international risk governance council May 2008 | 16Chemin de Balexert 9, 1219 Châtelaine, Geneva , Switzerland | Tel: +41 (0)22 795 17 30 Fax: +41 (0)22 795 17 39

Regulation of Carbon Capture and StorageIntroducing the IRGC’s Policy Brief

IEA, 13 May 2008

Chris Bunting, IRGC Secretary General

christopher.bunting@irgc.org www.irgc.org

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WHAT IS RISK GOVERNANCE?

Risk is an uncertain consequence (positive or negative) of an event or activity with respect to something that people value

Governance refers to the actions, processes, laws, traditions and institutions by which authority is exercised and decisions are taken and implemented

Risk governance refers to the identification, assessment, management and communication of risks in a broad, governance, context

Good practice in risk governance integrates the principles of good governance within the traditional risk-handling process of risk identification, assessment, management and communication

Introducing the IRGC’s CCS Policy Brief

The challenge of better risk governance lies in enabling societies to benefit from change while minimising the negative consequences of the associated risks

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FOUNDATION BOARD

ADVISORY COMMITTEESCIENTIFIC & TECHNICAL COUNCIL

SECRETARIAT

IRGC’s projects &

conferences

Sets strategy and focusApproves business plan and budget

Approves topics for project workAppoints members of IRGC bodies

Raises funds

Provides high-level adviceExtends IRGC network

Prioritises topics according to IRGC criteriaLeads project work

Provides members of project task forcesOrganises peer reviews

Controls quality of deliverables

Supports and contributes to projectsCommunication

Provides support to fundraisingFinance and administration

IRGC STRUCTURE

Introducing the IRGC’s CCS Policy Brief

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CHAIRMEN OF THE IRGC’S BOARD ANDSCIENTIFIC AND TECHNICAL COUNCIL

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Donald Johnston, Chairman of the BoardFormer General Secretary, Organisation for Economic Co-operation and Development, based in France Upon taking office as General Secretary of the OECD in June 1996, Mr. Johnston moved from a

career as a lawyer and politician who spent 10 years in the Canadian Parliament and served as a Cabinet Minister in a number of senior portfolios

In 1988, he ended a decade of political life to become legal counsel to the Canadian law firm, Heenan Blaikie

M Granger Morgan, Chairman of the Scientific and Technical Council Professor and Department Head, Engineering and Public Policy, Carnegie Mellon University, USA Prof. Morgan holds a BA from Harvard College, where he concentrated in Physics, an MS in

Astronomy and Space Science from Cornell and a PhD from the Department of Applied Physicsand Information Sciences at the University of California at San Diego (1969)

His research involves the development of methods to characterise uncertainty in quantitative policy analysis

Introducing the IRGC’s CCS Policy Brief

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IRGC PROJECTS FOCUS ON EMERGING, SYSTEMIC RISKS

► Core Concepts of Risk Governance

► Risk governance deficits and emerging systemic risks

► Nanotechnology – applications in food and cosmetics

► Regulation of Carbon Capture and Storage

► Risk governance guidelines for bioenergy policies

► Governance issues relating to low-carbon energy technologies

► Low-lying coastal areas affected by the impacts of climate change

► Synthetic biology

► Disasters and unconventional crises

Introducing the IRGC’s CCS Policy Brief

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IRGC’S CCS PROJECT PROCESS

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Paperscommissioned

from 11international

authors/teams

Workshopheld in

Washington DCMarch 2007

Writedraft ofPolicyBrief

Peer reviewand publishPolicy Brief

Conferencein Zurich

November2007

1. Submission to UNFCCC2. Submission to European Commission3. Article in Environmental Science and

Technology

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THE AUTHORS / TEAMS – 14 organisations, 7 countries

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► The Australian Greenhouse Office (part of the Department of the Environment and Heritage)► The Bellona Foundation (Oslo, Norway) and Statoil Research Centre (Trondheim, Norway)► BP International► Department of Engineering and Public Policy, Carnegie Mellon University (Pittsburgh, US)► Massachusetts Institute of Technology, US► National Resources Defense Council (Washington DC, US)► Potsdam Institute for Climate Impact Research (Potsdam, Germany)► Resources for the Future (Washington DC, US), Swedish Environmental Research Institute (Stockholm, Sweden) and the Centre for International Climate and Environmental Research (CICERO) (Oslo, Norway)► Scottish Centre for Carbon Storage (University of Edinburgh)► Stanford University (Stanford, CA, USA)► The Swiss Reinsurance Company (Swiss Re) (Zurich, Switzerland)

