Canada: Alberta Releases New Bill Regarding Carbon Capture and Storage

Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on CleanTech/Environmental, November 2010


Reaffirming Alberta's position as a world leader with respect to the development of commercially viable Carbon Capture and Storage (CCS), the Carbon Capture Storage Statutes Amendment Act, 2010 (the CCS Act) has passed the first reading of the Alberta legislature. The CCS Act, if ultimately proclaimed, will amend existing environmental and oil and gas related legislation and is a positive step towards establishing a clear legal and regulatory CCS framework. Coupled with the existing C$2-billion dollar carbon capture and storage fund founded by Alberta to promote the province's first large-scale commercial CCS pilot projects, the CCS Act confirms that CCS remains an integral part of the Alberta government's strategy in meeting its goal of reducing greenhouse gas (GHG) emissions by 50% by 2050.

The CCS Act represents one of the first formalized attempts in North America to regulate CCS and appears to address many of the concerns and considerations voiced by industry and environmental organizations with respect to implementing a manageable regulatory framework.

Highlights of the CCS Act include:

  • clarification over ownership of the pore space into which the sequestered carbon dioxide (CO2) is injected;
  • allocation of long-term liability for the intended permanent sequestration of the CO2;
  • addressing the risk of the 'disappearing corporation'; and
  • the creation of a post-closure stewardship fund.

These issues are discussed more fully below.

Ownership of Pore Space

CCS requires the injection of produced CO2 into underground formations which are then sealed on a permanent basis. Logistically, this situation poses a difficult situation for Alberta, as grants to minerals or other subsurface rights under existing legislation do not contemplate how the pore space of the subsurface area is to be treated (which is where the captured CO2 is to be stored). Further, pursuant to s. 57 of the Mines and Minerals Act, the owner of petroleum and natural gas rights also owns the rights to the underground storage.

The CCS Act will amend the Mines and Minerals Act to include a provision declaring that no grant from the Crown, either in land or mines and minerals, operates or has operated as a conveyance of the title to the pore space. This amending provision will be deemed an exception to s. 61.1 of the Land Titles Act, meaning that this declaration will not constitute an expropriation. Accordingly, the Crown will not be required to compensate any landowners or rights holders for the loss of the pore space.

Long -Term Liability

From an industry perspective, CCS represents an opportunity to reduce GHG emissions and therefore mitigate penalties imposed by Alberta legislation upon facilities within the province that emit greater than 100,000 tonnes of CO2e per year.

Since 2007, Alberta has legislated reporting requirements and emissions reduction requirements for facilities operating within the province under the Climate Change and Emissions Management Act (CCEMA) including the Specified Gas Emitters Regulation and the Specified Gas Reporting Regulation, both of which have been enacted under the CCEMA.

CO2e is calculated by converting all of the emissions of certain specified gases with known global warming potentials into the equivalent global warming potential associated with CO2. The specified gases include methane (CH4), nitrous oxide (N2O), sulphur hexafluoride, various hydrofluorocarbons (HFCs) and various perfluorocarbons (PFCs). Each of the specified gases have different global warming potentials. For example, one molecule of methane has the global warming potential equivalent to 21 molecules of C02.

However, poorly regulated CCS could also represent a source of potentially eternal and unquantifiable liability. In CCS, the captured CO2 is intended to be sequestered forever. Without clear legal parameters, the liability of a company performing CCS could be endless, given that most environmental legislation removes usual limitation periods that would otherwise restrict the duration of such liability.

The CCS Act attempts to alleviate this concern by providing some regulatory certainty surrounding longterm liability. It proposes to amend the Mines and Minerals Act to allow for the issuance of "closure certificates" upon the completion of a CCS project. Upon the issuance of a closure certificate, the province becomes the owner of the captured CO2, assuming all obligations of the party that injected it into the ground (the lessee), including:

  • obligations as an owner and licensee under the Oil and Gas Conservation Act of the wells and facilities covered by the agreement that authorized the injection of the carbon dioxide;
  • obligations as the person responsible for the injected captured carbon dioxide under the Environmental Protection and Enhancement Act;
  • obligations as the operator under Part 6 of the Environmental Protection and Enhancement Act in respect of the land within the location of the agreement used by the lessee in relation to the injection of carbon dioxide; and
  • obligations under the Surface Rights Act.

