State responsibility and liability in the context of Carbon Capture and Storage

Abstract

Before the Northern Lights project, carbon capture and storage (CCS) were a matter between operator and State, whereas it now includes other parties in the equation. How does this change the rules regarding responsibility? And how do international environmental rules on environmental pollution liability and principles like the ‘polluter pays principle’ and 'no transboundary harm' relate to a transboundary carbon dioxide (CO₂) graveyard? Is it fair holding the state of Norway liable for a carbon leakage when the source of emissions comes from a company based in another country? This thesis investigates the allocation of responsibility and liability in the third and fourth phases of carbon capture and storage, with a focus on third-party access of foreign companies to Norwegian CO₂ storage sites. Using the Northern Lights project as an example, the thesis argues that the capture, transport, and storage phases of CCS are interdependent, and that the legislators have neglected this interdependence when drafting the regulations. The thesis concludes that relying on existing legal provisions, such as the Environmental Liability Directive (ELD) may be inadequate for the CCS industry, which should develop its own liability scheme to address remedial action following environmental damage. The thesis argues that the incorporation of the Polluter Pays Principle (PPP) within the framework of the Northern Lights project poses significant challenges, with foreign capturing companies and their states of origin being the primary culprits. It suggests incorporating provisions of liability in solidum or a similar shared liability regime, where all stakeholders would share responsibility for any potential carbon leakage.