The inclusion of carbon capture and storage in the Clean
Development Mechanism at COP17 is a milestone
Developing countries can now earn certified emission reduction
credits for any greenhouse gases injected and stored as part of
carbon capture and storage (CCS) CCS projects
after CCS was introduced into the Clean Development Mechanism (CDM)
at the latest round of talks at the Climate Change Conference (COP
17) held in Durban this month. The decision came on the last day of
two weeks of intense negotiations.
The inclusion of CCS in the CDM is a milestone decision and sets
an important precedent for a greater widespread implementation of
CCS technology as credits generated from CCS projects in developing
countries may be sold for value, or credited towards meeting that
country's Kyoto targets.
So why did it take so long?
The inclusion of CCS as a CDM project activity has been the
subject of heated debate concerning a range of issues since 2005,
including potential environmental risks and uncertainties
surrounding technical aspects of the technology. Opponents have
also argued that, contrary to the objectives of the Kyoto Protocol,
CCS technology encourages the continued burning of fossil fuels,
and developing countries should therefore be encouraged to dedicate
resources to renewable energies rather than the development of
At the 2010 Cancun Conference, it was determined that CCS might
be considered an eligible project activity under the CDM but only
if certain issues were satisfactorily addressed and resolved. These
included permanence, measuring, reporting, verification,
environmental impacts, project activity boundaries, international
law, liability, potential for perverse outcomes, safety, insurance
coverage and compensation for damages caused due to seepage or
leakage. Parties and non-government observers were invited to
respond to the prospect of the inclusion of CCS as a CDM. Australia
was one of only 10 countries to make a submission, supporting its
The report set out approaches to site selection, defining
project boundaries, accounting for greenhouse gas emissions,
addressing transboundary issues and the movement of CO2
across jurisdictions, assessing risk, safety and
socio-environmental issues, managing permanence and determining
liability in cases of seepage.
The details of inclusion
Based on the SBSTA recommendation, it was agreed that regulatory
mechanisms be established so that a country may only host a CCS
project if it submits an agreement letter to the UNFCCC Secretariat
and implements specific domestic legislation to adequately govern
CCS technology. Five per cent of credits generated by CCS projects
will also be set aside in reserve for 20 years, in case of the need
to offset any seepage from the CCS project.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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