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The Storage of Carbon Dioxide (Licensing etc.) (Scotland) Regulations 2011

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General

Citation, commencement and interpretation

1.—(1) These Regulations may be cited as the Storage of Carbon Dioxide (Licensing etc.) (Scotland) Regulations 2011 and come into force on 1st April 2011.

(2) In these Regulations—

(a)any reference to a numbered section is to that section of the Energy Act 2008; and

(b)any reference to an EU instrument, or a provision of such an instrument, is a reference to that instrument or provision as amended from time to time.

(3) In these Regulations—

“appraisal term” has the meaning given by regulation 3(2)(a);

“the authority” means the Scottish Ministers as licensing authority under section 18(2);

“CO2” means carbon dioxide;

“corrective measures plan” has the meaning given by regulation 7(6);

“the Directive” means Directive 2009/31/EC of the European Parliament and of the Council on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006(1);

“the Environmental Liability Directive” means Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage(2);

“the ETS Directive” means Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC(3);

“financial security” includes—

(a)

a charge over a bank account or any other asset;

(b)

a deposit of money;

(c)

a performance bond or guarantee;

(d)

an insurance policy; and

(e)

a letter of credit;

“general exploration licence” means a licence granted by the Secretary of State under section 18(1) which authorises only activities within section 17(2)(c) and the establishment or maintenance of an installation for the purpose of such activities and which—

(a)

does not grant to the holder the sole right to carry out exploration of a controlled place, and

(b)

is issued in combination with—

(i)

a licence under section 4 to explore any controlled place with a view to carrying on activities within section 2(3)(a) to (d) and establish or maintain an installation in a controlled place for the purposes of such exploration, or

(ii)

a licence under section 3 of the Petroleum Act 1998(4) to search for petroleum in any area below the low water line or in the seaward areas as defined by regulation 3(1)(a) of the Petroleum (Production) (Seaward Areas) Regulations 1988(5);

“injection” means injection of carbon dioxide into a storage site;

“legislation” means legislation in force in the United Kingdom (whether passed, or made, before, after or at the same time as the commencement of these Regulations);

“licence” means a licence (other than a general exploration licence or a Scottish exploration licence) granted by the authority under section 18(1) in respect of activities within section 17(2)(a) to (d) (and “licence holder” is to be construed accordingly);

“licensed area” means the area within which activities are authorised under a licence;

“monitoring plan” has the meaning given by regulation 7(5);

“operator” means the person who carries on or controls activities within the meaning of section 17(2) at a storage site;

“post-closure plan” has the meaning given by regulation 12(3) or (4);

“provisional post-closure plan” has the meaning given by regulation 12(2);

“Scottish exploration licence” means a licence granted by the Scottish Ministers under section 18(1) which authorises only activities within section 17(2)(c) and the establishment or maintenance of an installation for the purpose of such activities and which does not grant to the holder the sole right to carry out exploration;

“storage permit” means a consent granted under a licence, authorising the use of a place as a storage site; and

“target date” has the meaning given by regulation 10(3)(a).

(4) The following expressions have the meanings given by Article 3 of the Directive (and cognate expressions are to be construed accordingly)—

“closure” of a storage site;

“corrective measures”;

“CO2 plume”;

“CO2 stream”;

“exploration”;

“hydraulic unit”;

“leakage”;

“migration”;

“significant irregularity”;

“significant risk”;

“storage complex”;

“storage site”;

“substantial change”;

“waste”;

“water column”.

Licences

Limitations on licensing powers

2.  A licence may not be granted for the purpose of storing CO2 in the water column.

Applications for a licence

3.—(1) An application for a licence must be—

(a)made in writing and sent to the Scottish Ministers; and

(b)accompanied by a fee of £2,100.

(2) The application must include either—

(a)a request that the licence specify a period (the “appraisal term”) during which the licence holder has the right to carry out exploration in the licensed area before making an application for a storage permit; or

(b)if no such period is requested, a statement of the reasons why such exploration is not considered necessary.

