AustLII Home | Databases | WorldLII | Search | Feedback

Western Australian Student Law Review

You are here:  AustLII >> Databases >> Western Australian Student Law Review >> 2017 >> [2017] WAStuLawRw 2

Database Search | Name Search | Recent Articles | Noteup | LawCite | Author Info | Download | Help

Vuksic, Aleksandar --- "Carbon Capture and Storage in Australia: Long-Term Liability Frameworks in a Post-Paris Agreement World" [2017] WAStuLawRw 2; (2017) 1 Western Australian Student Law Review 18


Aleksandar Vuksic[*]

Carbon Capture and Storage—Long-Term Liability—Australian Carbon Capture and Storage Legislation—Carbon Sequestration—Paris Agreement—COP 21

The Paris Agreement has placed greater focus on carbon capture and storage (‘CCS’) technologies. If those technologies are to move beyond hypothetical solutions and small-scale operations and into large scale commercial operations, certain legal issues must be tackled. One of the most difficult legal issues to navigate in this regard are the long-term liability challenges arising out of the large timescales involved. This article examines whether long-term liability should remain with the sequestering parties and, therefore, risk the creation of long-term liability gaps, or if the Crown should eventually assume all long-term liability and shoulder the burden. The current Australian long-term liability legislative frameworks for CCS technologies operate at the Commonwealth offshore, the state offshore, and the state onshore levels. These frameworks can be further separated by the three distinct ways in which they approach the long-term liability issue. No current legislative approach to long-term liability is ideal. If proliferation of CCS technologies is the end-goal, a unified legislative approach must be taken. The Crown should assume all long-term liability of the sequestered carbon if the technology is to have any viability. The risks associated with the creation of large liability gaps once sequestering entities cease to exist are too great. In this regard, the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) provides the most suitable template to build upon. However, more work needs to be done to ensure security for the Crown when assuming this liability and certain gaps can be filled by looking to overseas jurisdictions, particularly the United States (‘US’), Canada, and the European Union (‘EU’).


Climate change is fast becoming our greatest challenge. Global temperatures are rising, habitats are being destroyed, emissions are not slowing, and many developed countries are now faced with the ethical dilemma of calling for the slowing down of development in developing countries in a bid to stay global emissions. With this as its backdrop, the Paris Agreement (‘Agreement’) was born. The Agreement seeks to limit global temperatures at 2°C above pre-industrial levels: a valiant global endeavour with a secret at its heart. Through implication, the Agreement heavily relies on the uptake of carbon reduction technologies that will achieve negative emissions – most of which do not exist yet.

Of all these potential technologies, CCS and Biomass Energy CCS (‘BECCS’) stand out as being presently doable. CCS is the process of capturing carbon dioxide (‘CO2’) and injecting it into subsurface rock formations for indefinite storage.[1] BECCS is seen as an extension of CCS, transforming it from a carbon neutral process to a carbon negative one by adding a bioenergy component.[2] With a capacity to contribute between 15 per cent to 55 per cent of required CO2 abatement leading up to 2100,[3] one of the key selling points for CCS technology is its similarity to current fossil fuel industry practices.[4] However, it comes with its challenges. It risks becoming a hypothetical solution to be used only in bids to save the fossil fuel industry.[5] More importantly, it risks failing before it has even begun, as it faces long-term liability issues due to the timescales involved.

This article identifies several gaps in the current Australian long-term liability framework and, ambitiously, makes recommendations as to how those gaps should be filled. It briefly considers the impact of the Paris Agreement on CCS, before tackling the long-term liability issue. An analysis of the Australian long-term liability legislative frameworks will be carried out, followed by a brief look at some US, Canadian, and EU frameworks. Finally, the article argues that there needs to be a unified approach between states and the Commonwealth to long-term liability for Australian long-term liability frameworks to encourage CCS proliferation while also ensuring that no liability gaps are created. It is suggested that the Crown should eventually assume liability. A unified long-term liability mechanism should be based on the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (‘OPGGSA’).


While simultaneously lauded as a ‘genuine triumph’ but risking being ‘total fantasy’,[6] the Paris Agreement will supersede the United Nations Framework Convention on Climate Change (‘UNFCCC’), and its Kyoto Protocol, when it comes into effect around 2020. The Agreement sets out to depart from the UNFCCC and the Kyoto Protocol by going for a bottom-up approach, based on a system by which nations put forward their own non-binding intended nationally determined contributions (‘INDCs’) for Greenhouse Gas (‘GHG’) reductions.[7]

