Overview German Carbon Capture and Storage (CCS) Law

Carbon capture and storage (CCS) is one of the pillars of European climate change efforts. In 2009, the European Parliament and the Council issued Directive 2009/31/EC on the geological storage of carbon dioxide. It provides that all member states must transpose CCS regulations in accordance with the Directive into their national laws by 25 June 2011.

It took Germany until 24 August 2012 to do so. On this day the Act on the Demonstration and Use of the Technology for the Capture, Transport and Permanent Storage of CO2 (Gesetz zur Demonstration und Anwendung von Technologien our Abscheidung, zum Transport und zur dauerhaften Speicherung von Kohlendioxid – KSpG) finally entered into force. A first attempt to enact a law on the controversial CCS technology failed during the previous, sixteenth legislative period of the German Parliament (2005-2009).  On 7 July 2011 the Bundestag (German Parliament) adopted a new CCS Act, which was rejected by the Bundesrat (Federal Council), the legal body that represents the German federal states, on 23 September 2011. After further debate Bundestag and Bundesrat eventually reached a compromise in late June 2012.

1. Background

Carbon capture and storage (CCS) is a means of reducing the impact of fossil fuel emissions by trapping them below ground and away from the atmosphere.  A complete CCS plan provides for the safe capture at the place of CO2 emissions, secure transport, and permanent storage of emissions. The CO2 is then stored away from the atmosphere, in deep underground geological formations.  Capture can be effected either post-combustion, pre-combustion, or in oxyfuel combustion (where the fuel is burned off in oxygen rather than in air). In Germany, a small pilot program for CCS exists in Ketzin in the federal state of Brandenburg. It is coordinated by the GFZ German Research Centre for Geosciences. 

Vattenfall operates an oxyfuel pilot plant located near its existing lignite fired power plant in Schwarze Pumpe. E.ON and Siemens also launched a pilot plant that tests postcombustion carbon capture at E.ON’s hard coal-fired power plant near Hanau in September 2009.

In December 2011 Vattenfall AG announced the cancellation of its plans for a EUR 1.5 billion CCS project in Jänschwalde and the exploration of possible storage facilities in Eastern Brandenburg, the reason being the above described political controversy about a CCS law. The EU sponsored project ought to have commenced operations in 2015/16, using the CCS technology for the first time on a larger power plant scale and not only in a demonstration project size. Vattenfall however expressed its intention to continue operating its German and European CCS pilot projects and its will to further research CCS and participate in European CCS projects. This also included the will to build a power plant with CCS technology in Jänschwalde in the 2020s, Vattenfall said. 

2. European Law

Directive 2009/31/EC on the geological storage of carbon dioxide emphasizes that CCS is a bridging technology, which should not lead to a reduction in developments of renewable energies nor an increase in the use of fossil fuels.

The Directive stipulates that member states retain the right to select the location of storage areas within their countries, but that CO2 streams may only be injected into the ground once risk assessments have been carried out and exploration and storage permits have been secured. The Directive further instructs the member states as to the operation of CO2 storage facilities and monitoring thereof by a competent authority.

Additionally, in an amendment to the Large Combustion Plant Directive (2001/80/EC), this Directive specifies that plants with a rated electrical output of over 300 megawatts must evaluate whether storage and transport means are available and whether CO2 capture retrofitting is possible.  The Directive reiterates the goal of working towards implementation of safe CCS for new fossil power plants by 2020 if possible.

In accordance with the CCS Directive’s Article 18, liability for damage to the environment shall be regulated by Environmental Liability Directive 2004/35/EC regarding the prevention and remedying of environmental damage.  Liability for climate damage that results from leakages shall be regulated by Emissions Trading Directive 2003/87/EC, which covers storage sites and mandates that emissions trading allowances be surrendered for any leaked emissions.  All other liabilities will handled at the national level. The Directive mandates that the operator of a storage facility maintains responsibility for the site until it is handed over to a member state’s competent authority (even after closure if a risk still remains).

