OFFSHORE GEOLOGICAL STORAGE LICENSING REGIME

1. Introduction

The Offshore Geological Storage Licensing Regime in the United Kingdom provides the legal framework for storing carbon dioxide (CO₂) permanently in suitable geological formations beneath the seabed. The principal statutory foundation is Chapter 3 of Part 1 of the Energy Act 2008, supplemented by the Storage of Carbon Dioxide (Licensing etc.) Regulations 2010 and the Storage of Carbon Dioxide (Termination of Licences) Regulations 2011. The regime was originally developed to implement the EU Geological Storage Directive 2009/31/EC and remains an important component of UK carbon capture and storage (CCS) regulation.

2. Statutory Licensing Framework

Section 17 of the Energy Act 2008 prohibits specified offshore CO₂ storage activities without a licence. These include using a controlled place for CO₂ storage, converting geological features for storage, exploration connected with storage, and establishing or maintaining installations for these purposes. The controlled area includes the territorial sea and waters within a designated Gas Importation and Storage Zone (GISZ).

The North Sea Transition Authority (NSTA) currently oversees offshore carbon-storage licensing, except for storage within Scottish territorial waters where the relevant Scottish authorities exercise competence. A developer generally requires both a carbon-storage licence and appropriate rights from The Crown Estate or Crown Estate Scotland.

3. Exploration, Appraisal and Storage Permit

The licensing structure separates geological exploration and operational storage. A carbon-storage licence may contain an appraisal term, permitting exploration and appraisal of potential storage formations. The 2010 Regulations provide detailed application requirements and establish the framework for obtaining consent to undertake actual storage activities.

Before injection begins, the proposed site must satisfy technical and environmental requirements concerning geological suitability, containment, monitoring and potential leakage. The licensing process therefore operates as a form of risk-based environmental regulation, rather than merely granting a proprietary right to use the seabed.

4. Environmental Protection and Monitoring

The regime requires the operator to demonstrate that the storage complex is suitable for permanent containment of CO₂. Monitoring and reporting obligations continue throughout the operational phase and after closure. Operators must respond to irregularities, leakage risks and other significant events through appropriate corrective measures.

Environmental assessment is also significant. Offshore CO₂-storage licensing interacts with environmental legislation, including offshore environmental-assessment and habitats regimes. Current licensing rounds may therefore require Habitats Regulations assessment/appropriate assessment where protected sites could be affected. The UK's second offshore carbon-storage licensing round illustrates the continuing importance of ecological assessment in licensing decisions.

5. Closure, Liability and Transfer to the State

A distinctive feature is the legal treatment of post-closure liability. Under the termination regime, a storage licence can ultimately be terminated after the statutory conditions have been satisfied, including the required period following closure. Under the current framework, the State may assume responsibility for the storage site after the relevant transfer requirements are met. The 2011 Regulations were introduced specifically to complete the liability-transfer framework.

This creates an important principle: private operators bear responsibility during the active and post-closure monitoring stages, while long-term State responsibility is conditional upon regulatory requirements being satisfied.

6. Energy Act 2023 and the Wider CCUS Framework

The Energy Act 2023 strengthened the regulatory architecture for carbon capture, utilisation and storage. It introduced additional licensing arrangements covering CO₂ transport and geological-storage operations and confirmed that the existing Energy Act 2008 storage licensing requirements continue to apply. The Act also provides mechanisms concerning licence conditions, exemptions and regulatory control over changes in corporate control.

Consequently, offshore geological storage is now regulated as part of a broader CCUS infrastructure system, linking capture, transportation, storage and long-term environmental liability.

7. Case Laws

Case 1: R (Finch on behalf of the Weald Action Group) v Surrey County Council [2024] UKSC 20

Facts: The case concerned an oil-development project and whether downstream greenhouse-gas emissions had to be considered in the environmental assessment.

Legal Issue: Whether indirect climate effects connected with a project fall within the statutory EIA obligation.

Judgment: The Supreme Court held, by a 3–2 majority, that the downstream combustion emissions had to be assessed.

Legal Principle/Ratio Decidendi: Environmental assessment legislation must be applied according to its statutory purpose, and legally relevant indirect environmental effects cannot simply be excluded where the causal connection is established.

Significance: Although Finch concerned oil extraction rather than CO₂ storage, it is highly relevant to offshore geological-storage licensing because environmental authorities must carefully identify the project's legally relevant environmental effects.

Case 2: R (Friends of the Earth Ltd) v SSBEIS [2022] EWHC 1841 (Admin)

Facts: The claim challenged the Government's Net Zero Strategy under the Climate Change Act 2008.

Judgment: The High Court found deficiencies in the Government's assessment of whether its policies would enable statutory carbon budgets to be met.

Legal Principle: Statutory decision-makers must possess and properly consider adequate information when exercising legally defined environmental and climate-related functions.

Significance: The principle supports rigorous evidence-based decision-making in major CCS licensing and regulatory decisions.

8. Conclusion

The UK offshore geological-storage regime combines licensing, geological appraisal, environmental assessment, monitoring, corrective action, closure controls and long-term liability management. The Energy Act 2008 establishes the core prohibition and licensing structure, while the 2010 and 2011 Regulations provide detailed operational and liability mechanisms. The Energy Act 2023 further integrates storage into the wider CCUS regulatory architecture. The developing case law on environmental assessment and climate governance demonstrates that offshore storage decisions must be supported by lawful procedures, adequate evidence and effective environmental safeguards.