The Agreement aims to hold the rise in average global temperatures well below 2°C above pre-industrial levels, and seeks to limit that rise at 1.5°C.[8] Recent predictions indicate that if all INDCs are implemented as currently stated, a median warming of around 2.7°C above pre-industrial levels can be expected.[9] Modelling assessments which allow for a significant likelihood of reaching the 2°C target all assume wide-scale implementation of carbon reduction technologies.[10] According to the Intergovernmental Panel on Climate Change, all likely scenarios where global temperatures were kept within 2°C of pre-industrial levels involve significant uptake of CCS and BECCS.[11] For the temperature increase to stay at 1.5°C, negative emissions are essential.[12] The Agreement’s implementation of ‘internationally transferred mitigation outcomes’ and a sustainable development mechanism, as set out in art 6, all point towards the encouragement of CCS and BECCS. Article 4.1 of the Paris Agreement itself states that Parties to the Agreement aim to:

achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.[13]

The Agreement effectively references CCS-like technologies throughout in all but name. The scale of the assumption that carbon reduction technologies will be implemented on such a wide scale has been called ‘breathtaking’, with the global community gambling its future on a ‘carbon sucking fairy god-mother’.[14]

If signatories to the Agreement are to meet the temperature targets, the uptake of carbon reducing technologies such as CCS and BECCS seems inevitable unless draconian social measures are implemented to rapidly cease hydrocarbon use and implement widespread renewables uptake.[15] This has pushed technologies like CCS to the forefront of the climate policy discussion. Countries like Australia, which have implemented CCS legislation and facilitated CCS research projects, will have to begin to seriously consider the wide-scale application of the technology beyond its use as a mere diversion.[16] However, CCS is seen by many as a transition technology that has proved to be far more difficult and expensive to implement that initially thought.[17] Overreliance on CCS could prove dangerous.


In 2015, the Global CCS Institute ranked Australia first globally with respect to the development and implementation of comprehensive legislative CCS frameworks.[18] The framework makes a distinction between onshore and offshore CCS operations, and operates at three levels: Commonwealth offshore legislation, state offshore legislation, and state onshore legislation.[19] These regulatory frameworks tackle the long-term liability issue in three distinct ways: indemnity, transfer of ownership, and a transfer of ownership based on CO2 mineralisation.[20]

A The Commonwealth legislative framework

The OPGGSA constitutes the CCS framework for activities outside the State constitutional boundary of 3 nautical miles.[21] It allows for the conferral of a GHG assessment permit.[22] The permittee may then apply for a GHG holding lease[23] or a GHG injection licence. The injection licence allows the licensee to begin GHG injection and storage operations into one or more identified GHG storage formations wholly within the permit or lease area.[24] If all injection activities have ceased the licence holder must apply for a site closing certificate (‘SCC’).[25] The responsible Commonwealth Minister under the OPGGSA must make a decision on the application for a SCC within 5 years of the application date. Once the Minister makes the decision, a pre-SCC may be issued setting out a monitoring and verification program, as well as a required level of security to cover the costs of that program.[26] Once security is lodged, the Minister must issue the SCC which remains active indefinitely.[27]

Once a SCC is issued, a minimum of 15 years must elapse before the Commonwealth Minister may declare a closure assurance period (‘CAP’) having been satisfied that there are no significant risks and that stored GHGs are behaving as predicted.[28] If the Minister is not satisfied, the CAP is not declared. After the CAP is declared, a statutory indemnity takes effect.[29] The Commonwealth must indemnify against liability if the formation was specified under the GHG licence, a SCC is in force, a CAP has been declared, and if:

• the liability is a liability for damages;

• the liability is attributable to an act done or omitted to be done in the carrying out of operations authorised by the licence in relation to the formation; and

• the liability is incurred or accrued after the end of the CAP.[30]

If the CAP has been declared and the licence holder subsequently ceases to exist, the Crown assumes liability for damage and losses which it would have indemnified the former licensee for.[31]

1 Issues with the OPGGSA

One of the first points to note about the OPGGSA is that it remains completely silent on the issue of ownership. As a result, it appears that ownership of the sequestered CO2 must be determined by common law doctrines of chattels and fixtures.[32] Although the OPGGSA provides for an injection site to be within one or more offshore areas as defined by the Act,[33] liability issues may arise when storage formations themselves cross several jurisdictional boundaries either into state or territory jurisdiction or beyond the Exclusive Economic Zone (‘EEZ’),[34] particularly as long-term liability mechanisms are not identical across all jurisdictions. As it appears that most decisions under the OPGGSA would come down to ministerial discretion, many of the jurisdictional issues could be mitigated in the short-term by the relevant Commonwealth ministers only allowing injection into geological formations that do not present these jurisdictional challenges.

The wide ministerial discretions provided for in the OPGGSA creates uncertainty, as there is no legislative limit on the length of the CAP. If the Minister is not satisfied of the relevant criteria, the CAP can be extended and in theory, this extension can be indefinite. This would understandably create apprehension among future operators. The OPGGSA also remains silent in the rare event that an injecting entity ceases to exist prior to the declaration of the CAP. On a strict application of s 401 of the OPGGSA, it appears that the Commonwealth would not assume liability.

