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Paul Bailey, Jen Brickett, Elizabeth McCullough, Kerry Schlichting, Terry Unger, Sonya Suter, Eric Reeves, Nina Kaczmarczyk, Alistair Ritchie
Citation: IEAGHG, "Financial Mechanisms for Long-Term CO₂ Storage Liabilities", 2012-11, November 2012.
The study aimed to review current laws and emerging CCS specific regulations, in different regions of the world and under different legal frameworks, concentrating on long-term liability aspects. The primary work of the study was to investigate and assess the various potential financial mechanisms for supporting CO₂ liability, including an assessment of their applicability and practicality to all parties concerned, and provide recommendations based on the findings. As well as discussion on important issues such as when and how transfer of liability to the government should occur, and what these liabilities could be, the study focuses primarily on how this liability can be supported.
Government financial requirements primarily protect the government/taxpayer from the risk of the operator’s failing to fulfil its obligations, although some acceptable financial mechanisms also may serve as a funding source for the operator. On the other hand, for the benefit of shareholders/owners, an operator may propose a variety of positions regarding its exposure to long-term CCS liabilities, ranging from use of a financial mechanism to self-insurance without a financial mechanism (subject to agreement by the relevant authorities).
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