Canada: Carbon Capture And Storage: The Changing Regulatory And Legislative Landscape

Last Updated: July 25 2011
Article by Michael G. Massicotte

Most Read Contributor in Canada, September 2016

Spurred by Canada's commitment to reduce carbon emissions under the Copenhagen Accord and the Cancun Agreements, Alberta is leading the way in carbon capture and storage (CCS) regulation. Alberta is the first jurisdiction in Canada to enact comprehensive CCS legislation which clarifies the ownership of pore space, assigns long-term liability for post-closure injected carbon dioxide and creates a stewardship fund for monitoring and remedial costs.

This has been achieved through the Royal Assent of the Carbon Capture and Storage Statutes Amendments Act S.A. 2010, Chapter 14 (CCS Statutes Amendment Act). Prior to the CCS Statutes Amendment Act there was no clear regulatory or legislative framework for CCS projects. Project regulation occurred largely through Energy Resources Conservation Board (ERCB) directives governing CO2 disposal, monitoring, reporting, safety, and closure for analogous acid gas disposal projects.

The passage of the CCS Statutes Amendment Act signalled significant amendments to existing legislation, and in particular to the Mines and Minerals Act, the Oil and Gas Conservation Act (OGCA), the Energy Resources Conservation Act, the Public Lands Act and the Surface Rights Act.Amendments focus directly on CCS and clarify the role of the Government of Alberta.

Under the CCS Statutes Amendment Act, pore space ownership has been declared property of the Crown in right of Alberta. This does not apply to Federal Crown land. The new legislation is retroactive, regardless of mineral or storage rights. The CCS Statutes Amendment Act also authorizes the Alberta Energy Minister to enter contracts in respect of storage or disposal in subsurface reservoirs. Changes are CCS-specific and do not affect the activities of enhanced oil recovery. Under the new legislation, the Province accepts long-term liability for injected carbon dioxide. A CCS operator will be responsible for the CCS operation until it substantiates that the stored carbon dioxide is "contained" and a closure certificate has been issued. Thereafter, the Alberta Government will be the owner of the sequestered CO2 and, on an indefinite basis, will assume the monitoring and other post-closure responsibilities. The Alberta Government must indemnify the operator with respect to any third party liability related to the injected carbon dioxide.

A stewardship fund financed by CCS operators will be managed by the Government of Alberta. The fund will be controlled and administered by the Alberta Energy Minister and is to be used for remedial work and ongoing monitoring of post-capture CCS projects. Third parties may be paid out of the fund in respect of monies that remain owed from suspension, reclamation and abandonment costs. Double recovery is not permitted. In the event that a third party later recovers costs, they are liable to pay back monies to the fund.

In the new regulatory regime, the ERCB has a clear oversight role in CCS projects particularly in respect of inspections, investigations, and inquiries. The ERCB is also responsible for approval and licence for CCS projects, including a consideration of the social, economic and environmental costs of each project.

On April 28, 2011, the Government of Alberta issued the Carbon Sequestration Tenure Regulation A.R. 68/2011, O.C. 179/2011 (the CS Tenure Regulation). The CS Tenure Regulation: (a) defines pore space; (b) establishes the term for permits and leases; (c) limits the size of land for permits and leases and sets the annual rental fee; (d) establishes a minimum depth for the injection of CO2; and (e) creates the requirement for monitoring, measurement and verification plans, and closure plans which must be approved by the Minister and updated every three years. Further changes in regulation lie ahead. The Government of Alberta has initiated a Regulatory Framework Assessment to make recommendation on new process that should be in place for commercial scale CCS projects. By 2012 clarity on that process is expected. Beyond the CCS Statutes Amendment Act, emerging issues in respect of carbon capture may include questions of jurisdiction. While the bulk of regulatory issues for low carbon technologies occur at a provincial level, the federal government can set emissions pricing or targets. In addition, and notwithstanding the fact that oil and gas conservation law is primarily provincial, the environment is a shared responsibility between federal and provincial governments. The federal government can make laws to protect the environment based on a number of constitutional heads of power. Even with greater clarity over CCS regulation provided by new legislation, the roles of the federal and provincial governments respecting CCS continue to develop and may ultimately be in conflict.

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