A more pressing issue is one of indemnity coverage. As any damage caused by actions not authorised by a GHG injection licence will not fall within the scope of the statutory indemnity,[35] it appears that former licensees will continue to remain on risk for liabilities not covered by the indemnity or for liabilities that are not statute barred.[36] This issue is compounded where the sequestering entity ceases to exist as the State only assumes liability for the damages it would have indemnified the former licensee for. This could result in a scenario where an aggrieved party would no longer have a liable entity to bring a cause of action against if damage caused was not of the type originally covered by the statutory indemnity.

B Transfer of ownership: the Victorian and Queensland legislative framework

1 The Victorian framework

The Victorian offshore framework is established by the Victorian Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic) (‘OPGGSA (Vic)’) and operates similarly to its Commonwealth counterpart. The OPGGSA (Vic) provides for GHG assessment permits,[37] GHG holding leases,[38] and GHG injection licences.[39] Like the Commonwealth legislation, the OPGGSA (Vic) provides for: an SCC which must be decided within 5 years of application and if granted, remains in force indefinitely;[40] a pre-SCC; and a security covering monitoring costs.[41] However, there is no Victorian equivalent of the CAP. The OPGGSA (Vic) also provides that once a GHG licence is cancelled or surrendered, the Crown becomes the owner of any GHG substance that has been injected into a geological formation under that licence.[42]

The Victorian onshore regulatory framework is established by the Greenhouse Gas Geological Sequestration Act 2008 (Vic) (‘GGGSA’). The GGGSA provides for the issue of GHG sequestration exploration permits,[43] GHG sequestration formation retention leases,[44] and GHG substance injection and monitoring licences.[45] Unlike its offshore counterpart, the GGGSA provides that the Crown retains ownership in the underground geological formation,[46] with the Crown retaining Crown land rights.[47] Once a surrender of an injection and monitoring licence is accepted as set out by s 171 of the GGGSA, the licence holder must, before the surrender, pay the remaining cost of carrying out long-term monitoring and verification as detailed in a long-term monitoring and verification plan.[48] The Crown then gains ownership of the injected gas substance when the injection and monitoring licence is cancelled or surrendered.[49]

2 The Queensland onshore framework

Queensland currently only has an onshore regulatory framework in the form of the Greenhouse Gas Storage Act 2009 (Qld) (‘GGSA’). The GGSA provides for a system of GHG exploration permits and GHG injection and storage leases.[50] Unlike the other jurisdictions, Queensland defines the injected substance as a GHG stream which is a stream of CO2 or a substance overwhelmingly consisting of CO2. [51] Like the GGGSA, the GGSA vests ownership of the geological formation in the State.[52] The injected GHG stream becomes the property of the state post-injection only after the GHG lease is surrendered, or ends, under the Act.[53] Like within other jurisdictions, such surrender cannot be performed voluntarily and requires the approval of the relevant Minister under the GGSA after having considered all relevant factors.[54]

3 Issues with the Victorian and Queensland models

The issues facing the Victorian and Queensland legislation are quite similar and are therefore dealt with together in this section.

As the Victorian and Queensland frameworks transfer ownership of the stored CO2 to the Crown, one would assume that this would result in more clarity regarding the transfer of long-term liability. However, the Victorian Government has stated that it will not indemnify licensees for loss caused through negligence during CCS operations prior to the transfer of ownership,[55] nor will the state be liable for losses caused as a result of actions of the former authority-holder, even when the harm arises after the surrender of the GHG licence.[56] This means that, effectively, common law liability remains with the injecting parties.[57] The Queensland Government has stated that although there is state ownership in both stored CO2 and the pore space, the issue of long-term liability remains ‘complex’.[58] As Gibbs argues, this uncertainty could prove a key risk and obstacle to proponents of CCS in Victoria and Queensland.[59]

The Victorian Government, in defence of the current framework, has stated that the system as is provides the greatest incentive for injecting parties to ensure the permanence of their injection activities, while conceding that if the risk of exposure to long-term liability affects the uptake of tenements, then this could be dealt with on a case-by-case basis by utilising state agreements.[60] Not only is the use of the language of permanence quite problematic for proponents, potentially even acting as a deterrent, the proposed use of case-by-case state agreements doesn’t provide any certainty, even in the face of the Western Australian Gorgon Project providing a precedent.[61] Not to mention, a reliance on state agreements after the enactment of CCS legislation seems rather pointless; there must be certainty for potential participants, particularly in relation to long-term liability, in order for CCS to be a viable option. The use of project-specific state agreements undermines certainty, since any future long-term liability mechanisms will be reliant on negotiations between the parties involved.

