy, report on renewable energy support schemes Directive on carbon capture and storage, and Communication on demonstration plants Revised environmental state aid guidelines

Background CCS contribution in 2030, based on Impact Assessment 160 Mt captured if CCS included under the EU ETS Cutting GHG by some 30% would be €60bn (40%) more expensive without CCS Carbon price would be 46% higher w/o CCS than would otherwise be the case Sufficient storage capacity in Europe to store emissions Planning for infrastructure

Purpose, Focus, Scope Purpose  Legal framework to manage environmental risks Removal of legal barriers in existing legislation Focus on geological storage Capture: regulated and permitted under IPPC (Art. 30) Transport: regulated at MS level and through EIA- Directive (Art.29(1)(a)) Scope Territory of MSs, exclusive economic zones and continental shelves Doesn’t apply to research projects (< 100kt CO2) Storage in water column prohibited 6

Risk management framework – main provisions Storage: - Site selection (Art.4) + specific criteria & conditions (Annex I) Exploration and Storage Permits, applications, conditions and content (Art.5 to 9) Commission review of draft storage permits (Art.10) Monitoring, Reporting and Inspections (Art.13 to15) Corrective measures (Art.16), Liability and Financial Security (Art.19) Closure and Post-closure obligations (Art. 17) Transfer of responsibility (Art. 18) Third-party access (Art. 20-21) Removal of barriers for CCS in existing legislation Recognition of safely stored CO2 under EU-ETS 7 7

Exploration permit (Art.5) Site selection, Exploration Site selection essential for integrity and safety of storage potential sites assessed based on criteria listed in Annex I selection only if assessment shows that under the proposed conditions of use, there is no significant risk of leakage or impacts on human health or the environment (Art. 4.2) MSs have sole right to decide which areas in their territory to make available (Art. 4.1) storage site subject to EIA (Art. 29) Exploration permit (Art.5) where exploration is necessary, an exploration permit shall be issued to protect the holder against conflicting uses where exploration allowed, standard non-discrimination provisions apply

Commission review (Art. 10) Storage permits Storage permits No storage without a storage permit (Art. 6) Proposal contains detailed requirements on application, conditions and contents of the storage permit (Art. 7, 8 and 9) Commission review (Art. 10) Draft storage permits have to me submitted to the Commission, which may issue an opinion within six months MS may deviate from opinion, but have to provide justification Purpose: harmonization of implementation, public confidence, learning Permit regularly updated every 5 years or earlier if needed, and reviewed or withdrawn as necessary (Art. 11)

CO2 Acceptance Criteria, Monitoring and Reporting CO2 stream shall consist overwhelmingly of carbon dioxide no wastes or other matter added for the purpose of disposal concentration of incidental associated substances shall be below levels that would adversely affect the security of the storage or transport infrastructure, or that would pose a significant risk to the environment operator to show fulfillment of criteria before injection Monitoring, Reporting operator to carry out monitoring regularly, and to report at least once a year to the competent authority (Art.13 and 14) monitoring plan elaborated based on criteria listed in Annex II, and approved by the competent authority (Art.13) inspection at least once a year, by competent authority (Art.15)

Leakages Corrective measures (Art.16) in addition… operator to notify immediately the competent authority and to take the necessary corrective measures should operator fail to take measures, the competent authority shall take the measures itself and recover the costs from the operator in addition… Environmental Liability Directive applies for any local damage (Art.33) Emissions Trading System Directive applies for any global impacts to climate: safely stored emissions regarded as not emitted under ETS, but… ETS allowances must be surrendered for any leakages financial security for future liabilities (Art. 19)

Closure, Post-closure, Transfer of responsibility Closure (= cessation of injection) (Art.17) if the relevant conditions in the storage permit have been met, or following the decision of the competent authority Provisions for the post-closure phase operator remains responsible for the storage site (maintenance, monitoring, control, reporting, corrective measures + all ensuing legal obligations) as long as the site represents a significant risk post-closure plan (Annex II) Transfer of responsibility (Art.18) to competent authority, when all available evidence indicates complete containment of CO2 for the indefinite future Commission has the right to review and to give opinion

Financial security & Third party access Financial security (Art.19) to be made available prior to submission of application for storage permit to ensure that all obligations under the CCS-D & ETS-D can be met shall be kept until transfer or responsibility to competent authority Third party access (Art.20 and 21) principle is fair and open access to transport and storage MSs to determine modalities, and can limit access in certain cases (e.g. available storage capacity, national climate policy, etc.) dispute settlement arrangements also for cross-border

International context Removal of legal barriers EU law Water Framework Directive: amended to allow CO2 storage in saline aquifers (Art. 31) (same env. conditions as for natural gas) Waste legislation adapted to remove from scope CO2 transported and stored in accordance with this framework (Articles 34 and 35) International context 2006 amendment of the London Protocol (1996) to the London Convention (1972) on the Prevention of Marine Pollution by Dumping of Waste and Other Matter 2007 amendment of the Ospar Convention (1992) for the Protection of the Marine Environment of the North-East Atlantic

No mandatory CCS at this stage: Enabling versus mandating CCS Enabling Member States determine whether and where CCS will happen Companies decide whether to use CCS on the basis of conditions in the carbon market Capture-ready assessment required to avoid lock-in of high-emissions technology (Article 32) By amendment of the Large Combustion Plants Directive No mandatory CCS at this stage: Let the market work: The revised ETS will ensure a robust carbon price and action on demonstration will bring CCS costs down

Co-decision procedure – Art.251 EC Progress in Council Co-decision procedure – Art.251 EC discussion in env working group under SL Presidency majority of MSs positive many technical questions/details on the file open issues: COM revision of draft storage permits (Art.10) CO2 purity criteria (Art.12) Transfer of responsibility to MS (Art.18) Financial security (Art.19)

Rapporteur: Chris Davies (ALDE, UK) Progress in the European Parliament Rapporteur: Chris Davies (ALDE, UK) Report (beginning of June) proposes: Shorten duration of COM review procedure: introduce early information procedure (Art.10); at the same time strengthened Min. 90% purity of the CO2 stream New provisions for CO2 export to third countries (Art. 11a) CCS provisions for power plants with a rated output capacity > 300 MW and emitting over 350g CO2/kWh: Plants licensed after entry into force of CCS-D: planning for CCS Plants licensed from 2015 onwards: 90% CO2 captured Plants referred in point 1, from 2025 onwards: 90% CO2 capture 2015: revision of possibility to extend Art.32 to installations other than power plants

Outlook Upcoming FR Presidency – July 2008 Objective: Adoption of CCS-D before end 2008 to ensure safety and security of CO2 storage to provide legal certainty to operators to stimulate international regimes accepting CCS Focus on supporting early demonstration and on finding new funding opportunities for early projects Substantial finance available from ETS auctioning revenues 18