Appraisal or initial term

4.—(1) The appraisal term must not exceed the period necessary to—

(a)generate the information necessary to select a storage site; and

(b)prepare the documents required for an application under regulation 6.

(2) Subject to paragraph (1), the appraisal term may be extended by the authority at the written request of the licence holder, under the conditions laid down by the licence, provided that the authority is satisfied that any exploration so far carried out has been in accordance with the licence.

(3) If the licence does not include an appraisal term—

(a)the licence must specify a period as the “initial term” for the purpose of paragraph (4)(a); but

(b)that initial term may be extended under the conditions laid down by the licence.

(4) The licence expires—

(a)at the end of the appraisal term or the initial term, if no application for a storage permit is made before that date; or

(b)if an application for a storage permit is refused, when that refusal is notified to the licence holder.

Content of a licence

5.  A licence must include the provisions in Schedule 1.

Storage permits

Applications for a storage permit

6.—(1) The licence holder may, under the conditions laid down by the licence, apply to the authority for a storage permit in respect of a place within the licensed area.

(2) Where the licence includes an appraisal term, the application may not be made unless any necessary exploration has been completed, and the terms and conditions of the licence have been complied with.

(3) An application must contain—

(a)the name and address of the proposed operator;

(b)evidence of the matters referred to in regulation 7(1);

(c)in relation to the CO2 that is to be contained within the storage site—

(i)the total quantity that is to be injected and stored;

(ii)a proposed date on which injection is to commence;

(iii)the prospective sources and transport methods;

(iv)the composition of the CO2 streams that are to be injected;

(v)the proposed injection rates and pressures; and

(vi)the proposed location of the injection facilities;

(d)a description of measures to be taken to prevent any significant irregularities;

(e)a proposed monitoring plan drawn up in accordance with Annex II to the Directive and that takes into account the obligations imposed on the operator under legislation implementing Article 14 of the ETS Directive;

(f)a proposed corrective measures plan;

(g)the proposed provisional post-closure plan drawn up in accordance with regulation 12(1);

(h)the information required to be provided in relation to the storage site under legislation implementing Article 5 of Council Directive 85/337/EEC(6); and

(i)details of a financial security that will satisfy the requirements in paragraph 7(1) of Schedule 2, including proof that (if the storage permit is granted) such a security will be in force before the proposed date on which injection is to commence.

(4) The authority must forward to the European Commission—

(a)the permit application (within one month of receipt); and

(b)any other related material that the authority proposes to take into account when it seeks to make a decision on the award of a storage permit.

Grant of storage permits

7.—(1) Before granting a storage permit the authority must be satisfied that—

(a)the storage complex and surrounding area have been sufficiently characterised and assessed in accordance with the criteria set out in Annex I to the Directive;

(b)no part of the storage complex extends beyond the territories of the member States;

(c)under the proposed conditions of use of the storage site, there is no significant risk of leakage or of harm to the environment or human health; and

(d)the conditions in paragraph (3) are met.

(2) For the purposes of paragraph (1)(b), the territory of a member State includes its exclusive economic zone and continental shelf within the meaning of Articles 55 and 76 of the United Nations Convention on the Law of the Sea(7).

(3) The conditions are that the proposed operator—

(a)is technically competent (including in the operation of environmental management systems), financially sound and can be relied upon to carry out the functions of an operator; and

(b)has in place an appropriate programme of professional and technical development and training.

(4) Where more than one storage site is contained within the same hydraulic unit, before granting a storage permit for either site the authority must be satisfied that the requirements for the grant of a permit can be met simultaneously.

(5) In considering the application for the storage permit the authority may—

(a)approve the proposed monitoring plan; or

(b)require the applicant to make such modifications to it as the authority (after consulting the applicant) considers necessary,

and (if the permit is granted) the monitoring plan is the plan as so approved or modified.

(6) In considering the application for the storage permit the authority may—

(a)approve the proposed corrective measures plan; or

(b)require the applicant to make such modifications to it as the authority (after consulting the applicant) considers necessary,

and (if the permit is granted) the corrective measures plan is the plan as so approved or modified.