It appears that the Victorian and Queensland frameworks, in the absence of state agreements to the contrary, will inevitably push an aggrieved party towards litigation, which will generally come down to issues of causation and expert evidence. These evidentiary issues relating to causation are likely to be difficult to resolve, as has been seen in the US.[62] Both the Victorian and Queensland frameworks remain silent on the issue of operators ceasing to exist and the effect this would have on long-term liability. Despite the State taking up ownership of the CO2, the continued stance of governments that common law liability should remain with sequestering parties means that there is potential for large gaps in liability.

C Ownership upon mineralisation: the South Australian framework

The Petroleum and Geothermal Energy Act 2000 (SA) (‘PGEA’) was amended in 2009 to provide for licencing of injection activities and storage of regulated substances,[63] one of which is CO2.[64] The PGEA provides for a system of exploration,[65] retention,[66] and production licences.[67] It vests ownership of natural reservoirs which can be used for GHG storage in the Crown.[68] However, the legislation states that on the ‘production’ of a ‘regulated substance’ by a person lawfully entitled to produce it, that regulated substance becomes property of the person who produced it.[69] According to s 4 of the PGEA, a person produces a regulated substance:

in the case of a natural reservoir – by using it for the storage of petroleum or another regulated substance.[70]

These provisions seem to suggest that South Australia would assume ownership of mineralised or solubility trapped CO2 within a geological formation, but any non-mineralised CO2 would remain the property of the injecting party.[71]

1 Issues with the South Australian model

As a result of these provisions, any CO2 leakage would be defined as production. The CO2 would therefore be the property of the injecting party, and it can be assumed that the injecting entity would be held liable for any damage caused. Campbell predicts that it is very likely that the South Australian framework would encourage a process of contractual management to limit liability, with licensees still remaining potentially liable in situations where common law liability cannot be contractually excluded.[72] As the Crown appears to assume ownership of mineralised or solubility trapped CO2, in the event that any damage is caused by solubility trapped state owned CO2 (for example, to adjacent mineral deposits), either party could be liable; it would turn on a matter of statutory interpretation and the statutory definition of production. As with the frameworks above, any long-term liability issues would turn on complex questions of causation.

The PGEA’s silence regarding the assumption of liability by the state once the sequestering entity ceases to exist may cause the greatest level of concern. If un-mineralised CO2 were to cause damage, there would effectively be no one liable for the aggrieved party to bring action against. Action could be brought against the state in such a scenario, but with the current level of uncertainty there is little use in such guesswork. Many of these issues could be solved through contractual management and state agreements, as outlined above. The uncertainties and apprehensions of injecting parties would only increase with the added uncertainty of case-by-case contractual management.

D The Western Australian framework

Although there have been continued recommendations for an amendment to the Petroleum and Geothermal Resources Act 1967 (WA),[73] with a Bill currently in the Legislative Council,[74] Western Australia (‘WA’) does not have a CCS legislative framework in the traditional sense. The proposed amendments would follow the OPGGSA.[75] The current legislative framework consists of the Barrow Island Act 2003 (WA) (‘BIA’) and the Gorgon Gas Processing and Infrastructure Project Agreement, which forms Schedule 1 of the BIA.

The BIA functions much like OPGGSA, in that it provides a statutory indemnity for the Gorgon Project Joint Venturers.[76] Once injection activities cease, the BIA provides for a minimum 15 year period following the cessation of injection activities, after which a site closure notice can be issued.[77] This is essentially a WA version of CAP in all but name. The relevant BIA Minister may only issue such a notice if a Commonwealth representative is ‘satisfied of certain matters’ relating to the monitoring data and level of risk.[78] After the site closure notice is issued, the relevant BIA Minister must declare a liability assumption date in the Western Australian Government Gazette, after which the state will indemnify the Joint Venturers for their:

common law liability to independent third parties arising after the liability assumption date for loss or damage caused by the injection of Gorgon CO2 in the formation where that loss or damage is attributable to an act done, or omitted to be done, in the carrying out of CO2 injection operations under the authority of the section 13 approval.[79]

1 Issues with the Western Australian model

As there is no Western Australian regulatory framework to speak of yet, and the BIA functions much like the OPGGSA, not much else will be discussed in this article regarding the long-term liability issues in WA. The major difference between the OPGGSA and the BIA is that the latter does not provide for the assumption of state liability in the event that the Gorgon Project Joint Venturers cease to exist. Seeing as some of the geological formation into which the CO2 will be injected are within the territory of the Commonwealth Government, as demonstrated by the need for approval by a Commonwealth Minister,[80] and that the amendment Bill proposes that WA assume liability if licensees cease to exist,[81] this uncertainty will likely be resolved soon. Much like the OPGGSA, the main issues with the BIA and the proposed amendments lie with the coverage of the indemnity, the subsequent assumption of liability, and the creation of liability gaps when the operators cease to exist.


