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Energy Act 2008

Licensing

Section 18: Licences

54.This section allows the licensing authority (or any authority to which the relevant function has been transferred under section 34) to grant licences for the purposes of this Chapter. The licensing authority in relation to the activities of storage, conversion or exploration within the territorial sea adjacent to Scotland is the Scottish Ministers; otherwise, the licensing authority is the Secretary of State. However, where the activity concerned is only partly within Scottish territorial waters (for instance where a carbon dioxide store straddles the boundary between Scottish and English territorial waters) the licensing authority may be either the Scottish Ministers or the Secretary of State. In such a case, references to the “licensing authority” are to be construed as references to the Authority that exercises the relevant power to grant a licence or to consider a licence application. The licensing authority for an installation will always be the Authority that licensed the activity for which the installation is maintained or established.

55.A licence granted under section 18 will permit, under the terms and conditions laid down in the licence, the carrying out of one or more of the activities mentioned in section 17. However, in order to make use of the sea, the seabed or spaces under the seabed for the purpose of these activities, an operator would in addition have to obtain a lease or authorisation from The Crown Estate, who administer the relevant rights to the offshore area. Subsection (3) accordingly allows the geographical coordinates covered by the licence to be linked to those covered by the lease or authorisation from The Crown Estate (see also section 20 (4)).

Section 19: Requirements relating to grant of licences

56.This section gives the licensing authority the power to make regulations (subject to negative resolution procedure – see section 105) prescribing the conditions that the applicant may be required to meet in order to obtain a licence, as well as any other requirements that must be satisfied prior to the licence being granted. In particular, the regulations may set out:

  • who can apply for a licence;

  • how the application for a licence must be made;

  • the information which an application must contain and any accompanying documents;

  • an application fee; and

  • a requirement for the applicant to provide financial security (such as a letter of credit, a fund held on trust, or another form of security) in respect of any obligations arising in connection with the licensed activities.

The obligations in relation to which financial security may be required are not restricted to those laid down by the licence, and may take into account, for example, any liabilities that may arise in connection with a carbon dioxide store (such as any liability that may arise under the EU Emissions Trading Scheme). While such security may not be needed in every case, the intention of requiring such a security would be to protect the public purse against the risk of the licensee failing to meet its obligations arising from its activities under the licence. Where a financial guarantee is required, then it will be required as a condition of the licence being granted, and not as a condition of making an application.

Section 20: Terms and conditions

57.This section gives the licensing authority (or an authority to which the relevant function has been transferred under section 34) a power to grant licences on such terms and conditions as that licensing authority thinks fit. The licensing authority’s discretion is, however, subject to its power under section 21 to prescribe, by regulations (subject to the negative resolution procedure – see section 105), the provisions which must be contained in a licence.

58.Bysubsection (3) a licence may include provisions about the following matters (amongst other things):

  • the financial security that may be required (in addition to the security required under section 19), or the release of any existing financial security during the licensing period (for instance to reflect a change of circumstances, such as an improvement in the operator’s financial standing);

  • a power to allow the licensing authority to review or (after consulting the licence holder) to modify the licence;

  • a power to prevent, or enable the licensing authority to prevent the licence holder, in specified circumstances (such as where there is evidence to suggest that the store poses a significant environmental risk), from carrying on an activity (for example, the continued injection of carbon dioxide).

59.In addition to imposing conditions on the process of injecting carbon dioxide, the licence may also impose obligations on the licence holder after the activity of carbon dioxide injection has permanently ceased. Therefore licences will be able to cover both a period during which injection is taking place, and a subsequent period, during which it is expected the stability of the store would have to be demonstrated through monitoring and other activities prior to termination of the licence.

60.Subsection (4) ensures that the commencement and duration of the licence can be linked to that of the corresponding lease or authorisation from The Crown Estate.

61.Subsection (5) ensures that a licence can include an authorisation for the transfer of the licence to another person or the inclusion of another person as a party to the licence, subject to any conditions set out in the licence. Such conditions might for instance include obtaining the prior consent of the licensing authority for such a transfer.

62.Subsections (6) and (7) ensure that provisions in the licences can include conditions to obtain consent from the licensing authority (or an authority to which the relevant function has been transferred under section 34) for specified acts or omissions. Such consent may itself be granted subject to conditions.

Section 21: Content of licences: regulations

63.This section gives the licensing authority the power to make regulations (subject to negative resolution procedure – see section 105) about the terms and conditions which must be included in licences to be granted under section 18.

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