(7) If the authority is minded to grant a storage permit—

(a)the authority must forward a draft of the proposed permit to the European Commission, together with any material taken into consideration that has not already been provided under regulation 6(4); and

(b)the authority must before granting the permit consider any opinion on the draft that is issued under Article 10(1) of the Directive.

Content of storage permits

8.—(1) A storage permit must include—

(a)the name and address of a person who is a licence holder and who is designated as the operator of the site;

(b)the precise location and delimitation of the storage site and the storage complex, and any relevant information concerning the hydraulic unit;

(c)the operational requirements for storage, including—

(i)the total quantity of CO2 authorised to be stored;

(ii)the reservoir pressure limits; and

(iii)the maximum injection rates and pressures;

(d)the provisions in Schedule 2;

(e)any requirements in addition to those in Schedule 2 relating to injection and storage that the authority considers necessary, in particular to prevent significant irregularities;

(f)requirements designed to prevent any undue interference with other uses of the area surrounding the storage site;

(g)the corrective measures plan;

(h)the conditions for closure of the storage site; and

(i)the provisional post-closure plan.

Powers and duties of the authority

Corrective measures

9.—(1) This regulation applies where—

(a)a significant irregularity or a leakage has been detected; and

(b)the licence under which the storage permit is granted is still in force,

but does not apply where the storage permit has been revoked.

(2) Without prejudice to the obligations of the operator under provisions in the storage permit included by virtue of regulation 8(d) and paragraph 6 of Schedule 2, or to the powers of the authority under section 24 (licensing authority’s power of direction)—

(a)the authority may direct the operator to take any corrective measures (and any measures for the protection of human health) that the authority, after consulting the operator, considers necessary; and

(b)if the operator fails to take the measures directed to be taken, the authority must exercise its powers under paragraph (4).

(3) The measures directed to be taken under paragraph (2)(a) may be additional to, or different from, those envisaged in the corrective measures plan.

(4) Whether or not a direction has been given under paragraph (2) or under section 24—

(a)the authority may at any time take such measures itself (or arrange for another person to take them on the authority’s behalf); and

(b)the costs of doing so are to be paid by the operator.

(5) Section 24(5) to (8) applies to action taken under paragraph (4) as it applies to action taken under section 24(4).

Review, modification and revocation of storage permit

10.—(1) Subject to paragraph (2), where a notification is made in accordance with provisions in the storage permit included by virtue of regulation 8(d) and paragraph 4 of Schedule 2, the authority—

(a)may make such modifications to the storage permit as the authority considers appropriate; and

(b)must notify the operator of—

(i)the date on which any such modifications are to come into effect; and

(ii)the date on which the change may be implemented.

(2) Where it appears to the authority that the matters so notified would amount to a substantial change, the authority must—

(a)make such modifications to the storage permit as the authority considers appropriate (and make a notification in accordance with paragraph (1)(b)); or

(b)notify the operator that the change must not be implemented.

(3) The authority must make a notification under paragraph (1)(b) or (2) on or before—

(a)the date (“the target date”) on which the operator proposes to implement a change notified under provisions in the storage permit included by virtue of regulation 8(d) and paragraph 4(1) of Schedule 2; or

(b)a later date if the authority considers more time is required to allow it to make a notification.

(4) The authority shall notify the operator of the later date—

(a)no less than one week before the target date; or

(b)if one or more later dates have already been notified by the authority; no less than one week before the date most recently notified.

(5) This paragraph applies where the authority becomes aware of—

(a)any (or any risk of) leakages or significant irregularities;

(b)any breach of the terms or conditions of the storage permit; or

(c)any scientific finding or technological development which appears to have a bearing on the conduct of operations at the storage site.

(6) The authority must consider whether to modify or revoke the storage permit—

(a)where paragraph (5) applies; and

(b)on the date (“the review date”) falling on the fifth anniversary of the grant of the storage permit, and on every tenth anniversary of the review date.

(7) Following that consideration, the authority may—

(a)make such modifications to the storage permit as the authority considers appropriate; or

(b)if it decides that modification of the permit would be insufficient in the light of the matters referred to in paragraph (5), revoke the permit.

