There is currently considerable interest in the capture and storage of carbon dioxide (CO2) in Swedish basic industry. The purpose of the Baltic Storage of CO2 (‘Bastor 2’) project is to increase awareness of the potential for geological storage of CO2 in the Baltic Sea and to identify barriers to CCS implementation. This report – the main outcome of work package 4 on legal and fiscal aspects of the Bastor 2 project – provides an analysis of the current and suggested legal framework that would regulate CCS activities in Sweden and the wider Baltic Sea region. The evolution of a well-functioning legal framework for regional CCS operations is expected to be time consuming for which reason
the early identification of potential hurdles is critical to all stakeholders.
Against this backdrop the report’s core aim is to give an accessible account of the legal framework and how it is likely to affect various actors along the CCS value chain. This includes the identification of legal obstacles and gaps as well as analyzing the incentives and disincentives that are created by the law in its current form. Although taking Sweden as a starting point the report inevitably has its main focus on the EU CCS Directive (Directive 2009/31/EC) and related pieces of EU law.
The report utilizes a decision tree structure to describe the key interlinked business processes which form the CCS value chain, thereby enabling the identification of ambiguities or gaps in the regulatory system and highlighting the multiple factors that determine the effect of decisions made along the chain.
In addition to providing an increased understanding of the legal framework and its defining impact on the CCS value chain the report sets out a number of recommendations, primarily intended as input to the discussions regarding the imminent revision of the CCS Directive. Among these are that a clearer definition of ‘captured CO2’ ought to be developed and that more consideration should be given to potential market failures and the role of competition authorities in the buildup of CCS infrastructure. Particularly the rules on third party access to pipelines and storage sites are found to be quite vague at the EU level and thereby create room for problematic discrepancies between the
Member States. In this regard the EU Natural Gas Directive could provide a valuable point of reference. The responsibility for any transboundary CCS installations or structures is also under-regulated thereby causing significant uncertainties that ought to be addressed e.g. by means of relevant guidelines.
As to the potential for storing CO2 captured in the EU outside of the union, something which may be relevant in a regional Baltic context since parts of the Baltic Sea is under Russian jurisdiction, this is found to be impossible without significant amendments to applicable EU law. It is also concluded that further efforts should be made to enable transport of captured CO2 by ship, something which currently is highly problematic due to the details of the EU emissions trading system (EU ETS), and that the inclusion of biogenic emissions under the EU ETS may also benefit the deployment of CCS in the Baltic Sea region.
Elforsk, 2014. , 90 p.