Transcript Title Slide

Policy and regulatory
challenges for CCS
Dr Paul Zakkour,
ERM Energy & Climate Change Services, UK
International Workshop on CCS in the Power Sector: R&D
Priorities for India. Delhi 23rd January 2008
Delivering sustainable solutions in a more competitive world
Overview
• Policy:
• Designing approaches to promote and incentivise
climate change mitigation measures (e.g.
technology)
• Regulation:
• Ensuring effective deployment of those measures
(including safety and cross-media considerations)
Delivering sustainable solutions in a more competitive world
Policy to incentive CCS
• Public policy is vital to incentivise CCS
development and deployment: on the whole, CCS is
a solely climate change driven technology (exc EOR)
• Options include:
• Market mechanisms (carbon trading): cap and
trade or project based
• Fiscal (tax relief): on capital and operating costs
• R&D support (grants, subsidies): grants,
competitions, feed-in tariffs
• Mandatory obligations: difficult for new technology
• Combinations thereof
Delivering sustainable solutions in a more competitive world
Market mechanisms and CCS
• International AAU trading (Art 17 of KP)
• Approval of 2006 IPCC GLs will allow govt to govt
trade of any AAUs from CCS
• EU Emissions Trading Scheme
• Various workstreams ongoing to ensure recognition
of CCS by 2013 at latest
• Kyoto project mechanisms (Art 6 & 12 of KP)
• Not in CDM. Lack of support from NAI countries
• Some legitimate concerns, but no good reasons to
reject so long as framework is right– esp. early opps
Delivering sustainable solutions in a more competitive world
Liability and permanence are tricky!
Detailed storage site
assessment: every 10
years+?
5 year
periods of the
EU ETS
Number of years
1
10
Possibility of seepage of CO2 back to
the atmosphere over
geological timescales?
100
Project based mechanisms
e.g.CDM crediting periods of
7 (x3) or 10 years
1 year
surrender EUAs annually under the
EU ETS.
Handling of long-term liability for a
storage site by a host government.
Transfer of liability or end of
licensing period
50-500 years?
Source: ERM 2004
Delivering sustainable solutions in a more competitive world
Other incentive mechanisms
• Fiscal
• Tax relief, feed-in tariffs (generally market mechs are chosen
instrument for climate change)
• R&D
• CCS in power sector will need R&D support. Some early
opps (high purity CO2 streams) may be possible with carbon
market, but not power.
• Fiscal and R&D can be linked (e.g. auction fund recycle)
• Mandatory CCS
• Difficult to mandate until proven.
• Combined approaches
• Likely to be the most effective approach…market mechanism
“plus”
Delivering sustainable solutions in a more competitive world
Combining approaches
2012
Marginal abatement cost
– CCS ($ / t CO2)
?
Price convergence
point
$ / tCO2
CO2 price ($ / tCO2)
$20 / tCO2?
time
Other support mechanisms + ETS?
Delivering sustainable solutions in a more competitive world
ETS
Regulating CCS
• Why regulate?
• To mitigate risk of leakage and/or unintended migration
• To ensure liability allocated to recover cost of damages
• Will help to build confidence in the technology
• What to regulate?
• Capture: as for other chemical and power installations (not
covered today)
• Transport: as for other gas pipelines (also not covered here)
• Storage: new area of regulation needed
• Note: Regulations and incentives inherently linked in
context of liability for any emissions
Delivering sustainable solutions in a more competitive world
Regulatory issues for CO2 storage
• Leakage IS NOT always an inherent function of
storing CO2
• Leakage IS more a function of:
• Site characterisation and selection
• Risk assessment
• Risk management
- Monitoring and reporting
- Remediation and short-term liability
• Decommissioning
• Stewardship and long-term liability
• Think: Leakage events, rather than leakage rates
Delivering sustainable solutions in a more competitive world
Risks posed by leakage
Geological
sequestration risks
Local EHS
regulatory issues
Local
Surface release
Suffocation
Ecosystem impacts
(tree roots, ground
animals
International issue
(UNFCCC/Kyoto)
Global
CO2 in subsurface
Metals mobilisation
Other contaminant
mobilisation
Source: Wilson and Keith (2002)
Delivering sustainable solutions in a more competitive world
Quantity-based
Ground heave
Induced seismicity
Displacement of
groundwater resources
Damage to hydrocarbon
production
Surface release
CO2 back to the
atmosphere
Site characterisation and selection - trapping
• Ultimate objective:
to find and select
sites with evidence
of effective long
term trapping
mechanisms
Source: IPCC SRCCS, 2005
Delivering sustainable solutions in a more competitive world
Risk assessment - FEPs
• Feature:
• Event:
• Process:
characteristic of system components
boreholes, lithography, nearby communities..
a particular happening
pipe fracture, nearby earthquake, meteorite
impact..
natural phenomenon
corrosion of casing, dissolution of packing
material, convection of groundwater..