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KEY UNKNOWNS

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Unknowns (Table 3, page 18) acting as barriers to comprehensive CCS regulation

Capture and transport

1. Capture reliability, cost, energy penalty

2. Effects of varying purity of CO2 streams

Geological storage 3. Geological performance (leakage risk profiles) in a variety of geological settings and reservoir types

4. Basin-scale impacts (fluid displacement, induced seismicity)

5. Adequacy of models to predict reservoir performance at scale

Geological storage: operation and long-term stewardship

6. Monitoring methodology, detection limits

7. Remediation techniques, costs

Socio-political and climate considerations

8. Industrial organisation

9. Public acceptance

10. Climate regime/incentive structures

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THE PATH TOWARDS COMPREHENSIVE CCS REGULATION 1

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Learning from pilot projects

►Include a wide diversity of project types►Use a variety of geological settings►Include comprehensive, well-funded scientific and technical programmes►Regulatory and legal flexibility to support “learning by doing”►Operate transparently and provide publicly available data►Be comparatively evaluated by independent reviewers

Protecting CCS infrastructure from seismicity© Pacific Northwest National Laboratory, Joint Global Change Research Institute

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THE PATH TOWARDS COMPREHENSIVE CCS REGULATION 2

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Making the transition to general governance

► Widespread commercial deployment will not happen without an appropriate regulatory and liability regime

►In some jurisdictions many aspects needed for demonstration sites are covered by eg OSPAR Convention, London Convention, US EPA

►With so many unknowns it is almost impossible to create new regulatory bodies at the present time without risking lock-in to something inappropriate in the longer term

►IRGC proposes a two-stage approach:►Use existing structures for demonstration sites, and use the knowledge from these to…►Inform the creation of new regulatory structures when their purpose can be more clearly defined

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THE PATH TOWARDS COMPREHENSIVE CCS REGULATION 3

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Assigning regulatory responsibility

►Governance structures and processes differ between nations:►Federal (devolved) or centralised?►Governmental or agency-assigned?►Private or public ownership of land?►Private or public industry creating the CO2?

►Sinks will cross borders and boundaries►Nations and States/Provinces will have different property rights laws, emissions targets, funds, tax regimes, etc

►Industry will benefit from as much harmonisation as possible

International harmonisation of minimum standards and protocols will help

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THE PATH TOWARDS COMPREHENSIVE CCS REGULATION 4

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Resolving long-term liability and responsibility issues, such as:

►Who will be liable?►If the public, what will be the conditions for transfer of ownership?

►What penalties will be imposed?►For rapid release? For slow-long-term leakage? What is “acceptable”?

►What types of liability are relevant?►Party producing / transporting / injecting? Government?

►How will long-term management and oversight be financed?►How to raise funds for long-term oversight from the injection period?

►Which agency will oversee long-term stewardship?►Single regulator for operation and long-term storage, or a second?

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Achieving public acceptance – crucial for widespread deployment

► To obtain public subsidies for early projects► To negotiate property rights issues► To secure siting approvals► To resolve issues regarding public assumption of long-term liability

Public acceptance of long-term liability requires answers to two key questions:If CCS is safe and assuming no need to transfer ownership during operation, why and when should liability for possible leakage and its impacts be transferred to the public? (Governments last longer than most private sector organisations)

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THE PATH TOWARDS COMPREHENSIVE CCS REGULATION 5

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THE PATH TOWARDS COMPREHENSIVE CCS REGULATION 6

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Making CCS (financially) viable

► Market-oriented approach – needs CO2 price of €30/T or more

► Supply-oriented approaches:

1. Carbon tax (also at €30/T or more)

2. Sectoral performance standards

Supply-orientation will also have market implications as costs are passedon, but gives greater scope for choosing the appropriate technology/ies

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IMMEDIATE PRIORITIES

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►Public engagement and education

►Develop generalized site guidelines

►Develop generalized monitoring and verification protocols

►Develop GHG accounting protocols for CCS

►Improve and standardise modelling techniques

►Develop necessary modifications to existing regulations

►Negotiate specific arrangements for long-term liabilities at a limited number of early sites

►Create financial incentives for full-scale demonstration sites

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Pre-Assessment

Characterisationand Evaluation

AppraisalManagement Communication

Categorising the

knowledgeabout the

risk

UnderstandingDeciding

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