CCUS: Proposed transition access agreement opens new route to CO2 transport and storage
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On 27 October 2026 the UK government’s Department for Energy Security and Net Zero (“DESNZ”) published indicative Heads of Terms for the new “Transition Access Agreement” (the “TAA HoTs” and “TAA” respectively). The TAA would provide a new contractual route for projects that do not require support under the existing CCUS Business Model frameworks to access the CO2 transport and storage (“T&S”) infrastructure currently under development in the UK.
The TAA HoTs follow the draft commercial principles published in February 2026, and the further policy position statement published in July 2026.
We consider below the principal features of the TAA HoTs, how the TAA compares with the existing CCUS contractual framework, and what this means for project developers, funders and other stakeholders.
What is the TAA, and who can access the CO2 T&S infrastructure via this route?
The TAA is a proposed contractual framework through which eligible carbon capture projects (“Capture Entities” in the TAA) will be able to access the UK’s developing CO2 pipeline networks, and ultimately the storage sites to which those networks connect.
At a minimum, the TAA is intended to provide Capture Entities with access for an agreed amount of registered injection capacity for a term of up to 10 years. While the standard terms are intended to be technology agnostic, project- and technology-specific provisions may also be included where required. The TAA HoTs also envisage that projects generating Greenhouse Gas Removal (“GGR”) credits will be eligible.
The initial TAA framework has been developed principally with pipeline-connected projects in mind, although DESNZ is also considering its application to projects using non-pipeline transport.
For further commentary on the development of the UK’s non-pipeline transportation policy framework, see our previous commentary here.
What support does the TAA provide?
A central purpose of the TAA is to provide access to the relevant T&S network for an agreed amount of registered capacity.
A Capture Entity accessing the network will be required to pay T&S Charges to the relevant T&S Operator, in accordance with the relevant Network Code. These are expected to comprise:
- a T&S flow charge, which varies according to the quantity of CO2 delivered to and injected into the T&S network;
- a T&S capacity charge, which is based on the registered capacity allocated to the Capture Entity during the relevant charging year; and
- a T&S network charge, relating to residual or structural elements of the T&S network’s allowed revenue.
The proposed TAA provides targeted support where these costs reach certain levels. The Capture Entity would remain responsible for T&S Charges up to a “top-up threshold” (set on a £/t CO2 basis). Where the relevant T&S Charges exceed that threshold, the TAA Counterparty would make a top-up payment to the Capture Entity to account for the excess (including during outages of the relevant T&S network).
The threshold would be set on a project-specific basis and is expected to increase over the life of the TAA at a rate that is at least indexed to inflation. The effect is that the degree of support would gradually reduce over time as the project matures. Important aspects of the top-up mechanism and the conditions applying to payments remain under development.
The proposed TAA also protects against certain risks associated with access to the T&S network. This includes relief where commissioning is delayed by the T&S network, as well as protections relating to qualifying changes in law.
Other key terms of the TAA HoTs
DESNZ intends to model the TAA on the AR8 Contract for Difference (“CfD”) and other CCUS Business Model Contracts (such as the “DPA”, the Dispatchable Power Agreement for power CCUS projects). This applies both in terms of form (where each agreement comprises a project-specific front-end with standard terms and conditions) and substance (as much of the risk allocation borrows heavily from these precedents).
Where the TAA departs from these precedents, the changes and omissions reflect the more limited support it offers compared to the wider CCUS Business Model suite. The table below summarises the main points where the TAA diverges from the CfD and DPA.
