Norway is at the forefront of Carbon Capture and Storage ("CCS") technology development. However, the Norwegian government's major cut in the CCS funding in its budget proposition for 2018 puts the government project of developing a full scale CCS demonstration project at risk. In response to the budget cut, the Federation of Norwegian Industries, the Norwegian Oil and Gas Association and environmental organisations together launched a call for continuance of governmental support to and promotion of CCS development.

These recent developments actualise the Norwegian legal CCS framework, which provides the backdrop for full-scale CCS projects. This newsletter therefore aims to provide a high level overview of some legal aspects of the Norwegian CCS regime.

The legal and regulatory CCS framework

CCS consists of the capture of carbon dioxide (CO2) from industrial installations, its transport to a storage site and its injection into a suitable underground geological formation for the purposes of permanent storage.

From a legal point of view, CCS activities are subject to legislation that is generally applicable to industry activities in Norway, including property laws, planning laws and environmental legislation. Additionally, however, CCS is subject to certain CCS specific legislation, introduced in the Directive 2009/31/EC on the geological storage of carbon dioxide (the "CCS Directive"). The CCS Directive, which was adopted in 2009, establishes a legal framework for environmentally safe geological storage of CO2 within the territory of the EU Member States, including their exclusive economic zones and on the continental shelves.

The CCS Directive is implemented into Norwegian law through:

  1. a new Chapter 4A to the Petroleum Regulations and amendments to Section 4-8 of the Petroleum Act, which governs capture, transport and storage of CCS in relation to petroleum activities; and
  2.   the Regulations on Transport and Storage of CO2 on the Continental Shelf (the "Storage Regulations"), which governs prospecting and exploration for subsea reservoirs for CO2 storage and exploitation, transport and storage of CO2 in such reservoirs which is not carried out as a part of petroleum activities; and
  3.  a new Chapter 35 to the Pollution Control Regulations, which applies to all geological storage of CO2 – both in relation to petroleum activities and not - with the exception of certain smaller projects.

The Norwegian CCS policy today: Driving CCS forward or backwards?

The question remains whether the CCS legal regime will be actualised with the planned full-scale CCS project, or whether the government's decision to cut the budget proposition for 2018 by over 90 percent entails that it will not go forward with the project. As the cost of developing a large-scale CCS project is very high and not yet commercially viable, financial support from the government is decisive to carry out such a project. However, the government has announced that it still intends to carry out the project and that it will propose a revised budget proposition to the Parliament this spring on the basis of the results from the project's upcoming concept studies.