Storage of Carbon Dioxide (Inspections etc.) Regulations 2012

Lord Marland Excerpts

Monday 23rd January 2012 Grand Committee

Moved By

[Lord Marland]

That the Grand Committee do report to the House that it has considered the Storage of Carbon Dioxide (Inspections etc.) Regulations 2012.

Relevant documents: 33rd Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, the development of carbon capture and storage is a significant strand in my department’s work for decarbonising the UK’s energy supplies and therefore for the transition to a low-carbon economy. The Government are committed to making the UK a leading player in CCS. Creating an effective, fit-for-purpose licensing regime is necessary to ensure the safe, long-term storage of carbon dioxide and is a necessary condition for the effective deployment of CCS. The Energy Act 2008 provides for a licensing regime for carbon dioxide storage in the UK, for the appointment of inspectors, and for regulations to be made about their powers and duties.

In October 2010, the Government made the licensing regulations that transpose into UK law most of the requirements of the EU directive on the geological storage of carbon dioxide. These regulations are necessary to ensure compliance with Article 15 of the directive, which deals with inspections of storage sites, and put in place an important element of the licensing regime to ensure the safe, long-term storage of carbon dioxide. Article 15 requires that the competent authorities organise a system of routine and non-routine inspections of all storage complexes within the scope of the directive for the purposes of checking and promoting compliance with the requirements of the directive and of monitoring effects on the environment and on human health. It states that inspections should include activities such as visits to the surface installations, including the injection facilities, assessing the injection and monitoring operations carried out by the operator, and checking all relevant records kept by the operator. Article 15 further requires that routine inspections shall be carried out at least once a year until three years after the closure of a storage site, and subsequently every five years until responsibility for the relevant storage site is transferred to the competent authority.

These regulations amend the existing licensing regulations to implement those requirements. The form of the powers given to inspectors is the same as those that our inspectors have under other regimes to inspect and monitor offshore installations used for oil and gas activities. The bringing into effect of these regulations achieves these requirements and will essentially complete the transposition of the directive. I therefore commend them to the Committee and I beg to move.

[Lord Oxburgh]

My Lords, I declare an interest as president of the Carbon Capture and Storage Association. Given that geological formations do not respect international boundaries, are protocols in place to handle the quite significant likelihood that some of the proposed repositories will cross the border between Scottish waters and English waters? This is a problem which the oil industry faces and solves regularly, and it is simply a matter of ensuring that appropriate protocols are in place in this area as well.

--- Later in debate ---

[Baroness Smith of Basildon]

My Lords, like other noble Lords I have a few questions and points of clarification. First, I welcome the Minister’s opening comments on CCS. He is looking puzzled and I am wondering what on earth I said. He reaffirmed the Government's commitment to a CCS project. He is nodding now, so I must be correct on that. Perhaps he could say something further. My concern is how, when the budget has been raided by the Chancellor and £1 million taken from it, the Government can fulfil that pledge. As the Minister has renewed the pledge, will he give us an idea of the timescale? We know that because Longannet was pulled there have been changes. Does the Minister have any idea of a timescale for when we will see the start of the first CCS project?

I will not labour the points on Scotland because they have been better made by other noble Lords. Have the Government given any consideration to the impact that a referendum on independence would have, and to whether the legislation would have to come back to this House or whether further legislation would have to be put in place? Do the Government have a plan B should that scenario come into effect?

The order distinguishes between routine and non-routine inspections. There will be regular, routine inspections, and if the regulatory authorities are made aware of potential problems, there will be non-routine inspections. I am not clear whether there will be a facility for spot checks: that is, unannounced inspections. If all inspections are announced, there will be time for facilities to get their house in order and make changes, whereas an inspector needs to see what is normal custom and practice in the association or organisation. If they are not aware of any specific problem and there is no routine inspection scheduled, can they make an unannounced spot check to ensure there are no problems?

The order talks about how an inspector would make a report and it would be made publicly available—in what format? Would local authorities in that area be informed that an inspection had taken place and what the results were? Would it be given to Ministers? How would we make the information about that inspection publicly available?

