Climate Change and Carbon Sequestration: Assessing a Liability Regime for Long-Term Storage of Carbon Dioxide

78 Pages Posted: 11 Aug 2008 Last revised: 27 May 2014

See all articles by Alexandra B. Klass

Alexandra B. Klass

University of Michigan Law School

Elizabeth J. Wilson

Dartmouth College; Dartmouth College

Date Written: August 7, 2008

Abstract

As the world struggles with how to address climate change, one of the most significant questions is how to reduce increasing levels of carbon dioxide in the atmosphere. One promising technology is "carbon capture and sequestration" (CCS) which consists of capturing carbon dioxide (CO2) emissions from power plants and industrial sources and sequestering them in deep geologic formations for long periods of time. Areas for potential CO2 sequestration include oil and gas fields, saline aquifers, and coal seams. As Congress and the private sector begin to spend billions of dollars to research and deploy this technology, there has been insufficient attention paid to how to structure legal liability for the short-term or long-term risks associated with the geologic sequestration of CO2 in connection with CCS. Until now, federal and state legislators, when they have acted at all, have appeared to be in a rush to limit corporate liability for potential harm in order to encourage the development of CCS. We take a different approach. In this Article, we survey the existing environmental law and tort law liability regimes that may cover potential harm from escaping or migrating CO2. We conclude that while existing liability regimes are insufficient on their own to govern the CCS industry, existing federal and state environmental and tort liability can provide important risk management tools and serve as safeguards to private parties and state and local governments in the event of harm. Thus, state and federal legislation specific to CCS should leave in place this basic liability for full-scale commercial CCS projects. We also propose an adaptive governance model at the federal level for integrating several different compensation mechanisms including bonding, insurance, and pooled federal funding into commercial CCS project management to better provide financial security to investors without destroying existing liability protections for those who may suffer harm from CCS. This proposal offers a starting point for developing a model to integrate and manage liability for the nascent CCS industry.

Keywords: carbon, capture, sequestration, climate change, global warming, tort liaiblity, insurance, bonding, property rights, geologic sequestration

JEL Classification: K13, K11, K23, K32, L71, L94, L98, O14, O31, Q20, Q32, Q38, Q40

Suggested Citation

Klass, Alexandra B. and Wilson, Elizabeth J., Climate Change and Carbon Sequestration: Assessing a Liability Regime for Long-Term Storage of Carbon Dioxide (August 7, 2008). 58 Emory L.J. 103 (2008), Available at SSRN: https://ssrn.com/abstract=1210942

Alexandra B. Klass (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

Elizabeth J. Wilson

Dartmouth College ( email )

Hanover, NJ 03755
United States
6036461687 (Phone)
03755 (Fax)

Dartmouth College ( email )

Environmental Studies Department
Steele Hall
Hanover, NH 03755
United States

HOME PAGE: http://https://envs.dartmouth.edu/people/elizabeth-j-wilson

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