Guidance

Energy Security Bill factsheet: Retention, reporting and disclosure of carbon dioxide storage information and samples (added 9 May 2023)

Updated 1 September 2023

The UK has one of the greatest CO2 storage potentials of any country in the world, the UK Continental Shelf^{[footnote 1]}, with potential storage capacity estimated at 78 billion tonnes providing substantial opportunities for growth through international trade^{[footnote 2]}.

Why are we legislating?

Carbon capture, usage and storage (CCUS) is the process of capturing the carbon emitted from industrial processes and energy production and storing it deep underground in geological formations^{[footnote 3]}, where it cannot enter the atmosphere.

CCUS is essential to meeting the UK’s 2050 net zero target and our global climate commitments, with CCUS and low carbon hydrogen being vital to transforming industrial sectors such as steel, cement and chemicals which lack viable alternatives to decarbonise.

Storage of carbon dioxide offshore on the UK Continental Shelf can only be carried out under a storage licence and permit granted by the North Sea Transition Authority^{[footnote 4]}(NSTA).^{[footnote 5]} This puts in place robust requirements and controls to ensure that carbon storage is safe and secure and that the risk of leakage is minimised to avoid potential harm to the environment and human health or undermining of government’s decarbonisation efforts.

We are legislating to provide the NSTA with appropriate powers to require carbon storage licensees to retain and report information and samples gathered as part of activities associated with the geological storage of carbon dioxide, and to enable the NSTA to publicly disclose this information after a suitable confidentiality period. These powers will ensure valuable information collected by storage licensees is appropriately preserved and, in due course, made available for the benefit of the sector more broadly.

Exploration, appraisal, and monitoring activities carried out on and under the seabed by carbon storage licence holders will yield important information that will help support the NSTA to carry out its regulatory functions effectively. One of these functions includes ensuring that there is no significant risk of leakage at the time when a storage permit is granted. Storage site operators are responsible for ongoing monitoring throughout the operational lifetime, however powers for the retention and reporting of this ongoing information is in the public’s interest as this responsibility is eventually transferred back to the State after a storage site has closed.^{[footnote 6]}

Making this information publicly available would also help maximise the carbon storage potential of the UK Continental Shelf by enhancing the collective knowledge of the CCUS industry, allowing for the development of best practices and sharing of lessons learnt, to support the industry to develop quicker. These provisions will therefore support the government’s ambition to scale up deployment of carbon capture and storage by ensuring that information relating to the UK’s geological storage potential is able to be effectively utilised: to support investment in an emerging UK CCUS industry; provide opportunities for growth through international trade; support innovation and cost reductions; and facilitate decarbonisation.

How the Bill will achieve this

The measures in the Bill will allow the NSTA to require the retention, reporting and disclosure of relevant information from carbon storage licence holders; to support the carrying out of its regulatory functions; and to enable the most effective exploitation of the UK’s natural carbon storage assets, with an estimated 78 billion tonnes of potential CO2 storage capacity^{[footnote 7]}.

The detailed data retention, reporting and disclosure requirements for carbon storage licensees would be set out in regulations following passage of the Bill. There will be further engagement ahead of making any secondary legislation.

These powers would bring carbon storage licence information requirements in line with those for petroleum licensing set out in the Energy Act 2016.

Information currently gathered by the NSTA from petroleum licensees under the powers in Energy Act 2016 (and associated secondary legislation) is being shared across the offshore energy sector and academia via the National Data Repository. In doing so, this knowledge-sharing supports the development of projects and enables them to become operational as soon as possible. Enabling the use of information and samples collected by others to progress the industry quicker than it would have without this sharing of information.

FAQ

Part 1 of the Bill establishes the requirement for an economically regulated licence for carbon dioxide transport and storage, is this needed in addition to an NSTA storage licence?

Both an NSTA storage licence and permit and an Ofgem-regulated economic licence will be needed to operate an offshore storage site.

The NSTA licence required under the Energy Act 2008 regulates the operation of a storage site to ensure that carbon storage is safe and secure, with no significant risk of leakage, or of harm to the environment or human health.

The Ofgem licence required under Part 1 of this Bill economically regulates the operation of carbon dioxide transport and storage networks, ensuring fees and charges are economic and efficient.

How much CO2 storage is currently/has the potential to be licensed by the NSTA?

The NSTA is currently stewarding 6 active carbon storage licenses^{[footnote 8]} towards obtaining a storage permit. To meet the UK’s net zero targets, the NSTA estimate that up to 100 separate stores could be required for domestic storage^{[footnote 9]}.

The UK continental shelf holds an estimated 78 billion tonnes of theoretical CO2 storage capacity; these storage sites still need to be proven through appraisal activities^{[footnote 10]}.

In June 2022, the NSTA launched the UK’s first ever carbon storage licensing round and received 26 bids for 13 areas offered^{[footnote 11]}. This carbon storage licensing round is likely to be the first of many and the NSTA are currently evaluating the bids with a view to awarding licenses in Spring 2023.