The order does not make clear how long it should take a company to comply with any requirement the inspector has made following an inspection. This is not an operation that can be shut down if there are any safety issues, so it seems very important that if requirements are placed on the operator, they should be undertaken as a matter of urgency. However, it does not say anywhere in the order what the timescale should be or if indeed the inspector would make a recommendation on the timescale. Given that the original inspection report would be made publicly available, would the requirement for compliance be made publicly available as well? If there were requirements made of a company and it had to fulfil certain conditions within a certain period of time, would that information be available in the same way—whether or not they had complied?

Finally, the bit that slightly puzzled me was under new Regulation 20, “Offences”, which says:

“It is an offence for a person … without reasonable excuse to fail to comply with a requirement imposed under Schedule 3”.

What is a reasonable excuse? How dangerous will it be not to comply with any requirements that are made? Should it therefore be an offence with strict liability; that is, whether somebody is mad, bad, ignorant or careless, it is still an offence not to comply with any requirement? I cannot think what would be a reasonable excuse not to comply with a requirement made following an inspection. If the Minister can say something on those points, it would help me to understand the order better.

[Lord Marland]

My Lords, thank you very much indeed for your excellent questions, and I am delighted that we have the expertise of the noble Lord, Lord Oxburgh, who has more knowledge about this subject in his little finger than I do in my entire body.

As always, the noble Lord asked a very salient question, which of course we can answer. I would like him to understand—perhaps he will nod at me if he does—that we are talking about offshore storage because onshore storage is not contemplated at the moment. The Energy Act 2008 allows for either Scottish Ministers or the Secretary of State to license a site that is partly in the area of the authority and partly in the other. In that regard, there is a memorandum of understanding that will govern the co-operation, so I hope that that satisfies the noble Lord—and deals with one of the questions asked by the noble Baroness, which I will come on to in a second.

The noble Lord, Lord Teverson, invited us to consider who these inspectors are. Of course, they are the same people because they have significant expertise in the oil industry, where I believe we are a leading light in health and safety and have a very strong knowledge of inspectorates. I remind noble Lords that we are going slightly into the unknown here. A lot of good work has been carried out by friends of the noble Lord, Lord Oxburgh, in this area. It is not a proven technology but we have got as close as we can and we are lucky to be able to borrow on the great expertise we have in the North Sea. We did not go into consultation because this is quite a simple subject. We do not really need to consult on it. I am afraid that our department consults far too much and this is something that we should reduce a bit. I hope he will be satisfied that, for a change, we are not consulting—it seems to go on forever and take up a lot of our officials’ time so this is one that we will miss.

Stress testing of the whole thing is the sort of factor we will look for in the inspection regime report. That goes from capture down through the pipelines, to ensure that there is no leakage, that the gas is being transmitted effectively all the way through the process and that it is working because there can be solidification. Then, as the noble Lord rightly pointed out, there may be leakage from offshore storage. We must vigilantly check that all the evidence supports the storage facility being able to contain it and that there is no seepage which inevitably leads to pollution. We are informed that that will not happen but we want to make absolutely sure. They will have to be vigilant in this, particularly, as I said, because it is a demonstration project at this point.

My noble friend the Duke of Montrose asked whether the Scottish Executive are up to speed. We have been working closely with the Scottish Executive. As my noble friend knows, the winner of the first competition was in Scotland. The Scottish Executive have been working closely with us on this throughout and harmoniously—you might say for a change. Our department has a very good relationship with Scotland.

That brings me to the noble Baroness, Lady Smith of Basildon. What more can I say than what I said the other day? The Government are committed to the CCS demonstration project. The Treasury has committed £1 billion. As the noble Baroness knows, I was responsible for negotiating if not achieving the outcome of the first demonstration project. It is important that we get the thing moving quickly. On Thursday last week, I went through the timelines by which we expect to achieve this. We set ourselves an exacting target of being able to appoint or acknowledge the winner of the new process in June or July of next year. That is a very exacting timescale. We had an industry day in December and are having another one this month to set out the framework within industry. We have a lot of interest—from small and large-scale companies. I will not go into that now because it is unfair on those that are competing. The competition starts by March and they have until the middle of June and July to put in their bids. Our current timeframe is that we will announce that winner by the end of September.

[Baroness Smith of Basildon]

So it is March 2012 that you will invite bids?

[Lord Marland]

It is all in 2012. I am sorry that I did not clarify that but that is the case. As I said, a lot of people are interested in competing—which is encouraging.

On the referendum issue, regulation is in place within Scottish powers so that that is dealt with. On the whole business of inspection, clearly an inspection is annual but the inspectors have—and should have, as the noble Baroness said—the right to carry out spot checks. As the noble Baroness indicated, that is to ensure that this should not be telegraphed and they think, “Ooh, we have to get ourselves ready for the inspection”. An awful lot of people will spend a lot of time on this because it is very important that the inspection is right. The noble Baroness then moved on to ask whether the information will be publicly available. The short answer is yes. The reports of any non-compliance with the recommendations will be put on the public register so that it will be there for all to see.

She then mentioned reasonable excuse and I had to invite a comment from my officials. I will quickly go through what they said. There is an existing regime to deal with operator failures to comply with licences directions of the Secretary of State. A reasonable excuse might be that there is a good safety reason for not complying during an inspection period with inspectors’ request, for example, to switch off the equipment. If the inspector has requested that the equipment is switched off, that would be a reasonable excuse. However, there will not be many reasonable excuses. I hope that that answers the many excellent questions asked.

[Lord Teverson]

I thank the noble Lord. Perhaps I may reassure him that I have consulted with the industry since he spoke. The industry is apparently very happy that he did not consult, so I think that that is fine. I want to come back to one question, because it is important to understand it. It would seem to me that on any CCS project, demonstration or otherwise, there has to be some sort of facility for temporary storage at the power station. It might go straight off on a pipeline, but if there is a problem there has to be some capacity for storage at a power station, whether temporary or permanent. Who is responsible for that sort of inspection? Although it is not envisaged that there should be large-scale onshore carbon dioxide storage, I cannot imagine that there will not be any. As the noble Lord, Lord Marland, says, this refers only to offshore, so I would be interested to understand how that is regulated.

[Lord Marland]

The noble Lord asks an interesting question. I am grateful that he should have given me an elephant trap—which I did not fall into—and dug me out of it. As he rightly says, the current thinking for the previous competition for the demonstration project was entirely for offshore. It could be that there is an onshore project in this competition. It is not thought to be likely at the moment, but it could happen. We would then have to recognise that problem. However, the issue here is not so much about onshore and offshore; it is whether we have the skill and the quality of inspectors. This is a unique process in the large scale; in the small scale it has been proven. All the way along the piece, therefore, we have to ensure that it is being inspected, managed and contained properly. That is why we are giving the inspectorate, which has been so successful in its oil activities, the opportunity as individuals to carry this out.

[Baroness Smith of Basildon]

I am grateful to the noble Lord for answering the questions. Perhaps I may press him for clarification on one that he did not answer, which I am sure he just forgot. On reports of inspections being made publicly available, my question was not whether they would be—it is quite clear that they will be—but how they would be made publicly available. The noble Lord said that it would be by the public register. Is that a document that is easily available to local authorities and to those of us who have an interest? It is not something I have come across myself or read before. Secondly, if an inspector imposes conditions or requirements to be met within a certain timescale, will the information about whether and when the installation complies with any requirements for an inspection also be made publicly available? Otherwise it seems to me that the inspection report would be available, but the consequences from it would not be. I would like reassurance that both would be made publicly available.

--- Later in debate ---

[Lord Marland]

The information is readily available on the internet, of course; that is a standard practice for public information. The inspection will not stop there; there will be a further inspection to ensure safety and that practices are being followed. An update on that inspection will again be published on the internet, so it will be there to compare. This pre-supposes that an inspection will be carried out and that we will sit back and say that nothing has to be done about it. The whole point about these inspections is that there will be a public record so that people can see that there are issues that need to be dealt with. Of course, the public will expect us to deal competently with those issues. There will be a constant process of information available in relation to the storage, the problems that occur and whether they are being sorted out. We hope that there will not be a mass of problems, but we never know.

Motion agreed.