Although Australia may have the highest ranked CCS legislative framework globally, it is useful to briefly discuss lessons that can be learned from other jurisdictions. A comprehensive comparative analysis is beyond the scope of this article.

A The United States and Canada

The experience that both the US and Canada have with CCS type activities, particularly in enhanced oil recovery, places them in a position better suited to deal with long-term liability issues arising out of subterranean substance injection.[82] However, the highly federalised structure of the US, and the constitutional divisions of power between the Canadian provincial and federal governments, makes any large-scale comparisons impossible within the scope of this article.

In the Canadian province of Alberta, the Mines and Minerals Act[83] provides for the Crown to assume ownership of the sequestered CO2 while indemnifying the former lessee against damages in any tortious action if certain criteria are met.[84] That Act also establishes a Post-closure Stewardship Fund, which the lessee holder must pay into and which may be used by the Crown to cover a number of costs set out in s 122 of the Act.[85] Section 121(3) provides that the Crown may assume ownership of the injected CO2 in the event that the injecting party ceases to exist prior to the issuing of a closure certificate. The Mines and Minerals Act also sets out a number of provisions dealing with ‘orphan facilities’.[86]

In the US, it appears that several states are moving towards a position by which they are limiting any potential long-term liability for the state, and placing that burden on the injecting party.[87] However, the state of Montana, for one, appears to assume liability. Montana has a system similar to the OPGGSA CAP, under which 15 years must elapse after injection ceases before a certificate of completion may be issued. Liability then remains with the operator for a further minimum of 15 years following the issuing of the certificate before the operator may, with the consent of a state regulator, transfer liability to Montana.[88] The state then assumes long-term liability but alludes to the possibility of the US Federal Government eventually assuming liability in the longer-term.[89]

B The European Union

Directive 2009/31/EC[90] of the EU establishes a comprehensive CCS framework where long-term liability for CCS activities is to be transferred to Member States.[91] The EU framework functions similarly to the OPGGSA, in that it provides for a minimum 20 year CAP-like period. A number of conditions need to be met prior to transfer of liability, including that the ‘CO2 [must] be completely and permanently contained’.[92] A report is to be published by the operator before liability can be transferred referring to the aforementioned conditions. The report must at least demonstrate, amongst other things, that the ‘storage site is evolving towards a situation of long-term stability’.[93] A security, to be paid by the operator, is provided for and must cover at least the cost of monitoring and post-transfer obligations of a Member State for a period of 30 years.[94]


The success of CCS within Australia rests on the clarity of long-term liability frameworks. It will also be dependent upon a consistent, unified and nationwide approach. The proceeding part of this article suggests law reforms that may increase the prospect of that success.

A A unified system

Apart from creating apprehension among proponents, lack of conformity between the Australian frameworks could also encourage operators to transport captured CO2 to jurisdictions with favourable long-term liability frameworks. Would this transported CO2 fall under the jurisdiction of the state where it was captured, or the state where it was injected?[95] What if the CO2 migrates across jurisdictional boundaries? This issue of migration is highly likely to arise; many offshore geological formations situated in Commonwealth waters off the Victorian coast have physical characteristics that may result in GHGs migrating towards the Victorian offshore and even onshore jurisdictions.[96] Conformity, particularly in terms of long-term liability, would solve complex legal issues arising out of any such migration and grant greater peace of mind to anyone that could potentially suffer damage.

This raises the question of which framework template should be adopted. Case-by-case state agreements, although tempting due to relative ease of implementation, are not the answer. They provide no clarity or certainty for prospective operators. Those features are essential for a successful framework that encourages operators to participate. This article argues that a long-term liability framework should be based on the OPGGSA. This proposition is supported below.

B The Crown should assume liability

One of the first steps in ensuring conformity across jurisdictions is to implement a uniform approach to long-term liability. Long-term liability needs to eventually be assumed by the Crown for CCS to truly take off. This opinion is shared by the Ministerial Council on Mineral and Petroleum Resources.[97] There are a number of benefits to this approach.[98] The long-term nature of CCS means that attaching long-term liability to corporate entities — liability far exceeding those entities’ likely corporate lifespan — would both discourage investment in CCS and place a high burden on the wider community with resulting in gaps in liability. CCS ultimately needs to be implemented for the global public good; the very creation of the Paris Agreement impliedly acknowledges as much. This, along with a lack of any real financial incentive for potential operators, means the community should properly expect the government to take long-term responsibility for anything that may wrong.[99]

