Subordinate Legislation
Storage of Carbon Dioxide (Licensing etc) (Scotland) Amendment Regulations 2011 [draft]
Under item 2, the committee will take oral evidence on the draft Storage of Carbon Dioxide (Licensing etc) (Scotland) Amendment Regulations 2011, which is a Scottish statutory instrument that is subject to affirmative procedure. I welcome the Minister for Energy, Enterprise and Tourism, Fergus Ewing MSP, and his colleagues.
The motion on the instrument, which recommends that the regulations be approved, will be debated under the next agenda item. The officials who are accompanying the minister will not be able to participate in that debate.
I ask the minister to outline the background to and purpose of the draft regulations. The committee can then ask questions, before we move to the formal debate.
Good morning. As we know, the energy opportunities for Scotland are enormous, but a balanced energy future depends on more than renewable power—there must be cleaner thermal generation alongside it. Hydrocarbons will, of course, remain a central element of the energy mix in Scotland and the world—indeed, I spent yesterday in Aberdeen visiting a number of the hugely successful oil and gas companies that are so important to our economy—but we have a duty to minimise carbon emissions and to ensure sustainable economic growth.
Coal is the most abundant and least expensive but most polluting fossil fuel, and carbon capture and storage is the only technology that is capable of cutting fossil fuel emissions by up to 90 per cent. One of our energy pledges was to support the development and implementation of CCS technologies in Scotland through collaboration with academia, industry and other interested parties. The economic opportunities for the development of a CCS-based industry are considerable. We have a strong industry capability, world-leading expertise, research and design capabilities, and some of the best carbon storage sites in Europe. Up to 50 per cent of the potential storage sites in Europe are in Scotland’s depleted oil and gas fields.
We are deeply disappointed that the United Kingdom Government decided not to fund the CCS project at Longannet. However, the case for CCS deployment at Peterhead and elsewhere in Scotland is extremely strong and we will continue to do everything that we can to turn Scotland’s great CCS potential into reality.
We are required to implement the European Union directive on the geological storage of carbon dioxide. The Scottish Parliament has made great progress on that by approving a number of CCS regulations and by considering the draft regulations this morning. Article 15 of the EU directive dictates that member states must ensure that a system of inspections of all storage complexes is in place. The draft regulations will amend the Storage of Carbon Dioxide (Licensing etc) (Scotland) Regulations 2011, which came into force on 1 April this year, to include inspections. That will result in a system for checking in order to promote compliance with the directive, and for monitoring of the effects on the environment and on human health. The draft regulations also deal with inspectors’ powers and duties, how often inspections should be carried out and how inspections should be reported.
I am glad that among the major parties in Scotland and across the UK there is political consensus on CCS. We aim to have consistent regulations UK-wide for CCS. The UK Government is making for England and Wales a similar amendment to the amendment to our 2011 regulations in order that it can include inspections such as we propose in the draft regulations.
The opportunities that are associated with CCS in coal and gas are vast. We must deliver on that potential. I am happy to answer any questions from the convener or other committee members.
I was interested to hear from you and to read in our notes that the draft regulations relate to inspections of carbon dioxide storage complexes. As you said, the opportunity for storage in Scotland will primarily be where oil and gas reserves were located under the North Sea. Will you give us guidance on how such complexes might be inspected and regulated in practice?
I can give clarification, at least generally. Marine Scotland will be the competent authority to ensure that the regulations are enforced. Inspections of the oil and gas sector are carried out by the Department of Energy and Climate Change’s team of trained inspectors, who are accustomed to that environment. It is expected that an arrangement with the DECC to contract those inspectors on our behalf could be agreed. I hope that that answers in general your apposite question.
I did not intend to get overly technical. Your clarification was helpful.
Good morning, minister. I have no problem with the draft regulations; my question is more technical and is about the timing of inspections, particularly post-closure. Given recent circumstances in Fife, are you happy that five years is a short enough period after closure?
It is fair to point out that a corpus of statutory instruments on carbon capture and storage has been introduced. I forget the exact number, but the figures 50, 60 and 70 come to mind. At the instigation of Russel Griggs’s better regulation unit, the whole framework for carbon capture and storage in Scotland has been delivered. It is plain that we set the framework in place in the expectation that the Longannet project would go ahead. We wanted to be shovel-ready with the legal framework, but the subject is new and complicated: it all had to be done and it was done. The draft regulations are a relatively small—albeit important—part of that framework.
Annual inspections would begin within the first year of operation of a storage complex, which is known as the initial period. Three years after the injection activity is complete and the storage complex is closed, we will enter the post-closure period, during which inspections would be performed every five years. I mention that to allay the concern of Mr Brodie and colleagues that the regime would involve inspections more than five years apart.
A lot of preparatory work would be done prior to storage being undertaken—indeed, that will really be the critical time—to ensure that storage will be effective and that leakage, which has been given a lot of governmental consideration here and in the DECC, is properly taken care of. The efficacy and safety of storage of CO2 will be properly dealt with and a lot of expertise will be deployed to ensure that that work is carried out properly. The annual inspections would begin within the first year of operation and the five-yearly inspections would begin in the post-closure period.
The inspection regime—which, as I said, is being implemented through counterpart regulations in the Westminster Government—is thought to be sufficient and appropriate. Of course, if expert advice in this new area for Scotland and Europe subsequently indicates that the regime will be less than robust and less than sufficient, I am sure that we will look at it again, guided by evidence and scientific advice.
My attention has just been drawn to paragraph 3 of article 15 of the directive—it had not reached my frontal lobe—which requires that inspections be carried out every five years from three years after closure of the site.
Good morning. I have a few quick questions. How many people would be needed to undertake an investigation? What additional training would be required to facilitate that work?
You said that Scotland has 50 per cent of the Europe’s storage capacity. To what time period is it estimated that that will apply?
I suppose the first question is to ask which project will go ahead. For various reasons—which it would not be helpful to rehearse here—Longannet is not going ahead. However, as members are aware, other projects in Scotland are being considered. It is probably wrong for me to talk about individual projects in committee, for reasons that are to do with the planning system.
The first stage of a carbon capture and storage project is called the FEED—front end engineering and design—stage, when the detailed scientific, technical and engineering work is done to consider whether a project is feasible. The combustion side and the transportation and storage side would be looked at.
Incidentally, each project will be massive for the economy. I am pleased that Scotland is still being seen in the EU as taking the lead on CCS. With the support of officials, Scottish Development International and Highlands and Islands Enterprise, I lobbied the European Commission in support of CCS projects at an engagement and at a seminar in Brussels in November.
In addition, I met Shell in Rotterdam two weeks ago to discuss the company’s experience at Barendrecht, which was a proposed project that did not go ahead, partly because of fears among residents that CCS would be on land. It was rejected for a number of reasons, as were similar projects in Germany. That tends to indicate that the potential exists offshore. The preparatory work is massive and the projects would take several years to deliver. Funding of them is complex and difficult, particularly given that the carbon price is below £10 a tonne at the moment.
09:45
We are a long way from being able to answer with any precision questions of the nature of those which Stuart McMillan has quite fairly asked about training and timescales. I will be happy to get back to Mr McMillan with more detailed answers if that is in order, convener. The emphasis for us at the moment is on making the appropriate representations, with our colleagues in the DECC, to the EU to try to secure its support and, possibly, the support of the European Investment Bank, for example, for Scottish candidate projects, in order that Scotland can be at the forefront of CCS and so that we get the benefits from that. As far as I am aware, the projects are mostly relatively long-term projects.
Members might recall that it is our intention to hear evidence from a minister from the Department of Energy and Climate Change in the near future, which will provide an opportunity to pursue some of the issues directly.
This might be a “How long is a piece of string?” type question. You mentioned Peterhead and Longannet in your preamble. How many carbon capture complexes do you envisage will be required in Scotland to ensure that as much CCS as possible is undertaken? What would be the ideal number of such complexes?
I do not know that we have made an assessment of that sort, because CCS is at a nascent stage in its application in the EU countries.
I will answer the question by looking at it in a different way. Mike Farley, who co-chairs the thermal generation energy sub-group with me, expressed the view at the seminar in Brussels that if the EU is to meet its emissions targets, a very large number—into the hundreds—of power stations in the EU will have to be fitted with CCS technology. If the EU is serious about meeting those targets, CCS becomes a sine qua non of achieving success. In other words: no CCS, no targets. Targets will not be met without CCS. That view was broadly confirmed by the International Energy Agency in its recent remarks, which I heard when I attended the transport, telecommunications and energy council a couple of weeks ago in Brussels, along with Charles Hendry. The lady who spoke for the IEA made the same point: because the large emitters’ emissions are largely fixed, one can see that for the targets to be achieved CCS really has to be applied. The question is how best, working collaboratively across Europe, we can achieve that and how Scotland can be situated at the forefront of it.
We do not want to limit our ambitions, but the costs of applying the technology to existing power stations—retrofitting them—are not inconsiderable, which I think everyone would acknowledge was a factor in the Longannet decision. Peterhead is a gas-fired power station. I believe that it is the only candidate in the EU for CCS technology to be applied to an existing gas-fired power station. That makes it a strong candidate, in the sense that the experience that could be gained from applying the technology to it could be of great benefit in the necessary work of applying it to gas-fired power stations throughout the EU. As Angus MacDonald is well aware, there are other potential candidates. We do not want to rule anything out at the moment; as the minister, it would be wrong for me to do so, in any event.
If we are to achieve our targets, CCS is necessary. At the moment, with the financial difficulties that face Europe, the amount of investment that is required may make it difficult to achieve the targets, at least within the proposed timescale, unless CCS can perhaps be combined with enhanced oil or gas recovery, which would provide a second income stream. That, as they say, is another story.
I am sure that the minister is comfortable answering questions on the broad range of policy on CCS, but I gently remind colleagues that we are looking at the statutory instrument, which is narrower in its focus on regulation.
Good morning, minister. Why were the powers not included in the original act? Given that the technology is new, are you satisfied that the inspection regime is sufficiently robust to allay public fears about it, but not so robust as to impede the progress and development of a project?
I will take the second question first. I am satisfied that the inspection regime is appropriate. Plainly, I am satisfied on the basis of advice that I have received, as I am neither an expert nor a scientist. Ministers obviously rely on advice—otherwise we would be in a bit of a pickle. I am happy to accept the advice on that basis. The regulations are not a one-off; they are part of a large framework and corpus of work that many officials have spent a lot of time on in paving the way for a project that sadly did not go ahead. We would have been in a position to proceed with the Longannet CCS had the project been given the go-ahead, which is why so much work was put in and why so many Scottish statutory instruments have already been passed.
The regulations will implement article 15 of the European Union directive—no more and no less. They will not go further than that or gold plate it. I am sure that if they did they would attract questions from you, convener. I hope that that is a reasonable answer to Mike MacKenzie’s questions.
Good morning, minister. There will clearly be financial implications in setting up the inspection regime. Has the Scottish Government worked out costs that may apply and how it intends either to recover or to pay for the costs of the inspection regime that is outlined in the regulations?
The need for an inspection regime should not be cost driven. An inspection regime is necessary to ensure that a hugely significant activity is carried out appropriately. I expect the costs to be relatively insignificant compared with the overall costs of the project.
The inspection regime is a bit like health and safety legislation: we need to have it. A cost comes with it, but it is a cost that we cannot afford not to pay.
For clarification on the record, is it right that the Scottish Government will bear the cost of the inspection regime and that there will be no recovery of costs from the DECC or Europe?
If there is a way to share costs with collaborative partners, we will find it. I repeat that, to me, the cost of the regime is not a factor of any great significance, at this point. Of far greater significance is the work to get projects off the ground.
I will follow up that point. Given that the general approach to such matters seems to be based on the principle of full-cost recovery, one would assume that there would be some fee-charging mechanism to recover the costs from those who are being inspected.
Stuart McKay may be able to fill us in on this point.
Stuart McKay (Scottish Government)
The Scottish ministers are the competent authority in this case. Marine Scotland is carrying out the exercise on behalf of the Scottish ministers, so the costs will initially fall to the Scottish Government. We will seek to share those costs with the DECC, if that is possible. However, the majority of the cost of monitoring will lie with the operator; that cost is far greater than the inspection cost.
It seems that the situation is similar to that in relation to health and safety legislation, in which the operator carries the main cost while the Government ensures that the operator is carrying out its obligations properly, which carries a smaller cost. Is that what you are saying?
The approach in the regulations mirrors that situation. In addition to the one-year and five-year inspections that are laid out in the regulations, there will be on-going monitoring control systems that operators will need to comply with daily. If those monitoring control systems indicate that there is a problem, inspectors can come in, in a non-routine way, and inspect the facility at any time. That would involve a small percentage of the cost of safety.
There are no further questions from members. I thank the minister and his officials.
We move to the next item on the agenda, which is consideration of a motion on the regulations.
Motion moved,
That the Economy, Energy and Tourism Committee recommends that the Storage of Carbon Dioxide (Licensing etc.) (Scotland) Amendment Regulations 2011 be approved.—[Fergus Ewing.]
Motion agreed to.
A short report to detail that outcome will be presented to the Parliament.
I thank the minister and his officials for their attendance. We will have a short suspension before the next item of business.
09:57
Meeting suspended.
10:01
On resuming—