New Federal and State legislation heralds change to the capture and storage of greenhouse gases.
Recently enacted federal legislation has established access and property rights in Australia's offshore waters for geological carbon capture and storage (CCS) and forms a key component of the Federal Government's response to climate change. It is a seminal step for the burgeoning CCS industry.
Various States have also either enacted or proposed CCS legislation, although the approaches of the States and the Federal Government are not currently uniform.
COMMONWEALTH OFFSHORE STORAGE LEGISLATION
The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 (Cth), which amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (Act), was assented to on 21 November 2008. A new range of offshore titles will be created providing for the transportation by pipeline and injection and storage of carbon dioxide and potentially other greenhouse gases in geological formations similar to those in which oil and gas are found.
One potential use is for greenhouse gases to be collected from coal-fired power stations and injected through the seabed for underwater storage.
Under the Act, new greenhouse gas titles will be created between the outer limits of the State and Northern Territory (three nautical mile) coastal waters and the outer limit of the Australian continental shelf. The greenhouse gas titles will mirror the current offshore petroleum titles and provide for:
- A greenhouse gas assessment permit (similar to a petroleum exploration permit) which authorises the permit holder to explore for a greenhouse gas storage formation and injection sites for a period of six years (subject to extension on certain conditions)
- A greenhouse gas holding lease (similar to a petroleum retention lease) which enables the lessee to retain tenure over the acreage, if necessary, while a commercial source of greenhouse gas for injection is obtained.
- An injection licence (similar to a petroleum production licence) which authorises injection and storage of greenhouse gases.
- A greenhouse gas search authority (similar to a special prospecting authority).
- A greenhouse gas special authority (similar to an access authority).
Additionally there will be:
- An infrastructure licence authorising the construction and operation of infrastructure relating to a greenhouse gas or petroleum substance in the licensed area.
- A pipeline licence to provide for pipelines for the transportation of greenhouse gases.
Categories of storage formation
The Act establishes three categories of storage formation:
- A potential greenhouse gas storage formation - being a part of a geological formation that is suitable, with or without engineering enhancements, for the permanent storage of greenhouse gas substances. A permit holder must inform the Minister if the holder reasonably suspects that the title area contains such a formation.
- An eligible greenhouse gas storage formation - being a part of a geological formation that is suitable, with or without engineering enhancements, for the permanent storage of a certain amount of a particular greenhouse gas substance injected at a particular point over a particular period.
- A permit holder who reasonably believes that the title area contains an eligible greenhouse gas storage formation may apply to the Minister for a declaration that it is an identified greenhouse gas storage formation. This will enable the holder of a greenhouse gas assessment permit to advance to a greenhouse gas holding lease or injection permit.
Before passing the Bill, the Senate required a number of major changes. As a result of the Senate amendments, long-term liability for greenhouse gases that have been injected for permanent storage will be transferred to the Commonwealth Government. The transfer of liability to the Commonwealth will be upon the satisfaction of certain conditions and will not occur until 15 years after the injection site is closed. However, the Minister may consider the application for a site closing certificate over a period of up to five years, so in effect, liability passes to the Commonwealth after 20 years. Liability will also be transferred to the Commonwealth in circumstances where the storage operator has ceased to exist.
Additionally, the Minister is required to provide a petroleum retention lessee or production licensee with notice of an intention to invite applications for an assessment permit over a block within the retention lease or production licence area.
STATE ONSHORE STORAGE LEGISLATION
Some States have also moved to legislate for onshore carbon storage activities.
Victoria has introduced the Greenhouse Gas Geological Sequestration Act 2008 (Vic) and South Australia has addressed the issue by introducing a Bill to amend its existing petroleum legislation. Western Australia has to date only introduced project-specific legislation.
On 3 December, the Greenhouse Gas Storage Bill 2008 (Qld) was tabled in the Queensland Parliament. We will provide a comprehensive review of the Queensland approach in a future Update.
The State legislation does not currently mirror the Act. Following the introduction of the Act, the Federal Minister for Resources and Energy, the Hon Martin Ferguson, called on the States and Northern Territory to act with urgency to introduce nationally consistent legislation both onshore and offshore.
It is expected that the first titles under the Act will be allocated in early 2009. Draft regulations supporting the Act are expected to be made available for consultation shortly.
OUR CLIMATE CHANGE SERVICE
There are many ways in which DLA Phillips Fox can help with the risks and opportunities presented by carbon capture and storage and climate change in general.
Our cross-disciplinary team is on hand to assist businesses and governments to meet their obligations and pursue opportunities under the various schemes and legislation regulating greenhouse gas emissions, renewable energy use, clean coal technology and energy and resource efficiency.
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