CCS and Dutch legislation on licenses and liabilitiesDeltalinqs Energy Forum

Gerrit van der VeenFloris van WestrhenenAKD Rotterdam

19 April 2012

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Agenda

1. Introduction

2. The dutch legal system

3. Licenses and proceedings

4. Liabilities

5. Conclusion

Introduction (0)

1. AKD has been involved in the ROAD Project (Rotterdam Opslag en Afvang Demonstratie- project, Rotterdam Capture and Storage Demonstration Project).

2. Gerrit van der Veen of AKD = public law and regulatory lawyer.

3. Floris van Westrhenen of AKD = construction and real estate lawyer.

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Introduction (1)

1. No current onshore CCS-projects the Netherlands, due to local resistance of NIMBY nature and therefore lack of public support for onshore storage.

2. Policy aim: CCS under the sea. Storage at sea should provide sufficient possibilities for the required level of CO2 reduction.

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Introduction (2)

1. Government shall support development of CCS by deep-sea CO2 storage.

2. ROAD-project (Rotterdam Opslag en Afvang Demonstratieproject, Rotterdam Capture and Storage Demonstration Project) is aimed at capturing part of the CO2 emitted by E.ON's Maasvlakte Power Plant 3 (MPP3).

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The Dutch legal system (1)

1. Implementation of CCS-Directive (2009/31/EC) and the OSPAR Decision 2007/2 in Dutch Mining Act and subordinate legislation, such as Mining Regulation.

2. Effective from 10 and 16 September 2011.

3. Of the three different stages in the CCS storage chain: the capture, transport and storage of CO2, the Mining Act and subordinate legislation only regulate the storage of CO2.

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The Dutch legal system (2)

1. The amendments of the mining legislation just ensure the implementation of the CCS Directive, and no more.

2. So, the current legal framework might be insufficient for successful introduction and execution of CCS.

3. Additional mining legislation might be necessary regarding (among others) financial commitments and liability issues.

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The Dutch legal system (3)

1. The implementation of the CCS Directive follows as much as possible the system of the existing mining legislation.

2. On the storage of CO2, the Mining Act contains more severe and strict requirements in relation to the contents of the permit (application).

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Licenses and proceedings (1)

1. Other than in “normal” mining licenses, a monitoring plan, a termination plan and the provision of financial security will have to form part of the CO2 storage permit, which is an “integral storage permit”.

2. Consultancy role of the European Commission, non-binding advice prior to decision to license.

3. The integral storage permit includes, among others, provisions on risk management, closure of a storage complex and financial security.

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Licenses and proceedings (2)

1. New permit for the exploration of potential CO2 storage sites ('CO2 exploration permit').

2. Exclusive right for holders of a CO2 exploration permit or a CO2 storage permit to develop the licensed activities.

3. So: No interference with an identical permit or with a permit for other activities (such as exploration, production or storage) is possible

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Licenses and proceedings (3)

1. The holder of a regular exploration, production or storage permit, who wishes to store CO2 in the relevant storage complex, must first (partially) return the regular permit before a positive decision can be taken regarding his application for a CO2 storage permit.

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Licenses and proceedings (4)

1. Application for license must be published in “De Staatscourant”.

2. Then: 91-day-period for competing license starts.

3. Means end of priority position of holder of other permit regarding the location. Could therefore lead to “loss of location”.

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CCS and liabilty(1)

CCS Directive:• Climate damaged due to leakage of CO2 is address

through the Emissions Trading Directive• Environmental damage is address by the

Environmental Liability Directive (implemented in the Netherlands through the Wet Milieubeheer.

• Civil liability is not covered by the CCS directive. This issue is left to the member states.

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CCS and liabilty(2)

Potential grounds for civil liability:

• Article 6:162 DDC (unlawful act) • Requires a form of negligence • The act must be attributable • The injured party must prove a causal relationship

between the unlawful act and his damage.

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CCS and liabilty(3)

Potential grounds for civil liability:

• Art. 6:174 BW (liability for defective buildings or works)• Strict liabilty. No negligence required. • Also applies to mining works.• Liability only if the structure is defective: if the

building or works did not meet requirements.• Not limitied to physical defects. Faulty software can

cause the building or structure to be defective.

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CCS and liabilty(4)

Potential grounds for civil liability:

• Art. 6:175 DCC (liabilty for dangerous substances)• A party who professionaly handles a dangerous

substance is liable when the danger materializes• The substance must be inherently dangerous. Not

clear whether this applies to CO2.

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CCS and liabilty(5)

Potential grounds for civil liability:

• Art. 6:176 (liabilty for operating a dump site)• The operator of a dumping site is strictly liable for

damage caused by the pollution of air, water or soil. • The operator remains liable for twenty years after

closure of the dump site. • Not clear whether a CO2 storage facility qualifies as a

dump site.• The stored CO2 originates from a party other than the

operator.

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CCS and liabilty(6)

Potential grounds for civil liability:

• Art. 6:177 DCC (strict liability for a mining works)• A holder of a mining permit is liable for a discharge of

minerals/resources. • CO2 is not a mineral/resource.

• The holder of the permit is liable for damage due to movements of the soil.

• The holder of the permit remains liable after closure of the mining works.

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CCS and liability (7)

Pursuant to article 31J Mining Act the Minister can revoke a storage permit on his initiative or on the initiative of the permit holder if:• The permit holder shows the CO2 is stored

completely and permanently;• The storage site has been closed and facilities to

inject CO2 have been removed;• A period of at least twenty years has passed since

closure of the site (this period can be shortened or extended at the discretion of the Minister)

• The permit holder has provided the financial means to cover the foreseeable costs, which at least include the estimated cost of monitoring for a periode of thirty years.

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CCS and liability (8)

• When the permit has been revoked, responsiblity is transfered to the State.

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CCS and liabilty (9)

• However, the transference only regards liabilty forclimate and environmental damage.

• Civil liability is not affected by the transference.

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CCS and liabilty (10)

Conclusion:

• It is not clear to what extent an operator of a CO2

storage facility can be held liable for damaged. • An amendment to the Dutch civil code has been

announced.

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Thank you for your attention!

AKD lawyers & civil law notariesWilhelminakade 1

3072 AP Rotterdam P.O. Box 4302

3006 AH Rotterdam

Gerrit van der VeenLawyer and partner

Regulatory and Government Affairs T: +31 88 253 5556 F: +31 88 253 5447

M: +31 6 47 67 07 77E: gvanderveen@akd.nl

W: www.akd.nl/en

Floris van Westrhenenlawyer

Construction and Real EstateT: +31 88 253 5321F: +31 88 253 5443

M: +31 6 46 40 60 79E: fvanwestrhenen@akd.nl

W: www.akd.nl

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