DECC published its consultation on the Government's proposal for an offshore carbon dioxide storage licensing regime on 25 September. The proposal forms the latest stage in the Government's commitment to Carbon Capture and Storage (CCS) – the process of capturing carbon dioxide from the burning of fossil fuels and its transportation and permanent storage in geological formations. The Government is proposing to use its powers under the Energy Act 2008 to introduce the licensing regime. The consultation builds on DECC's earlier work in June 2008, when they consulted on how to respond to what was to become Directive 2009/31/EC on the geological storage of carbon dioxide. A draft of the proposed regulations which will transpose the Directive into UK law is annexed to the new consultation.

The geographical reach of the licensing regime will extend beyond the territorial sea and throughout the Gas Importation and Storage Zone (GISZ), in total an area extending up to 200 nautical miles from the baseline of the territorial sea.

In addition to the carbon storage licence granted by DECC, an operator would have to obtain a lease from The Crown Estate, which administers the relevant rights to the offshore area. Essentially, the lease will not be issued until the terms of the licence are agreed and conversely the licence will not be issued until the lease is agreed upon. Therefore operators must ensure they discuss their proposals with both parties.

The consultation sets out the proposed licensing regime in four stages and covers all activities from the initial exploration phase through to operation and ultimately site closure. Some of the key issues are summarised below:

  • During the initial non-intrusive exploration (Stage 1), DECC's intention is that an existing exploration licence will be sufficient at this stage;
  • A licence (which DECC suggests will be similar in structure to existing petroleum production licences) will grant the right to intrusive offshore exploration/appraisal for the purposes of selecting a site for storage (Stage 2). At this stage, the licensee will have an exclusive right to apply to DECC for consent for storage operation, and the information required for such an application is detailed in the consultation. Environmental approval is required at this point in the process, including consent under the EIA Regulations;
  • DECC's consent for storage operations will initiate the operation phase of the licence (Stage 3); and
  • The post closure phase (Stage 4) occurs when the process of storing has ceased and the facilities are being prepared for decommissioning. It is proposed that responsibility for the site will remain with the operator until DECC is satisfied that permanent containment has been achieved and, at this point, responsibility for the site will pass to the State.

Subject to the outcome of the consultation process, DECC intends to have regulations in place in the first quarter of 2010, allowing the licensing regime to be in force in April 2010. The consultation will run for a period of 12 weeks. Therefore, the deadline for responses is 30 December 2009. S+W will be analysing in greater detail the issues presented by the consultation in future issues of this E-Bulletin.

The Scottish Government have also taken steps this month to demonstrate their support to CCS, announcing that they are financially backing detailed research to identify North Sea CCS sites, contributing £75,000 towards the study.