The development of regulations governing carbon capture and storage (CCS)

Carbon capture and storage (often referred to as CCS) is a process involving technology for the capture of CO₂, typically from emission-intensive industries and other activities that generate high greenhouse gas emissions. Carbon capture may also be effected directly from the atmosphere. The captured CO₂ is then transported to a storage site, which in Norway effectively means suitable subsea reservoirs on the Norwegian continental shelf. The acronym CCUS is also used in some contexts, with the U denoting utilisation, which refers to projects in which is CO₂ also utilised as a product or service production input.

CCS status in Norway

There is mounting interest from businesses wishing to receive and permanently store CO₂. The Government has expressed a clear ambition of offering attractive storage areas for businesses that provide solutions for commercial CO₂ storage. Thus far, three permits have been granted for the Norwegian continental shelf under the CO₂ Storage Regulations. The first storage permit was granted to Northern Lights project in 2019. In April 2022, the Ministry of Petroleum and Energy (OED) granted two additional exploration permits. One was granted for an area located in the North Sea, and the other was granted for an area located in the Barents Sea. The North Sea exploration permit was granted to Equinor, while the Barents Sea permit was granted to a group comprised of Equinor, Vår Energi and Horisont Energi. A call for expressions of interest in a fourth permit was announced in April 2022, with an application deadline of 1 June 2022. CapeOmega, TotalEnergies and Wintershall Dea have applied for that permit. It is anticipated that the said permit will be granted in the second half of 2022.

Current CCS regulations

EU Directive 2009/31/EC on the Geological Storage of CO₂ (the Storage Directive) defines the legal framework governing environmentally safe CO₂ storage within the EEA. The objective of the Directive is to ensure that there is no significant risk of CO₂ leakage and that CO₂ storage activities do not entail any detrimental health or environmental effects, while at the same time averting any negative effects on safety and security in the transport network or the CO₂ storage site. A key feature of the Storage Directive is that it requires member states to establish a licensing arrangement for exploration for, and development of, suitable storage sites. It also requires monitoring of stored CO₂, financial security and establishment of third-party access to CO₂ pipelines and transport infrastructure, as well as to the storage sites.

The Directive was incorporated into the EEA Agreement in 2012 and was implemented into Norwegian law through the Regulations relating to the Exploitation of Subsea Reservoirs on the Norwegian Continental Shelf for CO₂ Storage and Transport (the CO₂ Storage Regulations) of 2014. In addition, new provisions were enacted in the Pollution Regulations and the Petroleum Regulations. These constitute, along with the CO₂ Safety Regulations, the key regulations governing CO₂ transport and storage in Norway.

The CO₂ Storage Regulations are, as mentioned, based on the EU Storage Directive and largely mirror the Directive in scope. In addition, the CO₂ Storage Regulations include provisions on, inter alia, conditions for the transfer of responsibility to central government, financial security for liabilities under the Regulations during the operating period and for a subsequent period until the transfer of responsibility – as well as further regulation of financial contributions to cover central government costs during a period after the transfer of responsibility. Requirements for third-party access to CO₂ transport and storage facilities have also been implemented.

CCS regulations in Norway are still evolving. In April 2022, proposed amendments to the Partnerships Act were circulated for consultation; more specially an expansion of the exemption provision defining forms of collaboration that fall outside the scope of the Partnerships Act. The crux of this proposal is to expand the said provision to also encompass collaboration between participants in activities under the CO₂ Storage Regulations. Correspondingly, it is proposed that carbon transport and storage collaboration be structured, to an even greater extent, along the same lines as petroleum activities.

Need for international regulations

There is a need for regulations at the international level to establish an efficient global CCS market. At present, cross-border CO₂ transport is not permitted other than by specific agreement between affected countries. Since 2006, the contracting parties under the London Protocol have acknowledged the right to store CO₂ beneath the seabed when this can be done safely. However, Article 6 prohibits the export of wastes or other matters for dumping in the marine environment. CO₂ is held to fall within the scope of this export prohibition. An amendment to this provision, allowing for CO₂ export between countries on certain conditions, was adopted in 2009. Such amendment to the London Protocol is, however, conditional upon ratification by no less than two thirds of the contracting parties, and this seems unlikely to happen in the near future. By 2019, only six of 53 had ratified the amendment. Until the said amendment enters into effect, it will therefore be necessary to conclude bilateral agreements between exporting countries and Norway in order to commence cross-border CO₂ transport. The Norwegian authorities are actively pursuing additional bilateral agreements, as well as further ratifications.

Please do not hesitate to get in touch with us if you want to learn more about carbon capture and storage opportunities in Norway.