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Energy Act 2008

Summary and Background

47.Carbon Capture and Storage (CCS) is a process involving the capture of carbon dioxide from the burning of fossil fuels, its transportation, and storage in secure spaces, such as geological formations, including under the seabed. CCS can be applied to a range of industrial processes including coal-fired and gas-fired electricity generation. It has the potential to reduce carbon dioxide emissions of standard coal-fired generation by up to 90%. The Stern Review(1) highlighted the potential role that CCS could play in tackling climate change, with the potential to contribute up to as much as 28% of global carbon dioxide mitigation by 2050. However, CCS has not yet been applied to commercial-scale electricity generation.

48.The Government is committed to the development of CCS with electricity generation. The Government launched a competition in November 2007 to support a CCS demonstration project in the UK. This will be one of the first demonstrations anywhere in the world. The objective is for the demonstration project to be operational by 2014. The demonstration cannot proceed without an appropriate legislative regulatory regime being in place.

49.Most of the activities involved in CCS are standard industrial processes and can be readily regulated by established legislation. However, permanent storage of carbon dioxide is a novel activity, and existing legislation to control depositions below the surface of the land and seabed is not well suited to licensing the storage of carbon dioxide. This Chapter of the Act establishes a framework for the licensing of carbon dioxide storage and the enforcement of the licence provisions. It also applies existing offshore legislation (for example the decommissioning legislation in the Petroleum Act 1998) to offshore structures used for the purposes of carbon dioxide storage. Chapter 1 of Part 1, amongst other things, asserts the UK’s rights to the use of the offshore sub-surface space for the storage of carbon dioxide.

50.The framework is limited to the offshore area. This is due to the fact that this area is likely to be of primary interest to developers in the short-term. Moreover, storage of carbon dioxide onshore requires amendment of existing EU Directives. Whilst such amendment forms part of the Commission’s proposal for a Directive on the geological storage of carbon dioxide presented in January 2008, the details of any Directive finally adopted will be a matter for agreement within the EU Council and the European Parliament. Whilst the agreed text of the Directive is expected to cover both onshore and offshore areas, there is a risk that the Directive may not be agreed in time to fit in with the timeframe of the CCS demonstration project. The provisions in this Chapter are intended to provide sufficient flexibility for the EU regime to be readily implemented once agreed at the European level in relation to the offshore area.

51.Following a Legislative Consent Motion agreed by the Scottish Parliament, the provisions of this Chapter apply to the territorial sea adjacent to Scotland (0 to 12 nautical miles) where the Scottish Ministers will have the relevant legislative, licensing and enforcement powers. The practical arrangements as well as any cross-boundary issues arising in connection with the provisions of this Chapter to that area are intended to be addressed in a Memorandum of Understanding to be entered into between the Secretary of State and the Scottish Ministers.


The Stern Review – The Economics of Climate Change, Nicholas Stern, 2006

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