Environment, Climate Change and Land Reform Committee

Meeting date: Tuesday, November 27, 2018

Official Report 813KB pdf

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European Union (Withdrawal) Act 2018

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Storage of Carbon Dioxide (Amendment) (EU Exit) Regulations 2018

Welcome back. The sixth agenda item is to consider a proposal by the Scottish Government to consent to the UK Government legislating using the powers under the European Union (Withdrawal) Act 2018 in relation to the Storage of Carbon Dioxide (Amendment) (EU Exit) Regulations 2018. We are joined by Stuart McKay, the head of carbon capture, utilisation and storage for the Scottish Government. Thank you for coming along to answer our questions.

My first question is about the timing of the committee’s receipt of the notification. It was sent on Thursday 22 November, with the expectation that the statutory instrument would be laid at Westminster a week later, on 29 November. Why do you think that so little time has been given to Parliament to consider the notification?

Thank you for inviting me to speak. We received the notification from the UK Government on 6 November, which is outside the 28-day period to begin with. I went through the usual processes. I had to consult the Scottish Government legal department and other policy officials and eventually get the notification through to the minister. That is why it was very late in getting to the committee.

What discussions did the Scottish Government have with the Department for Business, Energy and Industrial Strategy on the scope to lay the SI on 29 November, given that we now have a very short period in which to scrutinise it?

We have sent a holding response to the UK Government to convey the message that the timing is challenging and not ideal.

Did the UK Government give you any idea why it sees this SI as particularly urgent?

I think that it is because of the acceleration in the relevant policy area on the part of the UK Government. I sent an update to the committee that sets out the UK Government activity that has happened in the past 12 months.

The correspondence that we received did not indicate whether the draft SI had been shared with the Scottish Government by the UK Government. Has it?

We have not got the draft SI yet.

So, like us, you have not seen its content.

Can I just correct that? We have the draft SI and we have been consulted on that over the past few weeks, but we do not have the final SI. That is what I meant to say—apologies.

Are you content with the drafting that you have seen thus far?

Yes. It appears to be a minor technical change, rather than anything else. Our legal department is also satisfied.

The SI has been classified as category A, but the notification indicates that the SI would transfer power to the UK secretary of state. I am keen to know the reasons for classifying it as category A rather than category B, given that it creates new powers for the UK secretary of state.

The instrument makes some minor changes of a technical nature. Part of the legislation means that the UK Government has to consult the European Commission about technical requirements. The changes in the instrument give the secretary of state power to modify technical requirements.

Where it affects the Scottish Government is to do with the pipelines. If the pipelines cross the Scottish Government’s 12-nautical-mile limit, there is an interaction with the Scottish ministers, and because those pipelines will naturally come from onshore—in Scotland, in this case—to offshore, crossing the 12-nautical-mile limit into the UK continental shelf, they straddle the boundary. In the process of accessing those pipelines and in the termination and decommissioning of the pipelines at the eventual end of their life, there will naturally be an interaction with the Scottish Government.

That is where the two things meet, but it does not affect the Scottish Government’s licensing capability or competence, because we also have licensing powers for carbon capture and storage. However, the instrument refers to licensing CCS activities within the 12 nautical miles of the territorial seas of Scotland. Because pipelines go across those boundaries, there will always be that interaction.

You say that there will be an interaction. What kind of interaction? Is it a case of permissions or of agreement?

It would be consultation on decommissioning in a certain way, to ensure that the Scottish ministers are content with it, and it would be agreement on that. There would also be interaction on access and maintenance.

I appreciate the clarification, but given that there is what I would consider a complexity, I would have thought that the instrument should be category B.

I think that it is just because of the minor changes, from consulting the European Commission to consulting the secretary of state in the UK Government. Because it crosses boundaries between the 12-nautical-mile limit and the UK continental shelf, CCS has always been dealt with by the agreement of both Governments.

I get that. Thank you.

Notwithstanding your answers to Angus MacDonald, I would like to ask something for the record. You may already have answered some of these questions, but what impact does the proposed statutory instrument have on devolved areas and what are the practical implications?

It does not really have any impact, to be honest. As I say, the pipelines are always dealt with by agreement, because they cross boundaries, so both Governments’ agreement is required in order to consent, in order to gain access and in order to terminate and decommission, depending on what part of the sea the activity is taking place in. As I said, it does not affect the Scottish ministers’ competencies in licensing CCS within their own jurisdiction.

