Stakeholder meeting held on CCS Directive

The CCS Directive offers a legislative framework for Member States to regulate the geological storage of CO2 underground as part of the CO2 capture and storage (CCS) chain. 

The Stakeholder meeting was held as part of the process of improving the draft guidance documents intended to aid Member States in the transposition of the directive. Attendees included members of public authorities, industry, civil society and academia from across the EU.

All four draft guidance documents were presented by representatives from ICF, the consultancy that has drafted the documents, who in turn received feedback from the attendees. The Commission commented on stakeholders’ feedback but avoided taking clear positions on the drafts produced by ICF.

Guidance document 1 deals with risk management of geological storage, with particular emphasis on saline aquifers. The attendees discussed the need for more specific language in the final guidance document.

Guidance document 2 is the lengthiest document, dealing with all the main technical issues such as site characterisation, criteria for the CO2 stream and corrective measures to be taken.

Guidance document 3 deals with transfer of responsibility of the site from the storage permit holder to the competent authority. The main issue discussed was whether or not the minimum period through which the stored CO2 must have behaved according to models and without leakage should be counted from the end of injection of if the “count-down” could start earlier.

Guidance document 4 produced the greatest amount of interest from the attendees as it dealt with the issue of financial security and financial contribution. The directive requires a financial security to be provided by the storage operator to the competent authority as a safeguard fund in case of leakage as well as a number of other costs specified by the directive.

During the discussion, stakeholders focused on the need for governments to offer long-term emission allowance price insurance to the permit holder in case of leakage. Should leakage occur, the permit holder must surrender the equivalent of escaped CO2 in allowances (EUAs) under the EU Emissions Trading Scheme (ETS), which represents a notable risk given that future EUA prices are uncertain, will probably be considerably higher and will result largely from political decisions.  

“The fact that it is impossible to hedge against EUA price risk many decades into the future suggests that there should be a role for governments to provide insurance against fluctuating EUA prices. Otherwise, the risk is too great and will act as a disincentive for CCS,” argued Eivind Hoff, director of Bellona Europa.

Scott Brockett, from the Commission’s Climate Action directorate-general, explained that current ETS Phase III EUAs could be bought in anticipation of future potential leakages, thus avoiding the expected cost of surrendering allowances during a later Phase. Holding EUAs as a reserve on their balance sheet for several decades could, however, be very costly for companies.

“It’s an uncomfortable situation – if we allow states to share the risk then it transfers risk which was being taken care of by the financial security mechanism back onto the tax payer for a premium”, Brockett explained.

The public consultation on the guidance documents for the CCS Directive is open until July 30th 2010. The guidance documents will be subsequently adopted in November.

To access the draft guidance documents and for more information on the CCS Directive, visit the Commission’s website.