1. Minimum Requirements and Recommended Practices for Policymakers and Regulators Ian Havercroft, Senior Advisor - Law and Regulation Wednesday 22 June 2011 WWW.GLOBALCCSINSTITUTE.COM

2. OUTLINE OF PRESENTATION What is Carbon Capture and Storage Ready? - Concepts and definitions Implementation of policy commitments and regulation - Examples of implementation Observations - Divergent approaches Beyond the definition 1

3. CONCEPT AND DEFINITIONS 2

4. CONCEPT AND DEFINITIONS ‘Spectrum of investments and design decisions’ ‘A CCSR facility is a large-scale industrial or power source of CO2 which could and is intended to be retrofitted with CCS technology when the necessary regulatory and economic drivers are in place. The aim of building new facilities or modifying existing facilities to be CCSR is to reduce the risk of carbon emission lock-in or being unable to fully utilise the facilities in the future without CCS (stranded assets). CCSR is not a mitigation option, but a way to facilitate CO2 mitigation in the future. CCSR ceases to be applicable in jurisdictions where the necessary drivers are already in place, or once they come in place’ Expanded definition to consider capture, transport and storage elements 3

5. CONCEPT AND DEFINITIONS (2) The essential requirements represent the minimum criteria that should be met before a facility can be considered CCR. The project developer should: Carry out a site‐specific study in sufficient engineering detail to ensure the facility is technically capable of being fully retrofitted for CO2 capture, using one or more choices of technology which are proven or whose performance can be reliably estimated as being suitable. Demonstrate that retrofitted capture equipment can be connected to the existing equipment effectively and without an excessive outage period and that there will be sufficient space available to construct and safely operate additional capture and compression facilities. Identify realistic pipeline or other route(s) to storage of CO2. Identify one or more potential storage areas which have been appropriately assessed and found likely to be suitable for safe geological storage of projected full lifetime volumes and rates of captured CO2. Identify other known factors, including any additional water requirements that could prevent installation and operation of CO2 capture, transport and storage, and identify credible ways in which they could be overcome. Estimate the likely costs of retrofitting capture, transport and storage Engage in appropriate public engagement and consideration of health, safety and environmental issues Review CCSR status and report on it periodically 4

6. IMPLEMENTATION 5

7. EUROPEAN UNION The EU Storage Directive includes provisions relating to CCSR, although does not use the term ‘CCS Ready’ Article 33 of the Directive makes amendments to the Large Combustion Plants Directive Under the Directive an assessment is required of new combustion plants, with capacity in excess of 300MW, to determine whether: - Suitable storage sites are available - Transport facilities are technically and economically feasible; and - It is technically and economically feasible to retrofit for CO2 capture Where these conditions are met, the Competent Authority shall ensure that suitable space on the installation site is set-aside for capturing and compressing theCO2 6

8. SOUTH AFRICA The Record of Decision around the ESKOM coal-fired power station, Witbank (Kusile Plant) included a requirement around CCS ready Provisions relating to ‘air quality management’ require measures to be taken around CO2 and this must include carbon capture readiness Accordingly, as part of any application to undertake an activity under the decision, ESKOM will be required to submit ‘…a report detailing the preferred technology, for approval, before proceeding with construction’ 7

9. UNITED KINGDOM The UK has mandated Carbon Capture Readiness for all new combustion plants New coal-fired power plants in England and Wales – with a capacity over 300MW and subject to the LCP Directive – are required to demonstrate readiness as a part of their development consent application Operators will be required to demonstrate: - Sufficient space is available to accommodate capture equipment - Technically and economically feasible to retrofit the chosen technology - A suitable storage site for the captured CO2 exists - Technically feasible to transport the CO2 to the storage site 8

10. QUEENSLAND Queensland has defined CCS Ready as: ‘….generators must demonstrate that new plants have been designed with plans and milestones for incorporation of operational CCS, and that there are no known barriers to installation once the technology has been proven on a commercial scale. Furthermore, the government requires that new coal-fired power stations retrofit CCS within five years of CCS having been proven on a commercial scale’ The government has committed to further refine the term CCS-ready, with a view to providing ‘practical benchmarks’ that may be used nationally and internationally 9

11. CHINA ‘Feasibility Analysis of CCS-Readiness in Guangdong (GDCCSR)’ launched in March 2010 Project funded by UK Foreign and Commonwealth Office and the Global CCS Institute First report provided on 25 November 2010 Aim of the project is to raise political and commercial awareness of CCS technology Work plan indicative of the many issues to be reconciled 10

12. OBSERVATIONS 11

13. OBSERVATIONS Broad range of measures being pursued across a range of jurisdictions Implemented by governments and undertaken by industry Flexibility of the approach adopted No operational or international standardisation but identifiable themes and willingness to develop CCSR policies Likely range of stakeholder interests Limited focus on industrial application 12

14. BEYOND THE DEFINITION 13

15. BEYOND THE DEFINITION What are the essential components? - How are they to be addressed by policy, law and regulation? Development considerations - Involvement of multiple parties - Potential for embracing a range of activities - Various approaches to implementation Stringency of CCSR requirements - Least to most stringent - May be applied across individual components 14

16. BEYOND THE DEFINITION (2) Significant regulatory component to CCSR requirements - Note the earlier requirements from the IEA/CSLF/GCCSI definition Regulatory aspects to CCSR - Establishing regulatory oversight - Developing CCSR legislation and subsequent regulation - Verification of compliance CCS-specific legislation may be developed in tandem with CCSR policy - Harmonised approach to CCS policy 15

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