3. Act on the Demonstration and Use of the Technology for the Capture, Transport and Permanent Storage of CO2 (KSpG)

The Act on the Demonstration and Use of the Technology for the Capture, Transport and Permanent Storage of CO2 (KSpG) entered into force on 24 August 2012. The KSpG shall ensure a permanent storage of CO2 in underground rock layers in a way that protects mankind and the environment and takes the responsibility for future generations into consideration. The law regulates the exploration, testing and demonstration of the permanent CO2 storage technology.

In accordance with the compromise found in the Mediation Committee of Parliament and the Federal Council on the controversial CCS technology, Section 2 para. 2 provides for an annual storage of no more than 1.3 million tons of CO2 and a maximum storage capacity of 4 million tons of CO2 per year in Germany, thus reducing storage capacity compared to the bill as approved by Parliament in July 2011. Parliament had voted in favour of an annual storage capacity of 3 million tons of CO2 and a total storage capacity of 8 million tons of CO2. Besides Section 2 para. 2 no. 1 KSpG stipulates that permits can only be granted if an application for a CO2 storage facility has been made by 31 December 2016.

Section 2 para. 5 KSpG lays down the compromise on the so-called “state clause”, which was finally found in the Mediation Committee. According to this provision the federal states can decide on the areas of their state territory in which testing of the CCS technology and demonstration projects can or cannot be carried out. Thereby they have to take account of other potential options for the use of the potential storage sites, the geological particularities of the area and “other aspects of public concern”. This provision in particular has been hard fought over between federal states with potential storage sites, but opposed to the CCS technology, and states like Brandenburg that favour testing the new technology.

Chapter 2 KSpG regulates the transport of CO2. It stipulates that the construction, operation and significant alterations of CO2 pipelines need to be permitted in what is called a plan determination procedure (Planfeststellungsverfahren).

Chapter 3 KSpG contains the provisions on the permanent storage of CO2. Subsections regulate inter alia permitting of the exploration of potential storage grounds (Section 7 KSpG), the plan determination procedure regarding the erection and operation of a permanent CO2 storage facility (Section 11 KSpG), closure and post-closure obligation (Sections 17, 18 KSpG), and operator obligations (Sections 21 to 24 KSpG).

Chapter 4 KSpG sets out the provisions on liability and the transfer of responsibility to the state after closure of a CO2 storage plant. Following the compromise in the Mediation Committee of Parliament and Federal Council Section 31 para. 1 KSpG provides operators can transfer responsibility for closed CO2 storage sites to the competent state authorities after 40 years. The original bill approved by Parliament allowed for a transfer of responsibility after 30 years.

4. Other Laws

CCS may also be covered by other legal provisions. Large scale industrial production of CO2 typically happens in major industrial installations. These installations are subject to the permitting regime of the Federal Immission Control Act (Gesetz zum Schutz vor schädlichen Umwelteinwirkungen durch Luftverunreinigungen, Geräusche, Erschütterungen und ähnliche Vorgänge – Bundes-Immissionsschutzgesetz – BImSchG). Any changes to existing installations that would include equipment to capture and compress CO2 would require a review under the immission control law permitting regime.

As the captured CO2 will for the majority have to be transported to the storage site in pipelines, the legal regime for pipelines can be applicable to this part of the CCS process. Consequently, a plan determination procedure (Planfeststellungsverfahren) or a plan approval procedure (Plangenehmigungsverfahren) may be applicable. Details depend on the regime for environmental impact assessment pursuant to the EIA Directive 85/337/EC (and the German implementing legislation) and the general legal principles applicable to such plan determination and approval procedures.

The applicable legal regime for the actual CO2 storage may also depend on how and where the CO2 shall be stored and at what time the decision was taken. Federal and state water law applies to the extend acquifers are affected. Mining law may apply where CO2 storage shall take place in the context of oil and gas production or using brine caverns.

German mining law was not drafted with CO2 storage in mind, as CO2 injection into the earth is not a traditional mining activity. Therefore, the application of the mining law regime to CCS provides some challenges. For lack of a better legal basis, exploratory work for potential CCS storage in salt caverns in the state of Brandenburg previously relied on the mining law regime for brine exploration.