| TAA HoTs | Significance |
|---|---|
| 10-year term | Shorter term (10 years as opposed to the DPA’s 15 years) and, unlike the CfD, expressly excludes extensions. This is likely to impact the debt tenor of any project-financed capture projects looking to be awarded a TAA. |
Progression of the project required in accordance with Initial Conditions Precedent, Milestone Requirement and Operational Conditions Precedent
| TAA borrows the Initial Conditions Precedent, Milestone Requirement, and Operational Conditions Precedent concepts from the CfD and DPA, which require projects to progress in accordance with a set timeline or have their TAA terminated. In the context of the TAA specifically, these requirements seek to reduce the risk of T&S network capacity being reserved by projects that do not progress towards operation. |
| 12-month Target Commissioning Window extended day-for-day for Force Majeure and T&S Commissioning Delay Events | Unlike the DPA, the TAA gives no relief for electricity or gas network delays. For Capture Entities whose projects need electricity and/or gas grid connection (e.g. power CCUS), a delay in that connection would not extend the TAA Target Commissioning Window. |
| Termination event for prolonged limited CO2 flow and associated termination payment | Where CO2 quantities injected into the T&S Network fall below a specified threshold, the TAA Counterparty can terminate the TAA. This is the primary operational default described in the TAA HoTs and is intended to ensure that non- or under-performing Capture Entities do not prevent others from accessing T&S network capacity. |
| New default termination payment where termination for Capture Entity breach occurs | The TAA requires the Capture Entity to make a termination payment if the TAA is terminated for its default (including the limited flow described in the row above). No equivalent default termination payment is included in the DPA or CfD. |
| Qualifying Change in Law (“QCiL”) termination and compensation | The TAA borrows the QCiL termination and compensation regimes from the CfD and DPA. These provide very narrowly construed termination and compensation rights where certain changes in law make construction, commissioning, and/or operation of the relevant project illegal, or impose certain costs on the Capture Entity. |
| No Capture Entity termination rights | The TAA HoTs explicitly state that the Capture Entity will not have any rights to unilaterally terminate the TAA. |
| No termination payment for prolonged unavailability of the T&S Network | Under the TAA, no compensation or cost recovery is available to the Capture Entity where the TAA Counterparty terminates for prolonged unavailability of the T&S Network. Under the DPA, the equivalent termination results in a termination payment to the generator, providing a level of compensation designed to allow the repayment of senior debt. The lack of such a payment in the TAA would therefore have implications for the debt financing of any TAA-supported projects. |
| No gain share / lock-in under the TAA | Consistent with the limited support provided under the TAA, the TAA HoTs do not propose any gain share or lock-in mechanisms. Investors will therefore have greater freedom to sell down their project interests pre-COD. The DPA provides for both a project and sale gain share to allow consumers to benefit from profits realised as a result of the backstop provided by the DPA’s support mechanisms, as well as a lock-in period that prevents the initial owners from selling down between agreement signature and 12 months post-Start Date. |
What remains to be settled?
The published document is framed by DESNZ as indicative heads of terms rather than a final-form TAA. A number of commercially significant aspects of the proposed arrangements therefore remain under development, including:
- the identity of the TAA Counterparty, and how it would be funded;
- the operation of the T&S Charges top-up and payment mechanisms;
- the termination event for selling credits that do not comply with the GGR Standards, which are yet to be published;
- the applicable operational and performance thresholds;
- the consequences of a pre-Start Date termination; and
- the precise nature of the application of the TAA to non-pipeline transport.
DESNZ has also yet to set out the scope and nature of any amendments to primary and/or secondary legislation that may be required to establish the TAA framework formally, including the legal basis for awarding TAAs and for funding top-up payments. The HoTs remain expressly subject to the development and Parliamentary approval of any necessary legislation, and DESNZ is still considering both the identity of the TAA Counterparty and the mechanism by which it will receive funding from HMG to administer the TAA.
Wider UK CCUS implications
The TAA HoTs follow a wider reprioritisation of government support for CCUS. As part of its 2026 Budget, the Government announced that CCUS capital spending support during this Parliament will be prioritised towards more mature projects in the Teesside, Merseyside and North Wales clusters. Grant funding for the Viking cluster is also being maintained.
For other projects in development (including the Acorn cluster), the Government announced it is considering a greater role for private investment and alternative forms of public support, including loans and equity investment, subject to the relevant approvals, affordability and value-for-money assessments. The TAA appears to be a first step in that direction. It rebalances the terms of Government support to reduce both the level of support and the operational burden. Much remains to be determined, and it is not yet clear how prospective Capture Entities will assess the support proposed under the TAA.