Is CCUS safe?

CCUS is safe and is underpinned by a strong regulatory framework that is in place to mitigate any risks, with DESNZ being guided by the relevant expert bodies. No significant safety, health or environmental impacts have been documented from existing CCUS projects.

The Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) ensure that all offshore operations, including CCUS, comply with environmental standards and regulations. In addition, the North Sea Transition Authority licence and regulate the storage of CO2 on the UK Continental Shelf. Storage site operators are under legal obligations to continue to monitor and report on storage sites, including once the sites are closed.

What are the risks and responsibilities of CO2 leakage?

CO2 storage is a mature and safe technology. There is a strong regulatory framework in place to mitigate any risks associated with CCUS.

No significant safety, health or environmental impacts have been documented from existing CCUS projects.

A typical carbon capture storage project is likely to retain more than 99.9% of injected CO2 within the storage complex over a 125-year period^{[footnote 12]}. CO2 is typically expected to be stored into geological formations offshore, within depleted oil or gas fields or saline aquifers. This involves injecting CO2 underground at depths of around 800 metres or more, where the CO2 will be securely contained. A typical geological storage site can permanently hold tens of million tonnes of CO2.

The North Sea Transition Authority (NSTA) are the regulator for the storage of CO2 on the UK Continental Shelf. When it receives an application for a storage permit the NSTA is required by law to ensure (amongst other requirements) that the storage complex and surrounding area have been sufficiently characterised and assessed to ensure there is no significant risk of leakage or harm to the environment or human health occurring. Storage site operators are under legal obligations to continue to monitor and report on storage sites, including once the sites are closed.

Background

The Energy Act 2008 provides for a licensing regime that governs the offshore storage of carbon dioxide. The regime applies to storage in the offshore area, comprising of both the UK territorial sea and beyond designated as a gas importation and storage zone (GISZ) under section 1(5) of the 2008 Act.

The NSTA is the licensing authority for offshore storage except within the territorial sea adjacent to Scotland, which Scottish ministers authorise. In addition to applying for a licence, among other necessary consents and approvals, developers must obtain a relevant lease from The Crown Estate or the Crown Estate Scotland.

In summer 2022, the NSTA ran a carbon storage licensing round, inviting applications for carbon storage licences across a number of areas of the UK Continental Shelf, including the Northern North Sea, Central North Sea, East Irish Sea and Southern North Sea. The NSTA maintains a public register of carbon storage licences.

In early 2023, the NSTA ran a public consultation seeking views on carbon storage information retention and stewardship^{[footnote 13]}. Respondents to this consultation were supportive of the NSTA’s proposals for retention, reporting and disclosure of carbon storage information.^{[footnote 14]}

1. The UK Continental Shelf (UKCS) comprises those areas of the seabed and subsoil beyond the territorial sea over which the UK exercises sovereign rights of exploration and exploitation of natural resources. (See ‘UKCS Designations’.) ↩

2. Powering up Britain (2023) ↩

3. CO2 storage sites will typically comprise of geological formations offshore, within depleted oil or gas fields or saline aquifers. At these sites, CO2 will be injected underground at depths of around 800 metres or more, where the CO2 will be securely contained. (See ‘Deep geological storage of carbon dioxide (CO2), offshore UK: containment certainty’.) ↩

4. The business name of the Oil and Gas Authority (OGA). ↩

5. The Energy Act 2008 (section 17) establishes the NSTA as the licensing authority for offshore carbon dioxide storage, comprising both the UK territorial sea and beyond, designated as a gas importation and storage zone (GISZ) as defined by section 1(5), except for the territorial sea adjacent to Scotland which Scottish ministers authorise. ↩

6. Under the existing secondary legislation which establishes the detailed requirements for carbon storage licensing – The Storage of Carbon Dioxide (Licensing etc) Regulations 2010 and The Storage of Carbon Dioxide (Termination of Licences) Regulations 2011 - storage licences return to the State once storage sites have been closed for a sufficient time period (currently 20 years), with the State then liable should there be any future leakage after that point. ↩

7. Pale Blue Dot: Progressing Development of the UK’s Strategic Carbon Dioxide Storage Resource (2016) ↩

8. Public Register of Offshore Carbon Storage Licences ↩

9. Exploration Task Force, 2021. Exploration & Appraisal for CO2 Storage Sites in the United Kingdom ↩

10. CO2 STORage Evaluation Database (CO2 Stored). The UK’s online storage atlas ↩

11.  Carbon capture and storage – the road to net zero ↩

12. Deep geological storage of carbon dioxide (CO2), offshore UK: containment certainty ↩

13. Consultation on new carbon storage data powers ↩

14. Response to the consultation on information and sample related matters in Carbon Dioxide Appraisal and Storage and Petroleum Licences ↩