There are challenges with this approach; governments would need to ensure that CCS operations are carried out to the highest standards, thus limiting the assumed risk (which, ideally, should be done anyway — but placing liability on governments will incentivise them to supervise operations diligently). In this regard, the OPGGSA provides the clearest framework to build upon to ensure certainty for the Crown and proponents. The current OPGGSA framework for indemnity allows operators to be certain that they will be indemnified for specific liabilities, while maintaining their liability for tortious damages, therefore ensuring a high standard of operations. There is no doubt, however, that individual operators will eventually cease to exist as corporate entities, revealing major gaps in liability under the current framework. The Crown will need to assume all liabilities once the sequestering entity ceases to exist, not just those it would have indemnified for. This, in turn, would place a heavy burden on the Crown, which would need to ensure risks are limited. It has been suggested that frameworks should require proponents to ensure the existence of relevant corporations for a set period of time, or to secure appropriate insurance cover through the form of a security for a defined post-operational period.[100] The latter appears to be the better option from a standpoint that seeks to encourage CCS operations.

However, the OPGGSA framework needs to improve in certain aspects to ensure certainty for proponents and security for the Crown. Utilising successful provisions from other jurisdictions could fill these gaps.

C Incorporating international approaches

This article contends that any statutory indemnity provided to operators should not run indefinitely and should cease once the operator no longer exists. The Montana framework may provide a viable alternative. That is, a unified system might provide for a minimum time period following a CAP declaration, during which the Crown would indemnify operators. At the end of this minimum time period, the relevant minister may declare, having been satisfied of certain criteria, that the Crown is ending the indemnity and assuming long-term liability for the sequestered CO2. If such a declaration is not made and the operator ceases to exist while only covered by an indemnity, the current OPGGSA transfers liability to the Crown. As has been stated above, this transfer of liability should not merely include what the Crown would have indemnified for already, if all potential gaps in liability are to be filled.

One of the key lessons to be taken from the Alberta framework is the need to fill liability gaps in the event of the operator ceasing to exist prior to the declaration of a closure certificate, or in the event of the OPGGSA, the CAP. As the OPGGSA template provides for a wide Ministerial discretion which could extend the CAP indefinitely if the Minister is not sufficiently satisfied, the notion of an operator ceasing to exist before the CAP ends is not far-fetched. It is highly recommended that the Australian framework enacts similar provisions to s 121(3) of the Canadian Mines and Minerals Act. Absence of such a provision can only result in a scenario where adjacent operators and the wider public are placed at risk due to the creation of a large liability gap. In this same regard, a provision dealing with ‘orphaned facilities’ would also be beneficial in ensuring the stability and monitoring of orphaned sites.

Both the EU and Alberta frameworks offer improvements with respect to the payment of securities. Alberta not only requires a security to be paid, but also provides for the establishment of a fund into which these securities are paid, and in the case of the EU, a minimum time period for the which the security must be able to cover site monitoring and post-transfer obligations. It is recommended that similar provisions be enacted for the Australian frameworks. That kind of fund could also be used by the Crown to cover the cost of any damages arising out of the assumption of long-term liability. Further, the EU framework provides a rather comprehensive reporting framework for operators. Reports published by operators are to be used by Member States in their assessment of whether the conditions for a transfer of long-term liability have been met. This serves as a good example. Greater clarity on the operator’s reporting requirements prior to the declaration of a CAP, and a potential transfer of liability, would improve the Australian framework. This would incentivise operators to work to a high standard and decrease risk, while also providing clarity for future proponents regarding their obligations. However, from a legal perspective, the language of permanence used in the EU framework should be avoided as questions of permanence rely solely on our ability to make predictions into the future and this always carries a certain degree of uncertainty and risk. [101]


To use the words of the Queensland government, CCS long-term liability issues are quite complex. In an attempt to highlight possible improvements to Australia’s long-term liability frameworks, this article has likely raised more questions than it has offered answers. However, a few things are clear. Australia needs a unified long-term liability framework; the current situation is less than ideal. The first step in this process is to come to terms with the fact that if CCS is to be encouraged, as is suggested by the Paris Agreement, the Crown will need to assume long-term liability to facilitate such encouragement. The potential for liability gaps to be created by transferring long-term liability to operators with limited corporate lifespans would only breed uncertainty, discourage investment, and place significant risk on the wider community.

If the Crown is to assume long-term liability certain improvements need to be made to the current frameworks. A unified approach would go a long way in ensuring security for the Crown and certainty for proponents. Many shortfalls still exist with respect to this method and further work needs to be carried out to ensure no large liability gaps are allowed to form. This can be done by offering greater legislative clarity, looking to other jurisdictions for inspiration, and investing into CCS research. Otherwise, the CCS long-term liability issue could render the technology unworkable. As a result of this uncertainty and the state of the current framework, care should be taken not to allow CCS to become our only tool for combating climate change and reaching the Paris Agreement targets.

