1. Introduction

Carbon Capture, Utilisation and Storage (CCUS) refers to the capture of carbon dioxide (CO₂) produced by industrial processes or electricity generation, followed by its transportation for utilisation or permanent geological storage. In the electricity sector, CCUS is particularly relevant to coal- and gas-fired power stations because it can reduce the amount of CO₂ released while retaining dispatchable generation capacity.

The integration of CCUS with electricity generation therefore involves much more than installing a capture unit. It creates a legal and regulatory chain covering:

electricity generation;

CO₂ capture;

energy consumption and plant efficiency;

CO₂ compression;

transportation through pipelines or other infrastructure;

utilisation or geological storage;

monitoring and verification;

liability for leakage;

environmental approvals; and

electricity-market and carbon-market treatment.

The UK Government expressly recognises power generation as one of the applications of CCUS and has developed specific policy and business-model arrangements for power-sector CCUS. (GOV.UK)

2. How CCUS is integrated with a power plant

A conventional fossil-fuel power plant releases CO₂ through its flue gas. With post-combustion capture, the exhaust gas passes through a capture system, commonly using a solvent, which separates CO₂ from the other gases.

The captured CO₂ is then:

Power plant → Capture unit → Compression → CO₂ pipeline → Storage site/utilisation facility

The electricity-generating station therefore becomes part of a wider carbon-management infrastructure.

This creates an important legal distinction: electricity regulation alone is insufficient. A CCUS power project may require approvals under electricity, environmental, planning, pipeline, land, offshore, geological-storage and carbon-accounting regimes.

3. Why CCUS is important for electricity generation

CCUS can serve several functions in electricity systems.

A. Reduction of operational CO₂ emissions

The principal purpose is to capture a substantial proportion of CO₂ emissions before they enter the atmosphere.

This can allow fossil-fuel generation to participate in a decarbonising electricity system while reducing its direct emissions.

B. Dispatchable electricity

Unlike wind and solar generation, gas or coal generation can potentially provide controllable output. A CCUS-equipped gas plant can therefore be designed to provide flexible generation alongside variable renewable electricity.

The UK's Net Zero Teesside project illustrates this regulatory concept. The proposed project combines a gas-fired generating station with post-combustion CCS, CO₂ gathering pipelines, compression and offshore export infrastructure. The examining authorities considered the plant's flexible "mid-merit" role relevant to electricity-system operation. (Bailii)

C. Grid reliability

CCUS plants may contribute to capacity adequacy and system balancing. Consequently, regulators must determine how the costs of capture equipment, reduced efficiency and CO₂ transportation are reflected in electricity prices and capacity mechanisms.

4. Major legal issues arising from integration

A. Environmental permitting

A CCUS power station remains an industrial facility producing emissions. Capture technology does not automatically make the plant environmentally harmless.

Environmental authorities may therefore consider:

residual CO₂ emissions;

NOx and other pollutants;

wastewater;

chemical solvents;

construction impacts;

energy consumption;

noise;

water requirements;

pipeline impacts; and

risks associated with CO₂ storage.

In India, the Environment (Protection) Act, 1986 provides the central statutory framework for environmental protection and improvement. (India Code)

Thus, an Indian CCUS power project would have to operate within the environmental-clearance and pollution-control framework in addition to electricity-sector legislation.

B. Electricity-generation regulation

CCUS equipment substantially changes the economics and technical operation of a generating station.

The Electricity Act 2003 provides India's principal statutory framework for generation, transmission, distribution, trading and use of electricity. It also expressly refers to the development of environmentally benign policies. (India Code)

For a CCUS power station, regulatory questions include:

whether capture equipment forms part of the generating station;

whether electricity consumed by the capture process is treated as auxiliary consumption;

how the reduction in net electricity output is calculated;

whether CCUS expenditure can be recovered through tariffs;

how capital expenditure is approved;

how efficiency losses are treated;

whether captured-carbon infrastructure is regulated separately; and

how the plant participates in electricity markets.

5. The "energy penalty" problem

One of the most important technical-legal issues is the energy penalty.

Capturing CO₂ requires energy. A portion of the electricity generated by the plant may therefore be consumed by:

solvent regeneration;

CO₂ compression;

pumps;

cooling;

separation equipment; and

transportation preparation.

Consequently:

Gross electricity generation ≠ Net electricity available to consumers.

This creates a regulatory problem because consumers may ultimately bear some of the cost through electricity tariffs or government support.

A CCUS regulatory framework should therefore require transparent disclosure of:

gross generation + capture energy consumption + auxiliary consumption + net electricity delivered + tonnes of CO₂ captured and stored.

Such disclosure is important for tariff regulation and carbon-accounting purposes.

6. Carbon accounting and emissions trading

CCUS also interacts with carbon-pricing systems.