Does the function of legislating to amend certain technical requirements in areas where the Oil and Gas Authority is the licensing authority impact in any way on devolved areas, in addition to the ways that you have already mentioned?

We do not believe so. There is reference to updating the legislation as a result of technological innovations and other technical matters. The reference states that you would look to the European Commission to update the legislation. That will change because of the regulations; you would look to the UK Government and the Scottish Government to update those technical terms, wherever that is relevant.

Does the Scottish Government anticipate having a role in the exercise of that power? For example, does it expect to be consulted on changes to UK technical requirements, which are currently set out in the CCS directive? I take it that the answer to that is yes.

The answer is yes. We have consulted with the UK Government on the issue throughout the years.

Is it the Scottish ministers’ intention to have an equivalent power to modify technical requirements in the territorial sea adjacent to Scotland? If so, how does the Scottish Government anticipate that the powers will interact in practice?

Our intention is to address the same technical issues. That is not a priority—we have other things that need to be done more quickly. There are no live CCS projects involving injecting CO₂ into geological formations, and none is expected for a couple of years at best, so we feel that we have time to address the issue.

The notification states that the regulations also address

“minor EU Exit related amendments”

and

“non-EU Exit related cross-referencing errors.”

In plain speak, what are those?

CCS, by its nature, is affected by a number of things. One of them is the emissions trading system, which the committee has discussed. For instance, if there was a live CCS project, it would need an ETS permit. The interaction with the ETS connects CCS in that way.

So that is the purpose of those additional amendments and the correction of cross-referencing errors.

Yes. Some of the cross-referencing is to take out references to the European Commission and put in place references to the United Kingdom Government secretary of state.

That leads me neatly on to a couple of questions about CCS and the relationship with the EU ETS and what replaces it. How will the current incentives to avoid carbon leakage on carbon storage sites be replaced in the UK? We will have a carbon taxation mechanism. What is your understanding of how that will work?

That is not my exact area, but I will try to help. Whatever replaces the ETS, any CCS project will be part of that and will need a permit from whatever structure is decided on, as will many large industrial projects.

There is still uncertainty about the proposed mechanism and the impact on capturing or reducing emissions.

Yes. From my point of view, any CCS project needs a permit for the ETS. If the ETS is replaced by something else, whatever it may be, that will stay the same—CCS projects will still need a permit. There is no intention to change that.

The intention and the effect will be the same.

Yes. Whatever the solution is, it will address the CCS issue. There is no intention of changing that. I hope that that is helpful.

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Is CCS leaky? Would you expect projects to use ETS or some other mechanism?

It is there as a backstop; I do not want to use that word, but it is the only one that I can think of. It needs to be in place. I do not know whether you are aware of it, but Norway’s Sleipnir project has been storing CO₂ in the North Sea for 20 years now without incident. Our geologists have told us that this is the safe thing to do. Moreover, in choosing a store, we would have to characterise the geology on the basis of whether it was suitable or not. There are an awful lot of hurdles to get over before you can say that a site is suitable for this activity.

The notification says that the proposed SI

“does not amend the Scottish equivalent to the Licensing Regulations, the Storage of Carbon Dioxide (Licensing etc) (Scotland) Regulations 2011.”

The regulations relate to the licensing of geological storage in Scottish territorial waters and are expected to be amended in due course. I know that you have said that nothing is going to come forward for the next few years, but will not amending the relevant Scottish licensing regulations concurrently have implications for ensuring that there is a cohesive licensing regime?

This is a matter of priority. We have chosen to prioritise other things at the moment, but that is definitely on the list of things that need to be done and which definitely need to happen.

Do you have any idea when it will happen?

I do not have an exact date, but it will happen in due course. The process has already begun.

And there are no implications arising from the licensing regulations not being amended concurrently.

We do not have any live projects storing CO₂ at the moment. A number of projects are starting to be developed, which is very interesting, but there are no live operational projects at the moment.

If members have no other questions, I ask Mr McKay whether he wishes to raise anything that he might not have covered already.

I just want to reiterate that this is a minor technical change and that we are addressing the Scottish part of it separately.

Thank you very much for joining us and for your helpful evidence.

That concludes the items on the public part of our agenda. At its next meeting on 4 December, the committee will take evidence from the Cabinet Secretary for Environment, Climate Change and Land Reform and the Cabinet Secretary for the Rural Economy on a number of environmental issues arising from the UK’s exit from the European Union.

As previously agreed, the committee will now move into private session.

14:48 Meeting continued in private until 14:53.