CCS Technical Workshop 2022

Legal Challenges of CCS Implementation
Long term liability for geological storage of CO2 after completion of injection

21 January, 2022
PartnerHiroyasu Konno

Five Projects in which CO2 is Geologically Stored in Japan
Projects

Injection period

PurposeAssessment of CO2
leakage from thegeological storage in
GHG inventories

Ku-Bi-Ki

1991.3 ~ 1993.6

EOR

Sa-Ru-Ka-Wa

1997.9 ~ 1999.9

EOR

CO2 leakage fromsubsurface storage is“consideredinsignificant”

Na-Ga-O-Ka

2003.7 ~ 2005.1

Demonstration of geologicalstorage of CO2

Yu-U-Ba-Ri

2004.11 ~ 2007.10Enhanced recovery of CBM

To-Ma-Ko-Ma -I

2016.4 ~ 2019.11

Demonstration of geologicalstorage of CO2

No leakage

1Three Categories of Liability for Geological Storage of CO2
Categories

Explanation

Note about monitoring
activities

Safety Liability

Liability for implementing thenecessary measures to ensure thesafety of and prevent pollution fromgeologically stored CO2.

“Safety Liability” is comprised ofmonitoring activities to clarify
the implementation of measures
to ensure the safety of andprevent pollution fromgeologically stored CO2.

Civil Liability

Liability for third party damages
caused by unexpected accidents
due to geologically stored CO2.

Climate Change
Liability

Liability for CO2 emissions causedby leakage from geological storage.

“Climate Change Liability” iscomprised of monitoring
activities to check CO2 leakage
from geological storage.

2Safety Liability Laws for Geological Storage of CO2 in Japan
Storagelocation

Purpose

Laws

Limitation ofLiability Period

Existing Projects

Sub-seabed

EOR, EGR,
ER-CBM

Mining Act,
Mine Safety Act

5 years after themining right has
lapsed-Pure CCS

APMPMD*No limitation

To-Ma-Ko-Ma-I

EOR, EGR,
ER-CBM

Mining Act,Mine Safety Act

5 years after themining right has
lapsedKu-Bi-Ki,
Sa-Ru-Ka-Wa,
Yu-U-Ba-Ri

Pure CCS--Na-Ga-O-Ka

OnshoreSubsurface*Act on Prevention of Marine Pollution and Maritime Disasters
3Major Civil Liability Provisions for Geological Storage of CO2 in Japan
Provisions

Responsible legal entity

Civil liability requirements

Applicablearea(s)Existingprojects

Article 709
of Civil Act

Relevant operator of activities
for the geological storage ofCO2

1.

Willful misconduct or negligence inactivities related to the geologicalstorage of CO2; andReasonable causal relationshipbetween such storage and third party
damages

Both subseabed andonshore
subsurface

All five projects

Defect in the installation or
maintenance of the injection well orother facilities placed in the site; andReasonable causal relationshipbetween such defect and third party
damages

Only onshore
subsurface

Ku-Bi-Ki
Sa-Ru-Ka-Wa
Na-Ga-O-Ka
Yu-U-Ba-Ri

Reasonable causal relationshipbetween mining activities specified in
the Mining Act and third party damages
Neither willful misconduct ornegligence is required

Both subseabed andonshore
subsurfaceKu-Bi-Ki
Sa-Ru-Ka-Wa
Yu-U-Ba-Ri

2.

Article 717
of Civil Act

Possessor or owner of theinjection well or other facilities
placed in the site

1.

2.

Article 109of Mining
Act

Current or last holder of themining right

4Current Situation of Climate Change Liability for Geological Storage of CO2 in Japan

Type of Climate Change
Liability

Current situations

Relationship with GHG inventories

Monitoring CO2 leakage
from geological storage

 There are no laws on monitoring CO2 leakage fromthe viewpoint of Climate Change Liability.
 However, monitoring is conducted pursuant to theSafety Liability in Mining Act, Mine Safety Act, andAPMPMD* (if applicable). The results of suchmonitoring are assessed in accordance with the2006 IPCC Guidelines for National Greenhouse Gas
Inventories.

 To-Ma-Ko-Ma-I, in which monitoring is
conducted based on the APMPMD, isacknowledged as a project which has“no leakage” of CO2.
 Each of Ku-Bi-Ki, Sa-Ru-Ka-Wa, andYu-U-Ba-Ri, in which monitoring is
conducted based on the Mining Act
and Mine Safety Act, is acknowledged
as a project whose CO2 leakage fromsubsurface storage is “consideredinsignificant”.

Imposition of Carbon Tax orloss of emission allowance
for CO2 leakage

 Currently, Japan has neither carbon tax laws nor anationwide carbon emission trading system for thepurpose of reducing the amount of CO2 emissions
calculated in the GHG inventories or achieving theJapanese NDC (Nationally DeterminedContribution).

Directly related. Therefore, the criteria todetermine whether meaningful amountsof CO2 have leaked will be the same as
those of the GHG Inventories.

Invalidation of issued
voluntary carbon credit andsupplemental obligations ofvoluntary carbon credit forCO2 leakage

 There are no voluntary carbon credit schemes inwhich carbon credit is issued for CO2 injection andstorage in Japan.

Indirectly related or irrelevant. Therefore,
the criteria to determine whether
meaningful amounts of CO2 have leaked
will not necessarily be the same as thoseof the GHG Inventories.

*Act on Prevention of Marine Pollution and Maritime Disasters

5Long Term Liabilities for Geological Storage of CO2
Pre-Carbon Pricing and Post-Carbon Pricing
Long Term Liabilities
under Pre-Carbon Pricing
Tier 1

Tier 2 Safety Liability exists
for sub-seabed CO2
storage based on theAPMPMD* because
there is no limitation on
the liability period.
 Monitoring CO2 leakage
to be acknowledged as“no leakage”.

 Civil Liabilities exist
based on the Civil Act
and Mining Act, subject
to a reasonable causal
relationship with third
party damages.
 Monitoring CO2 leakage
to be acknowledged as“being consideredinsignificant”.

Long Term Liabilities
under Post-Carbon Pricing
Tier 1

 Imposition of carbon tax orloss of emission allowance
for CO2 leakage.
 Invalidation of issued
voluntary carbon credit andsupplemental obligations onvoluntary carbon credit forCO2 leakage.
 Safety Liability exists for subseabed CO2 storage based on
the APMPMD* because there
is no limitation on the liabilityperiod.
 Monitoring CO2 leakage to beacknowledged as “no leakage”.

Tier 2



Carbon Pricing in Japan Adoption of carbon
tax or carbon
emission tradingsystem.
 Introduction ofvoluntary carbon
credit schemes inwhich carbon credit isissued for CO2
injection and storage.

Civil Liabilities exist based on the Civil Actand Mining Act, subject to a reasonablecausal relationship with third party
damages.
Monitoring CO2 leakage to beacknowledged as “being consideredinsignificant”.

*Act on Prevention of Marine Pollution and Maritime Disasters

6

Roadmap of legal framework for Geological Storage of CO2 in Japan(Tentative personal ideas for discussion purpose)

Reconsideration of the scope of geological storage of CO2, such that it isregarded as a mining activity subject to the Mining Act and the Mine Safety Act.
 Safety Liability under the Mining Act and the Mine Safety Act is NOT too excessive for the private sector tobear. No tier 1 long-term liability exists.
 The results of the CO2 leakage monitoring conducted based on the Mining Act and Mine Safety Act can beacknowledged as “being considered insignificant”.
 Japan can start reducing CO2 emissions in GHG inventories by CCS without the legal framework oftransferring long term liability for geological storage of CO2 to public institutions.

Enforcement of CCS legal framework to set forth the following items:
I.

Safety Liability for onshore subsurface CO2 storage which is consistent with that under the Mining Act andthe Mine Safety Act.
II. Safety Liability for sub-seabed CO2 storage which is consistent with that under the Mining Act and the Mine
Safety Act, and which complies with the 1996 London Protocol.
III. Transfer of long-term Safety Liabilities of items I and II above to public institutions in case that they are too
excessive (like those of the APMPMD).
IV. CO2 leakage monitoring standards which can be acknowledged as “being considered insignificant”
V. CO2 leakage monitoring standards which can be acknowledged as “no leakage”, if necessary.
VI. Transfer of long-term CO2 monitoring liabilities of items IV and V above to public institutions in case thatthey are too excessive.
VII. Carbon tax or carbon emission trading system which facilitates the investment of CCS business by CO2
dischargers in Japan.
VIII.Transfer of the economical Climate Change Liabilities (such as imposition of carbon tax or loss of emission
allowance for CO2 leakage which arises from the introduction of item VII above) to public institutions.
7Thank you for your time and attention.