(8) Before making any revocation or modification under this regulation, the authority must consult the operator and any other licence holder.

Consequences of revocation of a storage permit

11.—(1) This regulation applies where the authority has revoked a storage permit under regulation 10(7).

(2) The authority must either—

(a)close the storage site; or

(b)consider any application for a licence (and, if such a licence is granted, for a new storage permit) in respect of the storage site.

(3) Following the procedure under paragraph (2)(b)—

(a)if no new storage permit is granted, the authority must close the storage site (but the existing licence continues in force);

(b)if a new storage permit is granted, the existing licence terminates on the date of that grant.

(4) Until the storage site is closed, or the new storage permit is granted, the authority is deemed to be the operator of the site for the purposes of the following obligations—

(a)in relation to the acceptance and injection of CO2;

(b)in relation to monitoring;

(c)in relation to corrective measures;

(d)in relation to the surrender of allowances under the ETS Directive; and

(e)under Articles 5(1) and 6(1) of the Environmental Liability Directive.

(5) Where the storage site is closed under paragraph (2)(a) or (3)(a), the authority—

(a)is deemed to be the operator of the storage site for the purposes of the obligations referred to in paragraph (4)(b) to (e); and

(b)must ensure that the storage site is sealed and the injection facilities removed (but this is without prejudice to the obligations of any person under Part 4 (abandonment of offshore installations) of the Petroleum Act 1998(8)).

(6) The licence holder of the existing licence must pay to the authority any costs incurred in meeting the authority’s obligations under paragraph (4) or (5); and section 24(6) and (7) applies to the recovery of such costs as it applies to the recovery of costs under section 24(5).

(7) In this regulation, “existing licence” means the licence under which the revoked storage permit was granted.

Closure of storage site and post-closure period

Post-closure plan

12.—(1) Before applying for a storage permit, the licence holder must draw up a proposed provisional post-closure plan that is—

(a)based on best practice; and

(b)in accordance with Annex II to the Directive.

(2) Before granting a storage permit, the authority must—

(a)approve that proposed plan, or

(b)require the operator to make such modifications to it as the authority (after consulting the operator) considers necessary,

and the provisional post-closure plan is the plan as so approved or modified.

(3) The authority may—

(a)approve a proposed post-closure plan submitted to it for approval in accordance with provisions in the licence included by virtue of regulation 5 and paragraph 3(1) of Schedule 1; or

(b)require the operator to make such modifications to it as the authority (after consulting the operator) considers necessary,

and the post-closure plan is the plan as so approved or modified.

(4) Where the authority is deemed to be the operator in accordance with regulation 11(4), the post-closure plan is the provisional post-closure plan with such modifications as the authority considers necessary.

Post-closure obligations

13.—(1) This regulation applies after the storage site has been closed and until the licence is terminated.

(2) The operator must continue to—

(a)monitor the site in accordance with the provisions in the storage permit included by virtue of regulation 8(d) and paragraph 2 of Schedule 2;

(b)comply with its reporting and notification obligations in accordance with the provisions in the storage permit included by virtue of regulation 8(d) and paragraph 3 of Schedule 2 (with the exception of the obligation in the provision included by virtue of sub-paragraph (5)(b)); and

(c)comply with its obligations to take corrective measures in accordance with the provisions in the storage permit included by virtue of regulation 8(d) and paragraph 6 of Schedule 2.

(3) For those purposes any reference to the monitoring plan or the corrective measures plan is to be read as a reference to the post-closure plan.

(4) The operator must seal the storage site and remove the injection facilities in accordance with its obligations under Part 4 of the Petroleum Act 1998.

(5) The closure of the storage site is without prejudice to the obligations of the operator—

(a)under legislation implementing Articles 5 to 8 of the Environmental Liability Directive; and

(b)relating to the surrender of allowances under the ETS Directive.

JOHN SWINNEY

Authorised to sign by the Scottish Ministers

St Andrew’s House,

Edinburgh

20th January 2011

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