A closure certificate will be accompanied by a release of the lessee by the province. More remarkably, the province will also indemnify the lessee against liability for damages in an action in tort if liability arises in relation to an action or omission of the lessee occurring in the context of the initial permitted injection of CO2.

In short, the issuance of a closure certificate results in the full-scale, permanent assumption by Alberta of all liabilities that may arise in relation to the injected CO2, without any apparent ability for the government to re-open the certificate process. Quite arguably, the CCS Act and its closure certificate provisions represent one of the most significant transfers of liability to the province of any legislation in Alberta.

A closure certificate may only be issued if, among other things, the captured CO2 is "behaving in a stable and predictable manner, with no significant risk of future leakage." This casts some doubt as to when the province may be fully satisfied to an extent that it will issue a closure certificate. It will be interesting to see if the government will adopt a process similar to that of Australia, which requires the expiration of a 15-year assurance period prior to the issuance of a closure certificate.

The Problem of the "Disappearing Corporation"

A concern raised by many is the scenario where a lessee performing CCS goes bankrupt or otherwise "disappears" prior to completing its injection program or receiving a closure certificate. The CCS Act addresses this scenario in two ways.

First, the province may assume ownership of captured CO2 where the lessee "ceases to exist". It should be noted, however, that this assumption is permissive, rather than mandatory, and it is yet to be seen if the government will in fact be keen to accept such ownership.

Second, the Energy Resources Conservation Board (ERCB) may also deem a lessee to be a "defaulting working interest participant" where such lessee:

  1. has an obligation under the Oil and Gas Conservation Act to contribute toward suspension costs, abandonment costs or related reclamation costs;
  2. has not contributed to those costs as required; and
  3. in the opinion of the ERCB, does not exist, cannot be located or does not have the financial means to contribute to those costs as required by the CCS Act.

In those circumstances, the province may make payment to a person in respect of a defaulting working interest participant's share of suspension, abandonment or reclamation costs and the defaulting working interest participant remains liable in respect of those costs.

The Post -Closure Stewardship Fund

A debate that has yet to occur involves whether the taxpayer views it as appropriate to be the one taking on the liability of sequestered CO2 as a result of the province's assumption of risk through the closure certificate process discussed above. The sensitivity of this issue will no doubt be exacerbated by the fact that the province has already committed C$2-billion dollars to developing CCS technology through the carbon capture and storage fund, and the fact that industry may in addition make some degree of profit (and/or mitigate a penalty imposed under the CCEMA) through the use of CCS.

In this regard, the CCS Act does establish a Post- Closure Stewardship Fund to be funded by industry participants performing CCS which may be used for:

  • the purposes of monitoring the behaviour of captured CO2;
  • the purposes of fulfilling any obligations that are assumed by the province upon issuance of a closure certificate;
  • the purposes of paying for suspension costs, abandonment costs or related reclamation or remediation costs in respect of orphaned CCS facilities where the work is carried out by an entity other than the lessee;
  • the purposes of paying for costs incurred in pursuing a non-paying lessee for reimbursement for the suspension costs, abandonment costs or related reclamation or remediation costs referred to above; and
  • any other purpose prescribed in the regulations promulgated under the CCS Act.


The Alberta government continues to play a leading international role in pursuing the commercially viable implementation of CCS. To make this pursuit real, a clear regulatory framework needs to be established. The CCS Act strives to do that and, at first glance, does it fairly well, with the exception of lingering concern regarding the transfer of liability onto the taxpayers.

For more information and insight into the regulation of GHG emissions and the carbon market in Alberta and Canada, visit our Publications, CleanTech page.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions