Regulatory framework for geological storage of CO2 in Brazil – Analyses and proposal

International Journal of Greenhouse Gas Control 5 (2011) 966–974

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International Journal of Greenhouse Gas Control journal homepage: www.elsevier.com/locate/ijggc

Regulatory framework for geological storage of CO2 in Brazil – Analyses and proposal George Augusto Batista Câmara a,∗ , José Célio Silveira Andrade b , Luiz Eraldo Araújo Ferreira c , Paulo Sérgio Rocha c a

UFBA, Escola Politécnica, Aristides Novis Street, 02, Federac¸ão, Salvador, BA, Brazil UFBA, Escola de Administrac¸ão, Av. Reitor Miguel Calmon, s/n – Canela, Salvador, BA, Brazil c UNIFACS, Street Ponciano de Oliveira, 126, 2nd Floor, Rio Vermelho, Salvador, BA, Brazil b

a r t i c l e

i n f o

Article history: Received 2 June 2010 Received in revised form 27 November 2010 Accepted 9 December 2010 Available online 11 January 2011 Keywords: Geological storage CGS Regulation Brazil

a b s t r a c t The lack of specific regulation for new technologies such as Carbon Dioxide Geological Storage (CGS) represents an obstacle in the fight against global warming and its consequences. Carbon dioxide is a greenhouse gas and a reduction in its concentration in the atmosphere through geological storage has been highlighted as an important initiative. As this is a little researched technology there is a lack of specific regulation to accompany its large scale usage. However, some developed countries have already structured their CGS regulatory framework. According to international studies one basic aspect in building a CGS regulatory structure lies in its correlation with natural gas and oil regulation. This article presents a regulatory framework Brazilian CGS proposal and suggests the creation of a new law on the subject and the development of its main regulatory mechanisms. The methodology used in this article is based on a review of literature and comparative analysis. A survey of the existing Brazilian legal framework on oil and gas was made. Focusing on the critical points of a Brazilian regulatory framework for CGS proposal this article identifies several technical, legal and structural aspects that must be present in the regulation. © 2010 Elsevier Ltd. All rights reserved.

1. Introduction Climate change represents one of the greatest environmental, social and economic threats facing the planet, and one of its main causes lies in the increase and accumulation of anthropic greenhouse gases (GHG) in the atmosphere. In developed countries this is already a major environmental concern. Specialists have been discussing possible lines of action to deal with this, such as inaction, adaptation and mitigation, as well as possible planetary engineering projects. Mitigation focuses on removing or reducing anthropic GHG emissions in the atmosphere. It is important to mention that mitigation is the line of action that will serve as a reference in this entire article which focuses on some important aspects related to a regulatory framework for Carbon Dioxide Geological Storage (CGS).

∗ Corresponding author. Tel.: +55 71 32712267. E-mail addresses: [email protected] (G.A.B. Câmara), [email protected] (J.C.S. Andrade), [email protected] (L.E.A. Ferreira), [email protected] (P.S. Rocha). 1750-5836/$ – see front matter © 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.ijggc.2010.12.001

According to the United Nations Development Programme, Human Development Report 2007/2008 – fighting climate change: human solidarity in a divided world: Climate change is now a scientifically established fact. The exact impact of greenhouse gas emission is not easy to forecast and there is a lot of uncertainty in the science when it comes to predictive capability. But we now know enough to recognize that there are large risks, potentially catastrophic ones, including the melting of ice-sheets on Greenland and the West Antarctic (which would place many countries under water) and changes in the course of the Gulf Stream that would bring about drastic climatic changes (PNUD, 2008). Carbon dioxide (CO2 ) is one of the most important greenhouse gases; it is a by-product of several industrial processes, such as cement and fertilizer production, hydrocarbon extraction and refinement, fossil fuel electricity generation, among others. The Intergovernmental Panel on Climate Change – IPCC (2005) highlights GHG mitigation as being the capture and storage of carbon dioxide in geological reservoirs – CCS, improvements in energy efficiency, the switch to less carbon-intensive fuels, nuclear power, renewable energy sources, enhancement of biological sinks, and the reduction of non-CO2 greenhouse gas emissions.

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The importance of using CCS technology on a large scale to help reduce CO2 emissions is currently being discussed by the international community. According to studies made by the International Energy Agency (IEA) in 2006, adequate CO2 capture and storage can significantly reduce emissions into the atmosphere in the short-term as well as in the medium-term. According to this study, among the existing technologies, or technologies likely to become commercially viable in the next two decades, CCS helps and will continue helping with around 20–28% of total CO2 emission reduction, based on a timeline that ends in the year 2050. According to the IPCC (2005) carbon dioxide (CO2 ) capture and storage (CCS) is a process consisting of the separation of CO2 from industrial and energy-related sources and transporting it to a storage location for long-term isolation from the atmosphere. With CCS technology it is possible to separate the CO2 emitted during a fossil fuel burning process and transform it into its liquid form and then transport it through pipelines, by trucks even via submarine pipelines under the ocean to geological reservoirs. These may be decommissioned mines, oil fields or any other location where CO2 can be stored. The term CCS covers both the CO2 capture and its transportation to its geological storage location. CGS, the focus of this article, on the other hand, refers specifically to CO2 injection and storage in geological reservoirs. According to the IEA (2007a,b,c) in a study called “Legal Aspects of Storing CO2 – Update and Recommendations”, the development of an effective regulatory system is a key first step towards building confidence among both the industry and the community in CO2 storage activities. The correlation between the CGS regulation and the existing gas and oil regulation is one of the aspects raised by the IEA. This correlation is a consequence of all the similarities between their technological processes and other regulatory aspects. In December 29th 2009 after the COP 15 Conference, the Brazilian Congress passed a law called “Climate Change National Policy”. According to this law, Brazil “will adopt, as a voluntary national commitment, actions towards greenhouse gas emission mitigation, having as a goal a reduction in all projected emissions of 36.1% (thirty-six point one percent) up to 38.9% (thirty-eight point nine percent) by the year 2020, Before the approval of the Climate Change National Policy in November 30th 2009 the Brazilian Ministry of Science and Technology presented statistics related to the whole country’s emissions in a document called “Brazilian Inventory of Anthropic Greenhouse Gases Emissions and Removals – General Information and Preliminary Numbers”. The inventory refers to a period of time between the years 1990 and 2005. Taken from the Brazilian Inventory, Table 1 shows that the items that presented the highest variations were those related to the “energy sub-sector” and those related to the “oil and natural gas extraction and transportation sector”. The Inventory also shows that the item “Changes in Use of Land and Forests” was most significantly responsible for 76.3% of all Brazilian emissions during the year 2005 (Brazil, 2009a,b,c,d). It is important to highlight that oil extraction and transportation activities will further increase emissions in the country when the pre-salt reservoirs, located along the Brazilian shore, come into operation. This is because the pre-salt reservoirs are, as is characteristic of carbonate rocks, heterogeneous, with highly variable petrophysical properties. The oil has an API gravity of between 28 and 30, gas–oil ratio between 200 and 300 m3 /m3 and variable contents of CO2 , between 8 and 12% for Tupi (Almeida et al., 2010). Aware of the need for GHG mitigation measures in December 2008 the Brazilian Government presented the Climate Change National Plan (CCNP) based on Decree number 6.263, November

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21st, 2007. The ninth chapter of this document focuses on the study of mitigation and CGS is presented as a technology that has to be, and will be, developed for the Brazilian oil industry to continue to be able to sustain its viability. See the following excerpt: The oil and gas strategy in order to mitigate climate change and reduce the carbon risk of some activities predicts investments in research, development and demonstration of clean technologies including carbon sequestration technology. Carbon dioxide capture and storage in geological formations is a technique that is still being studied and analyzed in many different countries, nevertheless it is possible to predict that in near future it will be able, from a global perspective, to contribute to climate change mitigation. The technique will also make possible the development of synergic partnerships between the industrial sector, such as cement and steel industries, CO2 geographically concentrated emitters, and, for example, the gas and oil sector, which already have geological reservoirs and CO2 capture specialized knowledge. The magnitude of GHG emissions, due to an increase in the oil and gas industry in next few years will demand the use of large scale of mitigation technologies. Geological carbon sequestration offers a technology that has shown high rates of GHG emission mitigation, however, its costs are still too high, requiring more investment in new and cheaper technologies. Besides, it is a technology that is still being developed and new ways to promote it must be found (Brazil, 2008). Petrobras is already conducting small pilot-scale tests in Brazil with CGS technology. While the industrial sector is already anticipating the possible use of CGS technology in the near future, Brazil does not yet have a regulatory framework that can be used. The existing oil and gas regulatory framework in Brazil was not designed to regulate the use of the CGS technology. The approval of the Clean Development Mechanism (CDM) during the United Nations Framework Convention on Climate Change UNFCCC is another factor that could speed up decisions towards the elaboration of a CGS regulatory framework in Brazil. The possibility of a CGS project being included as a CDM was discussed during the first session of the 11th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 11) and during the first Meeting of the Parties to the Kyoto Protocol (MOP 1), in Montreal, Canada in December 2005 (AECD/IEA, 2007). Since then, the CGS has been a theme of discussion in all subsequent conferences. In Copenhagen in December 2009 (COP 15/MOP 5) the importance of CGS as a reduction technology was officially recognized (UN/UNFCCC, 2009a,b). However, no relevant decision was taken. UNFCCC asked several different entities involved, including the Brazilian Government, their opinion regarding the CGS technology on May 31, 2010. They were asked to express their views in relation to carbon dioxide capture and storage in geological formations as a possible mitigation technology (Submission from Parties, 2010). In relation to the use of CGS as a GHG mitigation technology the following fragments show where Brazil stands: Brazil supports the acceleration of research on CCS technologies and supports the development, deployment and diffusion, including transfer of those CCS technologies that are already at least at demonstration phase, under the, context of Common but Differentiated Responsibilities and respective Capabilities of Countries. Brazil is conscious that the application of CCS in developing countries will depend on the technical maturity, costs, diffusion and transfer of technology and assessment of environmental issues, bearing in mind that this process is intensive in both capital and technology (UNFCCC, 2010).

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Table 1 CO2 emissions and removal. Sector

1990

1994

2000

2005

Variation on 1990/2005 (%)

Participation 1990

Participation 2005

203,217 195,766 22,176 64,903 26,441 8610 29,853 82,235 5824 71,339 5072

245,672 238,097 30,643 81,913 38,253 9099 34,560 94,256 6210 83,224 4821

316,451 305,889 40,861 105,466 40,618 14,056 50,792 124,197 9424 110,604 4169

346,990 333,077 48,454 114,620 46,418 14,746 53,456 136,155 7689 123,175 5291

71 70 119 77 76 71 79 66 32 73 4

21.8 21.0 2.4 7.0 2.8 0.9 3.2 8.8 0.6 7.7 0.5

22.0 21.2 3.1 7.3 2.9 0.9 3.4 8.6 0.5 7.8 0.3

13,817 10,052 2584 7451 1654 5797

15,212 12,527 3546 7575 1355 6220

17,015 14,051 4300 10,562 1581 8981

15,429 14,808 3611 13,913 1792 12,121

12 47 40 87 8 109

1.5 1.1 0.3 0.8 0.2 0.6

1.0 0.9 0.2 0.9 0.1 0.8

19,456 11,062 3688 1683 1184 1840 709,073

19,038 10,086 4098 1689 1502 1663 747,785

26,235 16,047 5008 1663 1604 1913 1,183,081

25,438 14,349 5356 1922 1846 1966 1,202,134

31 30 45 14 56 7 70

2.1 1.2 0.4 0.2 0.1 0.2 76.1

1.6 0.9 0.3 0.1 0.1 0.1 76.3

703,969 410,069 188,679 105,221 5103

738,794 444,893 188,679 105,221 8991

1,174,363 694,028 379,239 101,097 8717

1,194,659 714,324 379,239 101,097 7474

70 74 101 -4 46

75.6 44.0 20.3 11.3 0.5

75.9 45.4 24.1 6.4 0.5

931,746

1,012,496

1,525,767

1,574,562

69

100.0

100.0

(Gga )1 Energy Burning of fossil fuel Energy subsector Industrial subsector Siderurgical industry Chemical industry Other industries Transport subsector Air transport Road transport Other ways of transport Residential subsector Agriculture subsector Other sectors Fugitive emissions Coal mining Oil and natural gas extraction and transportation Industrial processes Cement production Lime production Ammonia production Aluminum production Other industries Land and forest use change Land use change Amazon biome Cerrado biome Other biomes Application of limestone in the soil Total

Source: Brazil (2009a,b,c,d). a According to the IPCC (1997) in Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories, all estimates of the national inventory should be presented in gigagrams (Gg) of pollutants.

Furthermore, with regard to the adoption of the CGS as a CDM: Taking into account CDM modalities and procedures, CCS technologies have implications and characteristics which are incompatible with the nature and characteristics of CDM project activities. Issues as leakage, project boundary, long-term liability and permanence have many additional implications. Some of these issues have been examined by reliable institutions but no satisfactory solution was reached, especially if taking into account the characteristics of a CDM project activity. Some other important issues regarding the nature of the CDM and possible economic and market impacts were not yet assessed (UNFCCC, 2010). The Brazilian Government presented its opinion on the following subjects: non-permanence which includes long-term permanence, measuring, reporting, verification, environmental impacts, project activity boundaries, international law, liability, the potential for perverse outcomes, safety, insurance coverage and compensation for damages caused due to seepage or leakage. Fig. 1 shows the correlation between some important subjects raised by UNFCCC in relation to the Brazilian Constitution highlighting specific laws and regulations with regards to each matter. Also, the “Brazilian Law for nuclear activities” as well as the “Law of radioactive wastes” were both taken into consideration. It is of importance to mention that the nuclear sector was analyzed by the Brazilian Government from a position that focused on security in which they concluded, “CGS has many similarities with the nuclear

power industry with regards to the long term burden and possible ways in which to address them with sophisticated insurance systems and government surveillance” (UNFCCC, 2010). It is important to mention that CDM CGS methodologies have already been presented to the UNFCCC, such as Shell’s methodologies related to projects located in Vietnam and Malaysia (OECD/IEA, 2007c). This article presents a proposal for a CGS regulatory framework focused on the Brazilian reality. To do so the methodology used in the present article was based on a literature review and comparative analyses. Initially research from the Brazilian oil and gas legal and regulatory framework was carried out, after this, the main gaps and needs of the legal and regulatory CGS technologies are identified. Finally an analysis of the current situation is made followed by conclusions and recommendations.

2. International CGS regulatory experience Due to the need to reduce CO2 emissions in the atmosphere some developed countries have already structured their CGS regulatory systems. According to the IEA (2009), in 2007 among the countries associated to the Organization for Economic Co-operation and Development (OECD) the 30 richest were responsible for 44.9% of all CO2 emissions worldwide, an extremely significant percentage considering that in 2007 total emissions represented 28,962 million tonnes of CO2 .

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Issue

Status

Legislation, regulatory structure or themes

Non-permanence, including longterm permanence

Nuclear Law and the Law of Radioactive Wastes

Measuring, reporting and verification

Laws and Environmental regulation (National, State and Municipal) and Regulation of Oil and Gas Industry

Environmental impacts

Constitution, Laws and Environmental Regulations (National, State and Municipal) and Regulation of the Oil and Gas Industry.

Project activity boundaries

None

International law

None

Liability

Oil & Gas Industry Regulation, Nuclear Law and Radioactive Waste Law

The potential for perverse outcomes

None

Safety

Environmental Laws and Regulations (National, State and Municipal) Oil and Gas Industry Regulation, Nuclear Law and Radioactive Waste Law.

Insurance coverage and compensation for damages caused due to seepage or leakage Legend: No correlation; Some correlation; Total correlation.

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Environmental Laws and Regulations (National, State and Municipal) Oil and Gas Industry Regulation, Nuclear Law and Radioactive Waste Law.

Fig. 1. Correlation between important CGS regulatory aspects and their presence in the regulation of similar areas in Brazil.

The CGS regulatory system in some developed countries such as the United States, Australia and the European Union stand out in comparison to others. In the United States activities related to the underground injection of substances and residues has been carried out for the last 50 years and is considered of extreme importance to many human activities, including oil production, production of chemicals, food production, and industrial and mineral production. According to the FY 200 National Injection Well inventory (as of 7/11/2006),1 in the USA today there are over 400,000 wells in use. In recent decades, due to injection activity many of the States, Territories and the Federal Government itself have developed programs and methods to protect underground sources of drinking water. With powers delegated by the Federal Government, the U.S. Environmental Protection Agency EPA was responsible for developing minimum standards for underground injection. In 1979 the Underground Injection Control Program UIC (EPA, 2008). The proposal for a specific CO2 geological storage regulation first came up in 2007 and it is currently in its final stage of approval by the United States Federal Government. Fig. 2 presents the United States regulatory historical development and validation on the subject. The EPA’s proposal refers to CO2 storage in geological reservoirs in which the initial injection of CO2 will be included in an existing substance injection category, as it is simply in the pilot-project stage. Only after its use on a larger scale will a special category be created to include CO2 (EPA, 2008). It is important to mention that

1 Information collected on the EPA website, http://water.epa.gov/type/ groundwater/uic/upload/2007 12 12 uic UIC-Inventory.pdf (accessed 15.10.10).

according to the EPA, “33 States have primary enforcement authority over the UIC program, the EPA and States share program implementation in 7 States and the EPA has directly implemented the entire UIC Program in 10 states“, many states already have then their own regulations. Due to his experience in underground injection of substances the United States has a consolidated regulatory structure which favors the development project of CGS. Worth mentioning is the initiative between some States from Canada and the United States denominated Project Weyburn. The regulatory framework was drafted by the Interstate Oil and Gas Compact Commission (IOGCC) which is a specific regulation for the project (Ziliotto, 2009, p. 36). Besides experience with various substances, it also favors the industry experience of oil and gas in the United States with Enhanced Oil Recovery (EOR). The American EOR legal and regulatory framework addresses many of the issues that CGS will need. Marston and Moore (2008) discuss the EOR regulation aspects that appear adequate to govern the sale, transport, and injection of CO2 for carbon capture and storage purposes as well as those that do not. In Australia, the Federal Government’s Ministerial Council on Mineral and Petroleum Resources MCMPR established and published the “Capture and Geological Storage Australian Regulatory Guiding Principles” on November 25th 2005. The MCMPR publication presents the “Guiding Principles” so that a national pattern for all CGS activities in each Australian State can be reached. The publication tackled 6 key regulatory issues: evaluation and approval processes; property access and legal rights; transport; monitoring and inspections; post-closure operational responsibilities; and financial aspects (Australia, 2005a,b). To support off-shore CGS

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Milestone Initiated

Date 11/07/2007

Sent to Office of Management and Budget (OMB) for Regulatory Review 05/30/2008 Received by OMB

06/04/2008

Regulatory Review Concluded

07/09/2008

Comment Period Open

07/25/2008

Published in Federal Register

07/25/2008

Comment Period Closed

11/24/2008

Comment Period Closed with Extension

12/24/2008

Final Rule: Sent to OMB for Regulatory Review

08/05/2010

Final Rule: Received by OMB

08/06/2010

Final Rule: Published in Federal Register

12/2010 (projected)

Fig. 2. Status of the United States CGS regulation. Source: United States Environmental Protection Agency – EPA (2010) (information obtained from the EPA website, http://yosemite.epa.gov/opei/rulegate.nsf/byRIN/2040AE98?opendocument (accessed 15.10.10).

activities the Australian Government changed the existing oil laws and regulations (Commonwealth Offshore Petroleum Act 2006 – OPA) granting the proper access and legal property rights to CGS when operating in the Australian sea, off-shore. Recently, the Offshore Petroleum Amendment (Greenhouse Gas Storage) Act of 2008 intended to amend the Offshore Petroleum Act of 2006, was approved. In a move similar to that of the United States, Australian states have the authority to regulate issues related to on-shore geological CO2 which has resulted in some states already developing their own regulations; for example: in the state of Queensland in the Greenhouse Gas Storage Regulation Act of 2010 and in Victoria in 2008. As for CGS’s regulation in Europe, in 2009 the European Union approved Directive 2009/31/EC of the European Parliament Council on the 23rd of April. The European Union’s regulation was inspired by and focused on the following: Carbon dioxide capture and geological storage (CCS) is a bridging technology that will contribute to mitigating climate change. It consists of the capture of carbon dioxide (CO2 ) from industrial installations, its transport to a storage site and its injection into a suitable underground geological formation for the purposes of permanent storage. This technology should not serve as an incentive to increase the share of fossil fuel power plants. Its development should not lead to a reduction of efforts to support energy saving policies, renewable energies and other safe and sustainable low carbon technologies, both in research and financial terms. Preliminary estimates, carried out with a view to assessing the impact of the Directive and referred to in the impact assessment of the Commission, indicate that seven million tonnes of CO2 could be stored by 2020, and up to 160 million tonnes by 2030, assuming a 20% reduction in greenhouse gas emissions by 2020 and provided that CCS obtains private, national and Community support and proves to be an environmentally safe technology. The CO2 emissions avoided in 2030 could account for some 15% of the reductions required in the Union (CCE, 2009, p. 1). The Directive preserves the individuality of each Member State, however, “. . .the establishment of a legal framework for the envi-

ronmentally safe storage of CO2 , cannot be sufficiently achieved by the Member States acting individually, and can therefore, by reason of its scale and effects, be better achieved at Community level. . .” (CCE, 2009, p. 119). 2.1. The Brazilian oil and gas industry – legal and regulatory framework Activities related to Brazilian oil and natural gas exploration, development and industrial production have been federal monopolies since the 1988 Constitution. However, in 1995 Constitutional Amendment number 9 was passed limiting this monopoly. On August 6th 1997 Constitutional Amendment number 9 goes in the same direction as the Brazilian Congressional Law number 9.478/97, the so-called “Oil Law”, a law that sets the rules for a national energy policy, and implements other measures. The “Oil Law” establishes conditions for the practice of economic activities related to oil and natural gas imports and exports, also refinement, processing, and its transport all under a Federal monopoly. The Oil Law established a national organizational structure to regulate the oil and natural gas industry. It created the National Council for Energy Policy CNPE, an entity responsible for developing and presenting national policy proposals, and is also responsible for implementing specific measures, all focusing on the rational use of energy sources. The goal is to guarantee the effectiveness of the National Energy Policy. The Oil Law also created the Oil, Natural Gas and Biofuels National Agency ANP, an entity qualified to regulate agreements and supervise economic activities related to the oil and natural gas industry. Among ANP’s duties are the elaboration of bidding process rules and also the way the tenders are carried out for oil and natural gas exploration development and production. ANP is also responsible for closing the contracts with the concessionaries and supervising the execution of works. Resolutions, ordinances, bidding process rules, current contracts made with the ANP and CNPE resolutions are among the main regulatory instruments of the Brazilian oil and natural gas industry. The current agreement regime follows the concession rules, however, given the new discoveries in the Brazilian pre-salt region there is a

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trend to establish a sharing system resulting in two oil agreement regimes. On March 4th 2009 the Brazilian Congress passed Federal Law number 11.909. This law focuses on natural gas transport, which is also the focus of article 177 of the Brazilian Constitution. Federal Law 11.909 also sets rules for activities related to natural gas treatment, processing, storage, liquefaction, reliquefaction and commercialization. As previously mentioned it is important to emphasize that the existing oil and natural gas regulatory framework in Brazil so far has not established controls for CO2 geological storage injection, inspection and monitoring. 3. Brazilian CGS model structure proposal Defining the necessary steps of a CGS project represents the beginning of regulatory structure development. To better understand the dynamics of the steps involved, Fig. 3 illustrates the context of a CGS project in its several steps. Besides those represented in Fig. 1 there are other steps considered equally as important in a CGS project. A list of these other steps with a description can be seen below: • Technical information gathering (collection): a database of information, previously gathered, on CGS topics; the information could refer to the country’s subsoil or subsurface such as seismic studies or to the natural gas transport and distribution, among others. • Project planning: this is the moment when the CGS project planning is elaborated and developed; it can be done by the appointed competent staff authority, by the company that was agreed or by the Operator. It is also possible for the company responsible for the CO2 emissions to develop a project and present it to the Appointed Competent Authority which has the ability to approve or reject the project. • Capture2 : a CGS project step that covers from the point of CO2 separation from the stationary source to its compression and its transmission to the city gate (when possible). • Transport4 : a CGS project step involving the transport of the CO2 from the city gate (when possible) to the injection site, which can be done through several logistical methods such as pipelines, trains, and ships among others. • Injection: a CGS project step that covers from the CO2 injection in the geological reservoir to its closing through mechanical processes including the reservoir cementation and flattening. During this step, as well as in the others, the monitoring activity is present. • Post-injection/closure: a CGS project step which starts right after the CO2 geological reservoir injection. It consists of constant monitoring of the reservoir while being injected with CO2 . This step is time limited and, importantly, the company responsible for the injection stage is also the one responsible for the post-injection monitoring step. At this stage the responsibility still falls on the company. • Post-closure: CGS project step when a transfer in responsibilities takes place, by this last stage the responsibility for the area injected with the CO2 changes from the company to the previously appointed authority. It is not a time limited stage and it consists of monitoring and inspection activities. There are some important aspects in a CGS project that must be clearly established in the regulatory framework before the

2 The existence of this step characterizes the project as a CCS project rather than a CGS project. However, since the focus of the present article is CGS this is the acronym that is going to be used.

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execution of the project itself, for example, aspects related to the CO2 property rights and responsibility once it is stored. This article does not attempt to analyze these aspects. All the CGS project stages have been listed and defined; Fig. 4 illustrates possible interactions between all governmental spheres. It is important to emphasize though that there are, in fact, two governmental spheres in a given CGS project, the Federal sphere and the State sphere. This division of competence is based on the regulatory framework outlined in the Federal Constitution, as well as in Brazil’s Oil and Gas Laws. Therefore, this article draws a parallel between the regulatory structures of oil and gas, specifically the regulation of natural gas which is structured as follows: The ANP (Federal Competent Authority) is responsible for regulating the steps regarding the production or importation and transpiration to “city gates”, after the city gate the State Regulatory Agencies (State Competent Authority) are responsible for distribution to consumers. The present article makes an important distinction between Competent Authority (CA) and Appointed Competent Authority (ACA). The Competent Authority has the power to interfere in the steps of a project, granting licenses or any other governmental authorization, or supervising the project. The Appointed Competent Authority is officially designated to conduct the project or the steps of a project. Each governmental sphere will have an Appointed Competent Authority to conduct or simply participate in a given CGS project. The Appointed Competent Authorities should be established according to specific laws; also all non-legal matters referring to the project should be developed and regulated by the APC itself, both in the Federal and State spheres. The Appointed Competent Authority in a given CGS project must have the power to make technical, financial and tax related decisions, as well as be responsible for conducting the CGS project after its transfer from the company that was in charge of the injection services. Consequently the Appointed Competent Authority will perform all monitoring and maintenance activities to guarantee its reliability. The Appointed Competent Authority’s independence is an extremely important aspect in a CGS project. ACP activities involve the government and the private sector, as well as nongovernmental institutions and society itself, therefore managing to keep its autonomy is extremely important for an interference free CGS project.

4. Results 4.1. Brazilian CGS projects regulatory framework proposal To better understand the Brazilian CGS project proposal presented in this article, Fig. 5 was drawn up. It is important to highlight that this proposal had the current oil and gas, exploration and production, regulation, as well as the environmental regulation as references and models. For the proposal the old CGS project was divided into 4 stages, project planning/research, injection, postinjection/closure and post-closure. The project planning/research stage focuses on the planning of the CGS project and its initial activities. At this stage there is a pre-project phase which includes the entire CGS project bidding process. This stage also lists all financial (insurance and sanctions) and environmental responsibilities, especially those concerning the licenses needed. The initial seismic studies (when necessary) and the reservoir tests, before injecting the CO2 , are done during this stage as well. All the phases require the presentation of a report and every time the Operator is involved these reports must be given to the Appointed Competent Authority for approval. This stage can be performed by the company that first

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Fig. 3. An illustration of the settings before and after the implementation of a CGS project.

Fig. 4. CGS project steps and the Appointed Competent Authorities.

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Fig. 5. All the activities in a Brazilian CGS project described in the correct sequence of stages and competences.

proposed the CGS project, however, final decisions will depend on the Appointed Competent Authority’s approval. The second stage includes the reservoir’s initial CO2 storage process, but before the process begins it is necessary to make sure that all structures are ready to go and that all the licenses have already been granted. Also, during this stage all specific insurance issues should be settled. The Operator will have to present the Annual Labor Program, a document that will list all the activities that will be done during that year. The Operator will also have to present the Annual Storage Program in which, based on prediction analyses, all future storage in each location will be specified. In this stage the monitoring will be carried out by the Operator and inspections will be made by the Competent Authorities. The third stage, the post-injection/closure, takes place right after the CO2 injection. This is the moment when the closure and injection operations are performed and the completion of these stages monitoring activities, performed by the Operator, as well as governmental supervision must be done. As well, an amount of money has to be deposited by the Operator as insurance. Finally, the post-closure stage, the moment when the Appointed Competent Authority observes, monitors and carries out maintenance services at the disposal site especially inside the well, is characterized by the transfer of responsibilities from the Operator to the Appointed Competent Authority. This transfer is formalized by the signing of a document representing the acceptance of the end of the injection activities. From this moment on the Operator will be free of any kind of responsibility and the Appointed Competent Authority will continue with the activities. The transfer of responsibility does not mean that the Operator will no longer be obligated to respond legally or technically. This is also the moment when the monitoring report is produced. During this stage inspections to check the reservoir’s status, as well as environmental inspec-

tions (groundwater, possible impacts on the fauna and flora, among others), will continue to be carried out by Competent Authorities.

5. Conclusion Brazil still does not have a specific regulation to control greenhouse gases, nevertheless, as it is considered a developing country other nations accept this omission quite naturally. However, there is a need to master CGS technology because of the considerable amount of CO2 present in the pre-salt fields. In order to control CGS technology the approval of a Brazilian regulatory framework is critical. The analysis and proposal of the regulatory framework for CGS presented here was based on the existing Brazilian oil and natural gas legal structure and also on environmental regulation. However, it has become clear that a new law, focusing on a Brazilian CGS model, is very necessary in the same sense that it was necessary in reference to nuclear activities. This new law must bring specific definitions and must detail the participation of the Competent Authorities during the project, naming those responsible for the conduct of the CGS project, and finally a new law must set the basis for future administrative regulations. A new law must address all important topics in accordance with what is being discussed in the UNFCCC and also in accordance with what has been presented in the introduction of the present article. In addition to other issues such as: the need to pay royalties to Cities, States and the Federation, as well as to landowners, there is a need to create definitions for CO2 classification and to create the specifications for the CO2 that will be injected. Project locations and the CO2 ownership are also important topics, among others, that new legislation must address.

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The structure required by a CGS regulation should not become a financial burden to the project. This is something that must be kept in mind during the entire Brazilian CGS regulatory model development and execution. These costs should not become obstacles to the planning and operation of a CGS project, nor become insurmountable problems for any of those involved in the CGS project such as the Appointed Competent Authority, the emitter and the Operator. This article has raised and discussed the need for CGS technology regulation and presents a Brazilian CGS regulatory model. This CGS regulatory framework proposal was developed making use of existing legal structures in particular that of the oil and gas industry. The development and approval of a law establishing the CO2 geological reservoir injection legal and regulatory frameworks is an extremely important step that must be taken in Brazil. It is also important to define which Competent Authorities will be involved in the project and who the Appointed Competent Authorities responsible for carrying out the country’s CGS related activities will be. To gain the trust of society and investors in this new technology the first step is to establish a well structured regulatory structure. More importantly, the ultimate objective must be a reduction in Greenhouse gas emissions. The discussion on the CGS regulatory aspects is extensive here, however, it does deal with the whole subject. Some key CGS regulatory aspects were analyzed but some, such as property rights and the specification standards for CO2 storage, were not addressed. As they are critical to establishing a CGS regulatory framework, it is recommended that they should be the subject of further studies. References Almeida, A.S., et al., 2010. A Study on the Potential for CGS in the Pre-salt Cluster of Santos Basin: The Tupi Pilot Application. Rio de Janeiro, September 2010. Rio Oil & Gas Expo and Conference 2010. Copyright 2010, Instituto Brasileiro de Petróleo, Gás e Biocombustíveis – IBP. Australia. Ministerial Council on Mineral and Petroleum Resources – MCMPR, 2005a. Carbon Dioxide Capture and Geological Storage Australian Regulatory Guiding Principles. Canberra, p. 64. Australia, 2005b. Offshore Petroleum and Greenhouse Gas Storage Act. Canberra, p. 867. Brazil, 2009a. Law Number 11.909. Regulates the Constitutional Article Number 177, Activities Related to Natural Gas Transport, Treatment, Processing, Storage, Liquefaction, Regasification and Commercialization; It Changes the August 6, 1997, Law, Among Other Decisions. Brasília. Brazil, 2009b. Law Number 12.187. Establishes the Climate Change National Policy, Among Other Decisions. Brasília. Brazil, 2009c. National Official, Brasília, Section 1, Extra Edition, p. 109. Brazil, 2009d. Ministry of Science and Technology, Brazilian Inventory of Anthropic Greenhouse Gases Emissions and Removals – General Information and Preliminary Numbers. Brasília, p. 19. CCE - European Parliament and the Council of the European Union, 2009. Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006. IEA, International Energy Agency, 2007a. Legal Aspects of Storing CO2 – Update and Recommendations. Paris, p. 141. IEA, International Energy Agency, 2009. Key Worlds Energy Statistics. Paris, p. 82. IEA, International Energy Agency, 2007b. Greenhouse Gas R&D Programme – IEA GHG. ERM – Carbon Dioxide and Storage in the Clean Development Mechanism 2007/TR2. Cheltenham, April, 2007, p. 131. http://www.ieagreen.org.uk (accessed 20.05.08). IEA, 2007c. International Energy Agency, OECD – Organisation for Economic Cooperation and Development. Carbon Capture and Storage in the CDM. Paris, November. IPCC, Intergovernmental Panel on Climate Change, 2005. IPCC Special Report on Carbon Dioxide Capture and Storage. Prepared by the IPCC Work Group III, Metz, B., Davidson, O., de Coninck, H.C., Loos, M., Meyer, L.A. Cambridge University Press, Cambridge, p. 442. IPCC, Intergovernmental Panel on Climate Change, 1997. Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories. Geneva, 1997. http://www.ipccnggip.iges.or.jp/public/gl/invs1.html (accessed 18.04.10).

Marston, P.M., Moore, P.A., 2008. From EOR to CCS: the evolving legal and regulatory framework for carbon capture and storage. Energy Law Journal 29, 421–490. UN – United Nations Framwork Convention on Climate Change – UNFCCC, 2010. Views Related to Carbon Dioxide Capture and Storage in Geological Formations as a Possible Mitigation Technology – Submission from Parties (Brazilian Submission on the Possible Inclusion of Carbon Dioxide Capture and Storage in Geological Formation (CCS) in the Clean Development Mechanism). Bonn, May. UN – United Nations Framwork Convention on Climate Change – UNFCCC, 2009a. Draft Decision – /COM.5 – Further Guidance to the Clean Development Mechanism. Copenhagen, December. UN – United Nations Framework Convention on Climate Change – UNFCCC, 2009b. Report on the Conference of the Parties Serving as the Meeting os the Parties to the Kyoto Protocol on its Fourth Session, Held in Poznan from 1 to 12. Poznan, March. USA, 2008a. Environmental Protection Agency – EPA. 40 CFR Parts 144 and 146 Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide (CO2 ) Geologic Sequestration (GS) Wells, Proposed rule. Federal Register, vol. 73, n. 144, Washington, 25 July, 2008, pp. 43492–43541. USA, 2008b. Environmental Protection Agency – EPA, Technical Program Overview: Underground Injection Control Regulations. Federal Register, vol. 73, n. 144, Washington. Victoria, Department of Primary Industries – DPI, 2008a. A Regulatory Framework for Long-term Underground Geological Storage of Carbon Dioxide in Victoria. Melbourne, January. Victoria, Department of Primary Industries, 2008b. A Regulatory Framework for the Long-term Underground Geological Storage of Carbon Dioxide in Victoria. Melbourne, January 2008. http://www.dpi.vic.gov.au (accessed 10.05.08). Ziliotto, M.A., 2009. Mudanc¸as Climáticas, Sequestro e Mercado de Carbono no Brasil. Curitiba, Brazil.

Further reading ANP, 2008. Concession Contract for Oil and Natural Gas Exploration, Development and Production. Brasília. Australia, 2008. Offshore Petroleum Amendment (Greenhouse Gas Storage) Act 2008 – No. 117, 2008 – An Act to Amend the Offshore Petroleum Act 2006, and for Other Purposes. Canberra, p. 448. Brazil, 1977. Law Number 6.453. Nuclear Damages Civil Liability and Nuclear Activities Criminal Liability, and Other Measures. Diário Oficial da República Federativa do Brasil. Brasília, DF, October 18, 1977. p. 13957 2. Brazil, 1997. Law Number 9.478, 08/06/1997. National Energy Policy, Activities related to the Oil Monopoly, Establishes the Political Energy Nation Council and the Oil National Agency, Among Other Decisions. Brasília, August, 7, p. 16925. Brazil, 2001. Law Number 10.308. Site Location Selection, Construction, Licensing, Operation, Inspection, Costs, Damages, Liability and Guarantees Referring to Radioactive Wastes Disposal, and Other Measures. Diário Oficial da República Federativa do Brasil. Brasília, DF, November 21, p. 1. Brazil, 2007a. Federative Republic of Brazil Constitution. Brasília. Brazil, 2007b. Interministerial Climate Change Committee. Climate Change National Plan. Brasília, October, 1, p. 132. Dooley, J.J., et al., 2006. Carbon Dioxide Capture and Geologic Storage – A Core Element of a Global Energy Technology Strategy to Address Climate Change. Battelle Memorial Institute – Battelle. United States, [S.l], April, 2006. http://www.battelle.org/gtsp (accessed 13.05.08). IEA, International Energy Agency, 2008a. Energy Technology Perspectives 2006: Scenarios & Strategies to 2050 in Support of the G8 Plan of Action. Paris: Stedi Media, 2006, p. 486. http://www.iea.org/book (accessed 23.11.08). IEA, International Energy Agency, 2008b. Geologic Storage of Carbon Dioxide – Staying Safely Underground. IEA Greenhouse Gas R&D Programme. Cheltenham, January, 2008, p. 34. http://www.ieagreen.org.uk (accessed 20.06.08). IRGC, International Risk Governance Council, 2008. Policy Brief – Regulation of Carbon Capture and Storage. Geneva, February, 2008, p. 32. http://www.irgc.org (accessed 27.08.08). MCMPR, Ministerial Council on Mineral and Petroleum Resources, Carbon Dioxide Capture and Geological Storage Aus2005. Regulatory Guiding Principles. Canberra, 2005, p. 64. tralian http://www.ret.gov.au/resources/carbon dioxide capture and geological storage/Pages/ccs legislation.aspx (accessed 15.04.08). NETL, National Energy Technology Laboratory, 2006. International Carbon Capture and Storage Projects Overcoming Legal Barriers. USA, 23 June, 2006, p. 41. http://www.netl.doe.gov (accessed 10.07.08). Official Journal of the European Union, 2009. Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 – Strasbourg. 5 June, 2009, pp. 114–140. Queensland, 2010. Greenhouse Gas Storage Regulation 2010 – Subordinate Legislation 2010 No. 58, Made Under the Greenhouse Gas Storage Act 2009. UNDP – United Nations Development Programme. The Human Development Report, Fighting Climate Change: Human Solidarity in a Divided World. Coimbra, Edic¸ões Almedinas, p. 442. UNDP, United Nations Development Programme, 2008. Human Development Report 1007/2008, Fighting Climate Change: Human Solidarity in a Divided World, Coimbra, Ed. Edic¸ões Almedina, 2008, p. 442.