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10 Jul 2009

Carbon capture and storage: Navigating the environmental and heritage assessment process

by Claire Smith

Carbon capture storage project proponents should carefully consider the location of their proposed project and the range of different environment and heritage assessments and approvals that may be required at an early stage in the planning process and allocate sufficient time and resources for this task.

All carbon capture and storage (CCS) projects will have a range of environment and health and safety risks associated with the capture, separation, transport, injection and storage phases that will need to be assessed and minimised. The Commonwealth Government and Victorian, Queensland and South Australia Governments have recently either varied existing petroleum legislation or enacted new standalone legislation to permit the storage of carbon dioxide in deep geological formations offshore (eg. depleted oil and gas reservoirs) and onshore (eg. unmineable coal seams onshore). This legislation regulates the risk of potential carbon dioxide leaks through a work plan or program that forms part of the authorisations which specify:

  • monitoring and verification requirements
  • modelling predictions of the short, medium and long term behaviour of carbon dioxide
  • assessment of the potential environment and health and safety implications of any leaks; and
  • risk management systems to identify, assess and manage operational risks.

The Minister responsible for regulating each Act will need to consult with other relevant Ministers responsible for the environment and water in each jurisdiction where there may be potential environmental impacts. In South Australia, for example, a proponent must prepare an environmental impact report assessing the potential impact of its activities and a statement of environmental objectives for low, medium and high impacts of the project (see Petroleum Act 2000 (SA)).

In addition to CCS specific legislation, proponents will need to consider a range of other potentially relevant legislative instruments depending on the nature, scope and, most importantly, location of the project which may regulate:

  • environment protection and conservation
  • occupational health and safety
  • pollution and disposal of waste
  • heritage issues; and
  • native title issues.

This article focuses on the potential relevance of the other legislative instruments such as the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) to carbon storage projects and the recently released Environmental Guidelines for Carbon Dioxide Capture and Geological Storage 2009 approved by the Environment Protection and Heritage Council and Ministerial Council on Mineral and Petroleum Resources Joint Officials Working Group which set out broad principles for assessing the environmental impact of CCS projects.

CCS Guidelines

A primary objective of the CCS Guidelines is to encourage national consistency and provide certainty for stakeholders regarding the application of current environmental regulatory processes for early CCS projects in relation to:

  • environmental assessment
  • monitoring
  • site closure; and
  • co-ordination of the environmental approval and management regime.

The CCS Guidelines envisage that the experience gleaned from early projects in the next decade will be used to develop best practice regulation. According to the CCS Guidelines, the level of assessment needed for a CCS project will hinge on the degree of environmental and community values that are impacted and proponents are strongly encouraged to consult with relevant authorities early in the planning process and be transparent in their dealings with regulators, the general public and local communities. The CCS Guidelines set out a number of broad guiding principles, including:

  • Continuous risk assessment will be an essential element of the initial environmental impact assessment of the storage site and ongoing management for the life of the project. A risk assessment of groundwater resources must be included particularly for projects situated near the Great Artesian Basin and other regional groundwater sources.
  • When considering environmental assessment for a CCS injection stream, proponents should keep in mind that the stream should be "overwhelmingly carbon dioxide" in accordance with the London Protocol or separate assessment and approval processes may be needed.
  • Monitoring of injected carbon dioxide will be essential to provide confidence in CCS, and until experience determines otherwise, monitoring programs must cover air, groundwater, soil chemistry, in-hole geochemical monitoring, geophysical (including seismic) and monitoring and modelling of the carbon dioxide plume. In the longer term, the knowledge and understanding gained from early projects will enable regulators and proponents to develop the most appropriate monitoring and verification regime to meet the environmental outcomes and market objectives for large-scale commercial CCS projects.
  • Proponents will be liable for all aspects of a CCS project during the life of the project and be required to meet agreed performance standards for closure including the cost of post-closure monitoring. Further, until there is national consistency on post closure ownership and liability, the principle of "polluter pays" should apply with proponents being responsible, either through continuing legal liability or by agreement with a jurisdiction transferring responsibility via a mechanism such as performance bonds or insurance.
  • Jurisdictions will need to co-ordinate and engage in widespread consultation to aid in developing a nationally consistent approach to CCS project environmental outcomes. Although offshore and onshore jurisdictions require different approaches due to the differences in the types of environmental risk, there is a need to streamline environmental regulation and ensure consistency in application of environmental approvals.

While the CCS Guidelines provide some generic overarching principles for environmental assessment, the real detail will be in applicable Acts and underlying regulations in the jurisdiction where the CCS project is located.

Potentially relevant environmental and heritage assessments

It is likely that not all environmental issues will be addressed by the project specific approval process under the relevant CCS legislation. CCS proponents may need to also undertake a range of environmental or heritage assessments under other Commonwealth or State legislation depending on the project's location. Of particular importance will be an assessment as to whether or not the EPBC Act (the Commonwealth Government’s central piece of environmental legislation) is applicable.

The EPBC Act provides a legal framework to protect and manage nationally and internationally important flora, fauna, ecological communities and heritage places — defined in the Act as matters of "national environmental significance". If a proponent is proposing to undertake any exploration or operational activities that will or are likely to have a significant impact on:

  • a matter of national environmental significance (eg. Commonwealth marine areas, world heritage sites, national heritage places, wetlands of international importance (often referred to as Ramsar wetlands), nationally threatened species and ecological communities and migratory species); or
  • the environment (including Commonwealth land),

it must refer the activity to the Department of the Environment, Water, Heritage and the Arts (DEWHA) in accordance with the EPBC Act. This "referral" is then released to the public for comment and the Minister or his delegate will decide whether the likely environmental impacts of the activity are such that it should be assessed under the EPBC Act.

There are five different levels of assessment that DEWHA may undertake, depending on the significance of the activity and how much information is already available. DEWHA will make a recommendation to the Minister regarding whether or not the activity should proceed and any conditions that should be added to the approval. The Minister will consider the social and economic impacts of a project as well as the environmental impacts in determining whether or not to authorise an activity. DEWHA has developed an interactive database which is a useful tool for proponents requiring information on matters of national environmental significance. Proponents will also need to check the national heritage list and Commonwealth heritage list.

For projects in offshore areas, a proponent may also need EPBC Act permits if it is proposing to carry out activities (eg. seismic surveys) in a Commonwealth marine reserve or an area where whales are likely to be. In addition, a permit may be required if a proponent's activities could result in carbon dioxide being injected into the marine environment under the Environment Protection (Sea Dumping) Act 1981 or if the proponent needs to enter a historic shipwreck protection zone declared under the Historic Shipwrecks Act 1976.

In order to prioritise key conservation values in marine areas, the Commonwealth Government has embarked on a program of marine regional planning under the EPBC Act. Each plan will describe a region's key habitats, plants and animals; natural processes; human uses and benefits; and threats to the long-term ecological sustainability of the region. The plans will be a useful source of information for proponents as they will give details about the various statutory obligations under the EPBC Act that apply in the particular region.

For onshore projects, proponents will need to assess whether or not additional environmental assessment is required under environmental legislation in the relevant jurisdiction. Proponents should also carefully consider whether or not any proposed activities may have an impact on Indigenous heritage values and whether there are any native title claims or determinations under the Native Title Act 1993 or relevant State or Territory legislation. Even if an area is not covered by a native title determination or claim this does not necessarily mean that there are no Indigenous people asserting rights to an area. Aboriginal Land Councils, State heritage agencies and Aboriginal Affairs Departments, the National Native Title Tribunal, Native Title claimants and Prescribed Body Corporates under the Native Title Act are useful sources for proponents seeking to identify the relevant authorised and other Indigenous people with interests in a release area.

Conclusion

Proponents of CCS projects will have to navigate through a range of complex environmental assessment and approval regimes. The type and location of the project will be a critical factor in determining the degree of environmental and heritage assessment that is required. This process should be commenced at the planning stage of the CCS project as it is likely to be time consuming and require technical and legal input and consultation with a variety of different stakeholders.

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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 communication. Persons listed may not be admitted in all States and Territories.