Scenario
Delivering sustainable solutions in a more competitive world
Risk management - remediation
Injected CO2 migrates up dip maximising dissolution & residual CO2
trapping
E
A
B
Aquifer
D
G
F
C
Storage formation
Fault
A. CO2 gas pressure exceeds
capillary pressure &
passes through siltstone
B. Free CO2 leaks from A
into upper aquifer up
fault
C. CO2 escapes through ‘gap’
in cap rock into higher
aquifer
A. Extract & purify ground water
B. Extract & purify ground water
C. Remove CO2 & re-inject
elsewhere
Potential escape mechanisms
D. Injected CO2 migrates up
dip , increases reservoir
pressure & permeability
of fault
Remedial measures
D. Lower injection rates or
pressures
Delivering sustainable solutions in a more competitive world
E. CO2 escapes via poorly
plugged old abandoned
well
F. Natural flow dissolves CO2
at CO2 /water interface
& transports it out of
closure
G. Dissolved CO2 escapes
to atmosphere or ocean
E. Re-plug well with cement
F. Intercept & re-inject CO2
G. Intercept re-inject CO2
Risk management - approaches
Local EHS risks
• Civil, Criminal law, etc.
• Evidence of damage and
proof of negligence key
features
Global EHS risks
• Regulate and Offset,
or
• ………?
• ………?
• Will depend on liability in
regulatory regime
MONITORING & REPORTING
Environmental (H&S) Impact Assessment
Physical remediation
Financial instruments (insurance, bonds etc.
Delivering sustainable solutions in a more competitive world
IPCC 2006 GHG Inventory g/lines
Site characterisation
Risk assessment
Risk management
(monitoring)
Risk management
(reporting)
Delivering sustainable solutions in a more competitive world
The role of Impact Assessment
• EIA will be an important
component of project
approval
• Needs risk-based
approach
• Gorgon (Aus): Risk-based
EIA approval process for
CCS being tested
Delivering sustainable solutions in a more competitive world
A step-wise process to manage risks
Step
Documentation
1. Literature & data review
Data catalogue (geology, geophysics, old
wells, other uses)
QA/QC
2. Build static Earth model
Agreed / qualified / verified set of static
Earth models inc. rational behind decisions /
choices – define project boundary
QA/QC
3. Run Dynamic models
Source sink matching; injection plan;
numerical simulations; plume behaviour;
ultimate fate; trapping mechs; flux rates
across boundary, secondary containments;
seepage pathway; hydro-geology; biosphere
QA/QC
4. Define risks (ESHIA)
EIA; environmental baseline
QA/QC
5. Define monitoring scheme
Detailed monitoring plan
QA/QC
Delivering sustainable solutions in a more competitive world
Summary: regulatory needs for CO2 storage
NEED
BASIS FOR REGs
Site characterisation and
selection
IPCC 2006
Risk assessment
IPCC 2006, FEPs, others
Risk management
EIA, ESHIA
- remediation & liability
- monitoring and reporting
IPCC 2006
Decommissioning
Petroleum/mining regs, EIA,
??
Stewardship and long-term
liability
Financial instruments, EIA, ??
Delivering sustainable solutions in a more competitive world
EU CCS Directive
Approaches to designing CCS regulations
• Carbon trading
• Creates a chain of custody for CO2 from capture to
storage
• Provides mechanism to manage “global” risk
• Environmental, health and safety
• Need to modify existing EHS regulations to fit the
regulatory needs highlighted above
• Provide mechanism to manage “local” risk
• Legal systems
• Property (storage) rights, licensing, liability etc…
Delivering sustainable solutions in a more competitive world
Delivering sustainable solutions in a more competitive world
Regulating and Incentivising CCS
Dr Paul Zakkour,
Email: [email protected] T: +44 20 7465 7200
International Workshop on CCS in the Power Sector: R&D Priorities for India.
Delhi
23rd January 2008
Delivering sustainable solutions in a more competitive world
Delivering sustainable solutions in a more competitive world