Is carbon capture and storage (also known as geosequestration) the answer to meeting global emission reduction targets?
This was the major question raised at international workshop, recently held in Norway. Australia, the only country to present as united front, was seen as the shining light behind the latest developments in the new technology.
In 2005, the G8 Group of Nations Meeting resolved to coordinate international thought leadership on the various requirements for developing early opportunities for carbon capture and storage (CCS or geosequestration).
In association with the International Energy Agency (IEA) and the Carbon Sequestration Leadership Forum (CSLF), workshops were held in Oslo in June 2007. These workshops considered public awareness, legal and regulatory, technical and commercial/financial/international mechanisms, as the main drivers of, and impediments to, CCS early opportunities.
The IEA reported that six billion tonnes of CCS per annum is required worldwide by 2050, to make the contribution necessary to global emission reduction targets. Presently CCS accounts for only 0.05 per cent of this figure. After energy efficiency measures, CCS proposes to be the second largest contributing strategy in combating climate change.
Participants, at the invitation only workshops, heard overviews of existing CCS operations, such as Statoil's Sleipner Project off Norway, which has stripped and sequestered seven of the nine per cent CO2 content of oil extracted from the North Sea, amounting to one million tonnes of CO2 per annum, over the past ten years.
Project proponents (including the US Futuregen proposal, the Monash Energy, ZeroGen, Gorgon, Fairview and CO2CRC Otway projects in Australia, Conoco Phillips' Immingham CCS Project in the UK and the European CO2 Test Centre at Mongstad, Norway), also participated in the workshops. Minter Ellison was the only participating law firm in Australia.
Other opportunities for CCS discussed, included BP's soon to run dry Peterhead oilfield plant, and a potential 'carbon grid' (piping from sources to sinks), across the Middle East as mooted by a Shell representative.
Participants called for regulatory certainty as a key commercial driver for CCS.
Australia is at the forefront of this development, following the imminent release of the proposed amendments to the Commonwealth Offshore Petroleum Act 2006 (with the first CCS blocks to be released next year) and similar initiatives underway in Queensland and South Australia. Similarly, the European Union announced that it would release its proposed regulatory framework by the end of 2007.
Whilst some participants were seeking a more streamlined regulatory system for research and development projects, others denied the need for a comprehensive regulatory reform, instead favouring agreements between governments and project proponents backed up with liability moratoriums.
Another suggestion, was the introduction of a sliding scale regulation, which depended on a project's risk and reward forecast, to allow regulators to reap the benefit of lessons from research and development findings.
Other proposals included the urgent need for a value on carbon to drive CCS projects, the channelling of carbon credit allocation or revenue into CCS projects, public-private partnerships and central verification to boost public acceptance. As well as a need for global consistency on verification to support a future international interface with emissions trading schemes, and a broad role for the insurance industry in regulatory developments and plant requirements.
The Oslo workshop outcomes will be fed into further workshops, held in Calgary, Canada later this year, which will in turn make key recommendations to the 2008 G8 meeting in Osaka, Japan.
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The article examines the regulation of the oil and gas industry and breaks down the regulatory process state by state.
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