The fundamental question is:

If a power station captures CO₂, when can that captured quantity be treated as no longer emitted?

The answer depends upon the applicable carbon-accounting framework.

A particularly important European case is ExxonMobil Petroleum and Chemical BVBA v European Commission, Case C-682/17.

The Court of Justice of the European Union examined the meaning of "electricity generator" under the EU Emissions Trading System (EU ETS). The Court held that an installation producing electricity principally for its own use could nevertheless qualify as an electricity generator where it continuously supplied even a small amount of electricity to the public network under the circumstances specified by the Court. The classification affected its treatment under the EU ETS and free-allocation rules. (EUR-Lex)

Importance for CCUS

Although ExxonMobil was not principally a dispute about the technical operation of CCUS, it demonstrates an important legal principle:

classification of a generating installation under carbon-market legislation can have direct financial consequences.

A CCUS plant therefore needs clear rules concerning:

captured CO₂;

transported CO₂;

permanently stored CO₂;

utilised CO₂;

leakage;

monitoring;

verification; and

emissions allowances or carbon credits.

7. CO₂ transportation as regulated infrastructure

Once CO₂ is captured, it must be transported.

A large-scale electricity-plus-CCUS project may require a dedicated pipeline network connecting several industrial facilities to a common storage hub.

This creates questions concerning:

pipeline construction permits;

land acquisition;

rights of way;

safety standards;

third-party access;

tariff regulation;

cross-border transportation;

pipeline integrity;

emergency response; and

liability for accidental release.

The UK Energy Act 2023 specifically establishes a statutory framework concerning CO₂ capture, transportation and storage and recognises CCUS applications including power generation. (Legislation.gov.uk)

8. Geological storage and long-term liability

The most legally distinctive part of CCUS is permanent storage.

The storage operator must demonstrate that the CO₂ can remain securely underground and must monitor the storage complex.

The EU CCS Directive provides a particularly developed example. It establishes a framework for environmentally safe geological storage of CO₂, including requirements intended to prevent significant leakage, protect human health and the environment, and address the entire lifetime of a storage site, including periods following closure. (Climate Action)

This creates the question of long-term liability:

Who is responsible if CO₂ leaks decades later?

Possible models include:

operator liability;

state liability after transfer;

shared liability;

financial-security requirements; and

monitoring obligations after closure.

A sound CCUS law must clearly allocate these risks.

9. Planning law and CCUS electricity projects

Large CCUS power plants are infrastructure projects with significant environmental and spatial impacts.

The most important recent judicial authority is:

R (Boswell) v Secretary of State for Energy Security and Net Zero [2025] EWCA Civ 669

The case concerned the proposed Net Zero Teesside Power project, involving a gas-fired generating station with post-combustion CCS together with CO₂ gathering, compression and offshore transportation infrastructure.

The challenge questioned whether the government's assessment of greenhouse-gas impacts was legally adequate. The Court of Appeal considered whether the decision-maker had made a legal error in assessing the significance of GHG emissions associated with the proposed CCS-equipped gas plant. (Bailii)

The earlier High Court proceedings similarly concerned the legality of granting development consent for the integrated CCUS project. (Bailii)

Legal significance

The case demonstrates that:

"carbon capture" does not automatically eliminate the need for detailed climate-impact assessment.

A regulator must consider the project's actual emissions and the legal planning framework applicable to the infrastructure.

This is particularly important where a gas-fired plant with CCS continues to emit residual greenhouse gases.

10. Carbon Capture Readiness and new power plants

The UK provides an additional example of regulatory integration.

The UK's current energy-policy framework requires certain new combustion generating stations of 300 MW or more to demonstrate carbon-capture/decarbonisation readiness. The 2025 National Policy Statement explains that the new Decarbonisation Readiness requirements supersede the earlier Carbon Capture Readiness framework in England from 28 February 2026. (GOV.UK)

This represents a preventive regulatory approach:

Instead of waiting until a power station needs decarbonisation, planning law requires the plant to be designed so that decarbonisation technology can subsequently be installed.

This concept is important for future electricity infrastructure.

11. CCUS and electricity tariffs

CCUS can significantly increase the cost of electricity generation.

A regulator therefore has to determine whether CCUS costs should be:

borne entirely by generators;

recovered through electricity tariffs;

supported through government subsidies;

recovered through carbon prices;

supported through contracts for difference;

supported through capacity payments; or

financed through a combination of these mechanisms.

The UK's policy framework illustrates this approach through dedicated business models intended to stimulate CCUS investment, including arrangements for power-sector CCUS. (GOV.UK)

The central regulatory challenge is to avoid double recovery while still making the infrastructure financially viable.

12. CCUS and electricity-market design

CCUS plants may participate in electricity markets differently from conventional fossil-fuel plants.

