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Legal and Regulatory Frameworks for CCUS An IEA CCUS HandbookThe IEA examines the full spectrum of energy issues including oil, gas and coal supply and demand, renewable energy technologies, electricity markets, energy efficiency, access to energy, demand side management and much more. Through its work, the IEA advocates policies that will enhance the reliability, affordability and sustainability of energy in its 31 member countries, 11 association countries and beyond. Please note that this publication is subject to specific restrictions that limit its use and distribution. The terms and conditions are available online at www.iea.org/t for others, new laws and regulations may be required. This IEA CCUS Handbook is a resource to develop and update legal and regulatory frameworks for CCUS. It identifies 25 priority issues that frameworks should address for CCUS deployment, and presents global case studies on how different jurisdictions have approached these issues. The handbook is supported by a comprehensive online CCUS Legal and Regulatory Database that provides examples of legislative approaches to CCUS from around the world. The handbook also updates the 2010 IEA CCUS Model Regulatory Framework, with Model Legislative Text providing sample wording as a reference for relevant authorities when developing tailored CCUS legislation for their national or regional context. The Model Text also provides example definitions of common terms used within CCUS legal and regulatory frameworks. The handbook does not consider legislative and policy approaches that aim to incentivise investment in CCUS, for CCUS Legal and Regulatory Handbook PAGE | 8 Chapter 1 IEA. All rights reserved. example legislation for tax credits or grant programmes. Although such incentives are important for the broad deployment of CCUS, the focus here is on the legal oversight and regulation of CCUS activities. The handbook is structured as follows Chapter 1 – Introduction provides an overview of the importance of regulating CCUS activities and identifies key regulatory issues for CCUS. Chapter 2 – Developing legal and regulatory frameworks outlines the questions policy makers should consider when formulating regulations. The chapter offers a six-step process intended to help governments begin this process. Chapter 3 – Regulatory foundations identifies the fundamental regulatory issues that provide a base for incorporating CCUS activities into frameworks. Chapter 4 – Key issues for CO2 storage lays out the legal and regulatory areas that frameworks must address in order to promote safe and secure geological storage. This chapter looks at how various governments from around the world have treated such issues as measurement, monitoring and verification, transfer of storage site stewardship, and post-site closure liabilities. Chapter 5 – International issues and CCUS hubs looks at the variety of legal and regulatory issues and implications that stem from cross-border projects. Chapter 6 – Other key and emerging issues details further regulatory considerations as CCUS technologies grow to meet the demands of a net zero future. About the IEA CCUS Handbook series Meeting net zero goals will require a rapid scale-up of CCUS globally, from tens of millions of tonnes of CO2 captured today to billions of tonnes by 2030 and beyond. The IEA CCUS Handbook series aims to support the accelerated development and deployment of CCUS by sharing global good practice and experience. The handbooks provide a practical resource for policy makers to navigate a range of technical, economic, policy, legal and social issues for CCUS implementation. CCUS Legal and Regulatory Handbook PAGE | 9 Chapter 1 IEA. All rights reserved. The role of CCUS in reaching net zero ambitions CCUS refers to a suite of technologies that involve the capture, use and storage of CO2. The CO2 can be captured from large point sources, including power generation and industrial facilities that use either fossil fuels or biomass for fuel. The CO2 can also be captured directly from the atmosphere with direct air capture DAC technologies. If not being used on site, the captured CO2 can be compressed and transported by pipeline, ship, rail or truck to be used in a range of applications, or injected into deep geological formations including depleted oil and gas reservoirs and saline aquifers, where it is trapped and permanently stored. CCUS carries considerable strategic value as a climate mitigation option and will play an important role in meeting net zero goals. In the Net Zero Scenario, more than 7.6 billion tonnes Gt of CO2 are captured, transported and used or stored globally in 2050. CCUS contributes to emission reductions in almost all parts of the energy system, with four major roles Tackling emissions from existing energy assets. If left unmitigated, today’s power and industrial plants could emit a further 600 Gt CO2 until the end of their technical lives – nearly 17 years’ worth of current global energy sector emissions. This is especially important for emerging economies with relatively young coal-fired generation fleets. Retrofitting these plants with CCUS can be a strategic option in some cases to help avoid emissions that may otherwise be “locked-in”. Reducing emissions in hard-to-abate sectors. CCUS is one of the few available options to reduce emissions in certain sectors, such as heavy industry cement, steel and chemicals production and long-distance transport including synthetic fuels for aviation. In the Net Zero Scenario, approximately 40 of the CO2 captured in 2050 is from energy-related emissions and process emissions from heavy industry. Providing a platform for low-carbon hydrogen production. CCUS can support a rapid scaling up of low-carbon hydrogen production to meet current and future demand from new applications in transport, industry and buildings. Removing carbon from the atmosphere. For emissions that cannot be avoided or reduced directly, CCUS represents an important technological approach for removing carbon and delivering a net zero energy system. In the Net Zero Scenario, approximately 2.4 Gt CO2 are captured from bioenergy and DAC in 2050, with 1.9 Gt of this CO2 permanently stored for carbon removal to balance remaining emissions in transport and industry. CCUS Legal and Regulatory Handbook PAGE | 10 Chapter 1 IEA. All rights reserved. Regulating CCUS requires consideration of the full value chain Schematic of the CCUS value chain IEA. All rights reserved. CCUS Legal and Regulatory Handbook PAGE | 11 Chapter 1 IEA. All rights reserved. The importance of regulating CCUS as the project pipeline expands The scale-up of CCUS technologies requires legal and regulatory frameworks to ensure the effective stewardship of CO2 storage sites, the protection of public health and the environment, and the safety of CCUS activities. Regulatory frameworks are also required to clarify the rights and responsibilities of CCUS stakeholders, including relevant authorities, operators and the public, and to provide clarity and certainty to project developers and their investors. While legal and regulatory frameworks should consider all aspects of the CCUS value chain capture, transport, use and storage, CO2 storage is typically the primary focus as it can present novel and complex issues for regulation. For example, frameworks must clarify the ownership, stewardship and liability for CO2 that is to be stored in perpetuity. Regulations must also ensure appropriate site selection and safe operations, and mitigate and manage risks across all stages of site development, operation and closure. Further, they should provide a legal basis for CO2 storage, allocating property rights and managing competition for resources. Regulatory issues associated with CO2 capture, transport and use will often fall within the scope of existing regulatory frameworks for industrial activities, including oil and gas, waste management, health, safety and environmental considerations for industrial sites, property rights and transport. While these areas may require little or no modification to existing frameworks as compared to CO2 storage, it is important that governments review existing domestic and international frameworks in order to remove any potential barriers to CCUS deployment. Experience with CCUS regulation is growing and evolving In 2010 the IEA released a Model Regulatory Framework to support countries that were developing, or considering developing, regulatory approaches for the large-scale deployment of CCUS. The model framework provided a starting point for developing regulations, with “Model Text” that could be amended or added to as appropriate. The model framework has been applied in reviews of legal and regulatory frameworks for Mexico and South Africa supported by the World Bank, as well as in other national and sub- national contexts. Since the publication of the model framework, substantial experience has been gained in the regulation of CCUS projects. Additionally, CCUS applications and technologies have continued to evolve, highlighting the need for flexibility in regulatory approaches as well as the need to review existing frameworks periodically. Around 30 commercial projects have started operations and the pipeline of projects in development has now grown to more than 200. While CCUS has been primarily used in association with natural gas processing or fertiliser production, a growing number of projects for hydrogen, steel, bioethanol and power production applications are either already operating or currently planned.
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