Development of a regulatory framework for CDM-enabled offshore carbon capture and storage (OCCS) in China

China has announced plans to reduce its greenhouse gas emissions and part of that plan is to develop carbon capture and storage (CCS) facilities. This chapter examines the regulatory challenges facing China as it undertakes this plan, and provides a menu of robust options for policy makers. In pursuit of this plan, China faces two material challenges in implementing its CCS strategy. The first is a lack of suitable onshore sites in the southern areas close to the industrial centers of Hong Kong, Shenzhen, and Shanghai. Their local geography and geology favors the use of offshore CCS; there are large suitable basins off the shore of most of southeastern China. Thus China needs to consider the inclusion of offshore CCS options. Second, China has announced its intent to leverage the finance options afforded under the Clean Development Mechanism (CDM) of the Kyoto Protocol. CCS, and offshore CCS, are permissible technologies allowed under the CDM, but there are regulatory requirements spelt out in Decision 10/CMP.7, which would need to be satisfied in advance to qualify an offshore CCS project for CDM-based support. Thus China needs to be able to rapidly progress its regulatory framework addressing CCS operations. This chapter explores the efficient pathways available to Chinese policy makers to rapidly develop a regulatory approach that would satisfy the regulatory requirements of Decision 10/CMP.7, whilst providing options to best match the regulatory and governing institutions of China. The chapter explores the literature of law and economics on regulatory theory to explain when certain options might be robust and when other options might be robust.