Skip to content.

Home

Allens Arthur Robinson

Focus: Climate Change – November 2008

Federal Parliament passes greenhouse gas storage legislation

In brief: The long-awaited enabling legislation for carbon capture and storage in Commonwealth offshore waters has been passed by the Federal Parliament. Partner Anna Collyer (view CV) and Lawyer Damien Hughes look at the important last-minute Senate amendments to the legislation.

How does it affect you?

  • The Offshore Petroleum Amendment (Greenhouse Gas Storage) Act 2008 has been passed by the Federal Parliament. The Act provides a framework for a carbon capture and storage regime in Commonwealth offshore waters.

  • The Act was passed with last-minute amendments made by the Senate on the critical issues of overlapping tenure and long-term liability.

  • The Act provides a significant first step in establishing a regulatory framework to facilitate the development of carbon capture and storage, consistent with the Federal Government's recognition of the importance of this technology for Australia.

Overview

The Federal Parliament passed the Offshore Petroleum Amendment (Greenhouse Gas Storage) Act 2008 on 12 November 2008. The Act provides a framework for a carbon capture and storage (CCS) regime in Commonwealth offshore waters. The Bill form of the Act was analysed in Allens Focus: Climate Change – May 2008 and an update on its progress and the recommendations of the House of Representatives Standing Committee on Primary Industry and Resources was provided in Allens Focus: Climate Change – October 2008.

The Act was passed with some significant last-minute Senate amendments on the critical issues of overlapping tenure and long term liability. These amendments are discussed below.

Return to top

Long-term liability

Significantly, the Government has departed from its long-held position of remaining silent on the issue of long-term liability. Rather than leaving long-term liability to be determined according to common law principles, the Government has adopted the recommendations made by the House of Representatives Committee for the transfer of long-term liability to the Government.

The Act provides a potential 20-year sunset on a proponent's liability in damages for authorised operations carried out under a CCS licence, subject to having met all of the closure obligations and the Minister forming a favourable view of any remaining risks associated with the stored greenhouse gases. The transfer of long-term liability to the Government would occur at the end of a 'closure assurance period'. This period would be for a minimum of 15 years and would commence on the issue of a site-closing certificate – a process estimated to take five years after project closure.

Return to top

Managing CCS and petroleum interactions

The main test in determining whether overlapping petroleum and CCS titles may be granted, and whether operations under those titles may be carried out, is the 'no significant risk of adverse impact' test.

The Senate amendments provide greater guidance on the matters to be taken into account in assessing whether this test will be satisfied. For instance, there will only be a 'significant risk of a significant adverse impact' if the relevant operations will increase the capital or operating costs, or reduce the rate or quantity of greenhouse gases to be stored, or petroleum to be recovered. The amendments also allow for threshold criteria to be established in the regulations that will be taken into account in determining whether the 'no significant risk of adverse impact' test is satisfied. It is intended that the thresholds will be set on the basis of the probability of the occurrence of certain events and the consequences of those events.

As previously reported, the House of Representatives Committee recommended that the Minister have the power to direct outcomes in all cases of overlapping tenure. These amendments reflect a compromise position.

Return to top

The way forward

The Federal Government has intimated that the passage of the Act will allow Australia to offer the first carbon storage blocks for commercial development in early 2009. However, the Act needs to be supported by the development of detailed regulations and guidelines. Accordingly, we would expect to see drafts of these further instruments made available for consultation in the near future.

For further information, please contact:

Return to top

Tweet or bookmark with
Tweet this article

What are these?

 

Recent Climate Change publications