[*] Aleksandar is a third year Juris Doctor student at the University of Western Australia.

[1] Stuart Haszeldine, ‘Geological Factors in Framing Legilsation to Enable and Regulate Storage of Carbon Dioxide Deep in the Ground’ in Ian Havecroft, Richard Macrory and Richard B Stewart (eds), Carbon Capture and Storage: Emerging Legal and Regulatory Issues (Hart Publishing, 2011) 7. See also Samantha Hepburn, Mining and Energy Law (Cambridge University Press, 2015) 280, 283.

[2] Kevin Anderson, ‘Talks in the city of light generate more heat’ (2015) 528 Nature 437.

[3] Intergovernmental Panel on Climate Change, Carbon Dioxide Capture and Storage (2005) Intergovernmental Panel on Climate Change <> 55.

[4] See National Geosequestration Laboratory, About carbon storage <> . See also Haszledine, above n 1, 8.

[5] Jonathan Paul Marshall, Disordering fantasies of coal and technology: Carbon capture and storage in Australia (December 2016) ScienceDirect <> 6.

[6] See Anderson, above n 2.

[7] Conference of the Parties, United Nations Framework Convention on Climate Change, Report of the Conference of the Parties on Its Twenty-First Sessions, Held in Paris from 30 November to 13 December 2015 – Addendum – Part Two: Action Taken by the Conference of the Parties at Its Twenty-First Session, Dec 1/CP.21, UN Doc FCCC/CP/2015/10/Add.1 (29 January 2015) annex (‘Paris Agreement’), arts 3, 4. See also Joshua B Horton, David W Keith and Matthias Honegger, Implications of the Paris Agreement for Carbon Dioxide Removal and Solar Geoengineering (July 2016) Harvard Project on Climate Agreements (July 2016) <> .

[8] Conference of the Parties, United Nations Framework Convention on Climate Change, Agenda item 4(b) Durban Platform for Enhanced Action (Draft decision 1/CP.17) Adoption of a protocol, another legal instrument, or an agreed outcome with legal forced under the Convention applicable to all Parties, UN Doc FCCC/CP/2015/L.9/Rev.1 Annex (12 December 2015) art 2 (‘Paris Agreement’).

[9] Climate Analytics, Ecofys, Potsdam Institute for Climate Impact Research, and NewClimate Institute (in collaboration), Paris Agreement: near-term actions do not match long term purpose – but stage is set to ramp up climate action (12 December 2015) Climate Action Tracker Statement <> .

[10] See Hans Joachim Schellnhuber, ‘Why the right climate target was agreed in Paris’ (2016) 6(7) Nature Climate Change 649. See also Intergovernmental Panel on Climate Change (IPCC), Special Report on Carbon Dioxide and Storage: Summary for Policy Makers and Technical Summary (Approved and Accepted by IPCC Working Group III and 24th Session of the IPCC, Montreal, Intergovernmental Panel on Climate Change, 2005).

[11] Intergovernmental Panel on Climate Change, ‘Summary for Policymakers’ (Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, 2014) 11–12.

[12] Simon Lewis, The Dirty Secret of the Paris Climate Deal (17 December 2015) Foreign Policy <> .

[13] Paris Agreement, art 4.1.

[14] See Anderson, above n 2.

[15] See Horton, Keith and Honegger, above n 7, 3.

[16] Marshall, above n 5, 6.

[17] Lewis, above n 12.

[18] Global CCS Institute, ‘The global status of CCS: 2015 summary report’ (Global CCS Institute, 2015) 9.

[19] Meredith Gibbs, ‘The Regulation of Geological Storage of Greenhouse Gases in Australia’ in Ian Havecroft, Richard Macrory and Richard B Stewart (eds), Carbon Capture and Storage: Emerging Legal and Regulatory Issues (Hart Publishing, 2011) 159, 161.

[20] Gary P Campbell, ‘Carbon Capture and Storage: Legislative Approaches to Liability – Managing Long-Term Obligations and Liabilities’ (2009) AMPLA Yearbook 324, 326–7.

[21] Hepburn, above n 1, 304–6.

[22] Offshore Petroleum and Greenhouse Gas Storage Act (Cth) ss 290, 291.

[23] Ibid ss 325, 331.

[24] Ibid s 361.

[25] Ibid s 386.

[26] Ibid s 391.

[27] Ibid s 392.

[28] Ibid s 399.

[29] See Campbell, above n 20, 340.

[30] Offshore Petroleum and Greenhouse Gas Storage Act (Cth) s 400.

[31] Ibid s 401.

[32] Nicola Swayne and Angela Phillips, ‘Legal liability for carbon capture and storage in Australia: Where should the losses fall?’ (2012) 29(3) Environmental and Planning Law Journal 189, 194.