Regulators may need to account for:

Capacity markets

A CCUS-equipped gas plant can potentially provide firm or flexible capacity.

Energy markets

Capture equipment affects the plant's marginal cost and efficiency.

Ancillary services

Flexible CCUS plants may provide balancing and system-support services.

Carbon markets

The plant's emissions liability depends upon the quantity of CO₂ emitted and the applicable treatment of captured and stored CO₂.

Thus, electricity-market regulation and carbon-market regulation increasingly become interconnected.

13. CCUS and public-interest regulation

A major policy question is whether CCUS should be treated merely as a private technology or as strategic energy infrastructure.

Large projects often require shared:

CO₂ pipelines;

storage sites;

compressor stations;

ports;

electricity connections; and

monitoring infrastructure.

This creates an argument for cluster-based regulation.

A common-storage model can allow several power stations and industrial facilities to connect to one storage network. But this also creates questions regarding:

third-party access;

capacity allocation;

pipeline tariffs;

priority rights;

infrastructure ownership;

insolvency;

cross-subsidisation; and

regulatory oversight.

14. Indian legal framework

India does not currently have a single comprehensive CCUS Act equivalent to the dedicated CCS framework found in some other jurisdictions.

Instead, CCUS electricity projects would potentially interact with several legal regimes.

Electricity Act, 2003

It governs the electricity-generation and electricity-market side of the project. (India Code)

Environment (Protection) Act, 1986

It provides the principal umbrella environmental legislation. (India Code)

Air and water pollution legislation

Capture plants may generate environmental impacts requiring compliance with pollution-control legislation.

Energy Conservation framework

Energy-efficiency consequences of CCUS can become relevant because capture equipment increases auxiliary energy consumption. The Ministry of New and Renewable Energy lists both the Energy Conservation Act 2001 and the 2022 amendment among India's relevant energy legislation. (Ministry of New and Renewable Energy)

Land and infrastructure law

CO₂ pipelines and storage infrastructure may require land-access and infrastructure approvals.

Carbon-market framework

India's emerging carbon-market architecture will also become increasingly relevant to how emissions reductions associated with CCUS are recognised and verified.

15. Major legal principles emerging from case law

The available case law demonstrates several principles relevant to CCUS electricity generation.

(Bailii)

16. Key regulatory challenges

1. Cost

CCUS can substantially increase capital and operating costs.

2. Energy penalty

Capture consumes electricity, reducing net generation.

3. Residual emissions

Capture does not necessarily mean zero emissions.

4. Storage risk

Long-term geological storage requires monitoring and liability arrangements.

5. Infrastructure coordination

Power generation, CO₂ transportation and storage must operate as one interconnected chain.

6. Carbon accounting

Regulators must determine when captured CO₂ can legitimately be treated as avoided emissions.

7. Stranded-asset risk

A power plant may become economically obsolete if CCUS infrastructure is unavailable or too expensive.

8. Regulatory fragmentation

Multiple agencies may regulate the same project.

17. Suggested legal framework for CCUS-integrated electricity generation

A comprehensive regulatory framework should establish:

First, a clear legal definition of CCUS and CCUS-enabled generation.

Second, integrated permitting for the electricity plant and associated carbon infrastructure.

Third, mandatory monitoring, reporting and verification of captured, transported and stored CO₂.

Fourth, financial-security requirements for storage operators.

Fifth, clearly defined long-term liability for leakage.

Sixth, transparent rules for electricity tariffs and recovery of CCUS expenditure.

Seventh, third-party-access rules for shared CO₂ pipelines and storage facilities.

Eighth, compatibility between electricity markets and carbon markets.

Ninth, emergency-response requirements for CO₂ transportation.

Tenth, periodic review of the project's actual climate performance.

18. Conclusion

The integration of CCUS with electricity generation represents a transition from regulating a power plant as an isolated facility to regulating an integrated electricity-carbon infrastructure system.

The legal chain is:

Generation → Capture → Compression → Transportation → Utilisation/Storage → Monitoring → Carbon Accounting → Long-Term Liability

The Boswell litigation is particularly significant because it demonstrates that the existence of CCS does not remove the need to examine the greenhouse-gas consequences of a gas-fired generating station. (Bailii) The ExxonMobil judgment demonstrates how the legal classification of electricity-generating installations can affect carbon-market obligations. (EUR-Lex) Meanwhile, the EU CCS framework demonstrates the importance of long-term storage monitoring and liability. (Climate Action)

For India, the principal challenge is developing a coordinated framework linking the Electricity Act 2003, environmental regulation, energy-efficiency law, carbon-market regulation, pipeline infrastructure and geological-storage governance. India's existing Electricity Act already provides the basic electricity-sector framework, but a dedicated and integrated CCUS regulatory architecture would provide greater certainty for large-scale CCUS power projects. (India Code)