[33] Offshore Petroleum and Greenhouse Gas Storage Act (Cth) ss 8, 22. See also s 7, which provides a definition of ‘offshore area’ for the purposes of the Act.

[34] Geoscience Australia, Australian Government, Maritime Boundary Definitions <> .

[35] Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) s 51.

[36] See Campbell, above n 20, 340.

[37] Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic) s 286.

[38] Ibid s 325.

[39] Ibid s 372.

[40] Ibid ss 414, 420.

[41] Ibid s 426.

[42] Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic) s 67.

[43] Greenhouse Gas Geological Sequestration Act 2008 (Vic) s 19.

[44] Ibid ss 58, 59.

[45] Ibid s 71.

[46] Ibid s 14.

[47] Ibid s 15.

[48] Ibid ss 170, 174.

[49] Ibid s 16.

[50] Greenhouse Gas Storage Act 2009 (QLD) ss 40, 117, 130.

[51] Ibid s 12.

[52] Ibid s 27.

[53] Ibid s 181.

[54] Ibid ss 174, 179.

[55] Swayne and Phillips, above n 32, 209.

[56] Gibbs, above n 19, 169.

[57] Ibid 171.

[58] See Swayne and Phillips, above n 32, 209. See also International Energy Agency, Carbon Captrue and Storage: Legal and Regulatory Review (Organisation for Economic Co-operation and Development/International Energy Agency, 2nd ed, May 2011) 72.

[59] Gibbs, above n 19, 169.

[60] Ibid 171. See also Victoria, Parliamentary Debates, Legislative Assembly, 25 February 2010, 579 (Peter Batchelor).

[61] See below for a discussion of the Barrow Island Act 2003 (WA) and the Gorgon Gas Processing and Infrastructure Project Agreement which forms Schedule 1 of that Act.

[62] Gibbs, above n 19, 169.

[63] Petroleum and Geothermal Energy Act 2000 (SA) s 10.

[64] Ibid s 4.

[65] Ibid ss 21, 22.

[66] Ibid ss 28, 29.

[67] Ibid ss 34, 35.

[68] Ibid s 5(1). See also s 4, which provides definitions of ‘regulated resource’ and ‘natural reservoir’.

[69] Ibid s 5(2).

[70] Ibid s 4.

[71] See Campbell, above n 20, 336–7.

[72] Ibid.

[73] See Department of Industry, Innovation and Science, ‘Carbon Capture and Storage Flagship South West Hub Project Review Report’ (10 November 2015) 3.

[74] Petroleum and Geothermal Energy Legislation Amendment Bill 2013 (WA).

[75] Ibid. See also Gibbs, above n 19, at 161.

[76] Barrow Island Act 2003 (WA) ss 14C, 14D.

[77] Ibid ss 13, 14B.

[78] Ibid s 14B. See also s 14A, which provides a definition of ‘Commonwealth representative’.

[79] Ibid ss 14D, 14C.

[80] Ibid s 14A.

[81] See Petroleum and Geothermal Energy Legislation Amendment Bill 2013 (WA) s 69JT.

[82] Barry Barton, ‘Carbon Capture and Storage Law for New Zealand: A Comparative Study’ (2009) 13 New Zealand Journal of Environmental Law 1, 9.

[83] Mines and Minerals Act, RSA 2000, c M-17.

[84] Mike Fernandez, Chad Leask and Chris Arnot, ‘Liability for sequestered CO2: the path forward for Alberta’ (2013) 37 Energy Procedia 7709, 7714. See also Mines and Minerals Act, RSA 2000, c M-17, ss 121(1), 121(2).

[85] Mines and Minerals Act, RSA 2000, c M-17, s 122.

[86] Ibid s 123.

[87] For example, Wyoming and Kansas. See Allan Ingelson, Anne Kleffner and Norma Nielson, ‘Long-term liability for carbon capture and storage in depleted North American oil and gas reservoirs – A comparative study’ (2010) 31(2) Energy Law Journal 431, 441–5.

[88] Ibid 445–7.

[89] Ibid.

[90] Directive 2009/31/EC of the European Parliament and of the Council [2009] OJ L 140/114.

[91] Ibid art 18(8). See also Ingeson, Kleffner and Nielson, above n 87, 445.

[92] Ibid art 18(1)(a), (b).

[93] Ibid art 18(2)(c).

[94] Ibid arts 20, 21.

[95] See, eg, Rebecca Campbell, ‘Long-term Liability for Offshore Geosequestartion’ (2006) AMPLA Yearbook 515, 530–1.

[96] Gibbs, above n 19, 172.

[97] Campbell, above n 95, 526.

[98] Ibid.

[99] Ibid.

[100] Campbell, above n 95, 526.

[101] See Haszeldine, above n 1, 13.

AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback