The UK moves closer to merchant CCUS models: non‑pipeline transport of carbon dioxide

On 5 February 2026, the Department for Energy Security and Net Zero (“DESNZ”) launched a long-awaited consultation (the “Consultation”) on policy and support for the non-pipeline transportation of CO₂ (“NPT”), which represents the first step in the development of NPT policy in the UK since DESNZ’s publication of its Summary of Responses to the Call for Evidence (“CfE”) on NPT in 2024.

This follows the successful financial close of the UK’s two fully-integrated pipeline-based CCUS clusters (the Northern Endurance Partnership, part of the expanding East Coast Cluster, in 2024 and HyNet in 2025), following which the UK is looking to broaden its CCUS industry to capture a more diverse range of projects (which include NPT and unsupported, merchant projects). It also comes at a time when other European countries (Norway, Denmark, and Sweden) have started to implement their own NPT models for deployment of CCUS, which given the ability of NPT to help facilitate the cross-border movement and storage of CO₂ brings the UK’s relative lack of movement on this policy area into sharp focus.

The Consultation closes on 1 May 2026 – we have highlighted in this Law-Now the key areas which stakeholders may wish to consider in their responses.

Rationale for NPT policy development

DESNZ has identified the following as its rationale for government intervention in NPT:

• cost and revenue market failures (CCUS costs exceeding current carbon price and available revenues, lack of revenue certainty and demand pull for low‑carbon products);
• investment coordination failures across multi‑party value chains;
• first‑mover disadvantages due to high upfront costs and technology/market risk; and
• the need for consideration of unpriced positive externalities (“societal spill‑overs”) from CCUS deployment.

DESNZ admits that existing capture business models and the T&S Regulatory Investment (“TRI”) model were designed primarily around pipeline transport (rather than NPT), and permanent geological storage (rather than intermediate and/or above-ground storage). Previous industry comments have noted that full‑chain NPT costs are a material barrier to investment, and that dedicated NPT support is needed.

DESNZ’s stated aim is to provide sufficient policy certainty to allow NPT projects to mature, while progressively reducing direct government intervention. In that vein, the Consultation also addresses the role of “unsupported” projects (i.e. projects with no taxpayer subsidy, often relying on voluntary carbon market revenues) and “semi‑supported” projects (no CfD‑style revenue support but scenarios in which limited interventions are used to protect against the manifestation of cross‑chain risk), whose treatment has remained a significant source of uncertainty for industry stakeholders.

DESNZ has considered how unsupported and semi‑supported pipeline projects can access storage and wider CCUS infrastructure, including through potential changes to the CCS Network Code and third‑party access arrangements. Draft commercial principles for a “Transition Access Agreement”, which will govern the relationship between T&S networks and unsupported / semi-supported projects have also been recently published by DESNZ, but given the focus of policy development has latterly been on pipeline transportation rather than NPT, stakeholders will have to wait for further clarity on the way in which this regime might facilitate NPT.

Key policy proposals

1. NPT fees likely to be included within capture agreements

DESNZ has evaluated five delivery options for subsidising NPT costs:

• Option A - Direct contracts between DESNZ and NPT service providers (intermediary-led).
• Option B - NPT services operated by regulated T&SCos (store-led).
• Option C - NPT services operated by capture projects (capture-led).
• Option D - One-off grants or capital co-investment (loans, guarantees, equity).
• Option E (preferred) - Support for NPT via capture business models while allowing all three archetypes (capture-led, intermediary-led, store-led) to develop.

DESNZ illustrates these models with the diagram below (shown as figure 1 of the Consultation):

Under its preferred Option E, capture projects would select and contract directly with NPT service providers, and pass on the NPT fee via their capture contracts, with DESNZ having no direct contractual relationship with NPT providers. The NPT fee would cover NPT-specific costs necessary for processing and transporting CO₂ from the capture facility to either the entry point of the piped T&S network or a direct injection facility, excluding costs already covered by capture payments, T&S charges or other funding sources.

Option E envisages a distinct “NPT fee” that is separate from capture costs (upstream capture and processing) and piped T&S charges (regulated transport and storage) to allow for comparison of NPT costs between projects.

DESNZ is seeking to encourage NPT solutions that achieve economies of scale, either by serving multiple capture projects or through strategic siting to accommodate future users. Where infrastructure is shared by multiple supported projects, government support would cover sizing required to manage their combined throughput. For single-project infrastructure, only capacity necessary for that project’s needs would in principle be funded, though targeted support for oversizing may be considered where clear value can be demonstrated. Mechanisms would be required to capture and share unit cost efficiencies as additional users join over time.

2. Risk allocation – projects to bear cross-chain and timing mismatch risks, with no direct government support

A central theme of the Consultation is the allocation of cross-chain risks. DESNZ identifies four key risks:

• Revenue uncertainty in low-throughput scenarios, where an NPT provider is available but CO₂ volumes fall due to upstream or downstream issues.
• Stranded asset risk, where a permanent loss of demand or storage capacity making assets uneconomic.
• CO₂ quality risk, where off-specification CO₂ causes damage, access refusals or ETS liabilities.
• Delay/outage risks, where construction or commissioning delays or failures in one part of the chain preventing others from exporting CO₂.

It is proposed that timing mismatch risk (i.e. where a delay to a T&S network prevents or delays the commissioning of the capture plant, as there is no offtake route for the captured CO₂) would rest with the NPT provider, with capture contracts including an “NPT project readiness” operational condition precedent treating the NPT solution as a single entity for readiness assessment. DESNZ has not considered making available to NPT providers a “Government Support Package” analogous to that available to the two Track-1 clusters, wherein a Revenue Support Agreement compensates T&S providers in certain circumstances where they receive no CO₂, and therefore receive no usage fees.

DESNZ expects CO₂ quality risk to be managed commercially, with batch transport potentially enabling better characterisation and blending of off-specification CO₂ before network entry.

3. Fee structures – throughput-only basis

Of the three NPT fee options DESNZ has considered, its preferred option is a throughput-only fee, with the NPT fee payable solely on CO₂ volumes delivered to the T&S delivery point on a £/tonne basis.

The other two options considered, but not preferred, are a base plus throughput model, with the base component linked to whole-chain performance (availability and losses) and capture costs based on flows at the capture facility, insulating the capture project from NPT performance risk; and an alternative base plus throughput model, with the base component disaggregated by individual NPT service provider performance.

4. No NPT licence to be required

DESNZ’s view is that NPT services would not be subject to economic licensing or ex-ante regulation, on the basis that (unlike pipeline networks) NPT does not have the attributes which lend themselves to creating a structural monopoly, and therefore justify economic regulation.

Where economically licensed T&SCos wish to provide NPT-related services, they would require Ofgem approval, with Ofgem determining how NPT revenues are treated for regulatory purposes.

An exemptions regime for NPT providers using short pipelines (for example, from capture plant to liquefaction facilities) may be required so that the NPT providers are not captured by the Energy Act 2023’s licensing regime.

NPT providers will be captured by other sector-specific regulatory regimes, such as the Goods Vehicles (Licensing of Operators) Act 1995, the Railways Act 1993, and the Railways (Access, Management and Licensing of Railway Undertakings) Regulations 2016, which regulate the operation of transport infrastructure, and the Competition Act 1998 and the Enterprise Act 2002, which provide the Office of Rail and Road and the Competition and Markets Authority with concurrent competition enforcement powers in transport sectors, including those not subject to economic regulation. 

5. Standardisation and operational considerations

DESNZ proposes an industry-led approach to NPT standardisation, with existing bodies developing relevant technical standards for CO₂ (e.g. for quality, pressure, temperature, impurity limits and equipment specifications). DESNZ’s view is that early NPT projects should benefit from flexibility to develop project-specific standards, contributing to broader standards over time.The 

On CO₂ specification and monitoring, as currently envisaged, each T&SCo determines its CO₂ specification within limits set by the CCS Network Code. For NPT, DESNZ considers that batch transport may enable better characterisation of CO₂ quality before network entry, and NPT infrastructure could play a role in managing impurity variability through batch mixing.

On network capacity, the CCS Network Code currently provides for continuous delivery at a set peak rate, but NPT facilities could offer variable delivery rates from interim storage, potentially optimising T&S capacity utilisation. DESNZ is seeking views on whether distinct capacity products and alternative charging approaches are needed, which entity should hold Registered Capacity (i.e. emitters or NPT providers), and how agile flow can be accommodated to help balance the network.

DESNZ also acknowledges that modification of the CCS Network Code will be needed to accommodate all three delivery archetypes (capture-led, intermediary-led, store-led) and suggests a phased implementation for faster deployment.

International comparisons – NPT is in use in Europe, but is supported by direct government support

While two of Europe’s most well-progressed CCUS projects (Norway’s Longship, including Northern Lights, and Denmark’s Greensand) will utilise NPT in the form of transporting liquid CO₂ by ship, the support offered from the respective host governments differs significantly from what the UK is proposing in the Consultation.

The Northern Lights / Longship is a public-private partnership, where private companies have partnered with the Norwegian government, who have contributed around 80% of the initial project costs, with additional funding from the EU. Similarly, in Greensand, the developers have received funding from both the Danish government and from the EU, although for a much lower proportion of the project costs than for Longship/Northern Lights.

Longship/Northern Lights and Greensand also benefit from fully-developed open-access regimes, which allow them to store carbon shipped from elsewhere – including from abroad in the case of Greensand.

In comparison, the UK government is proposing a much lighter-touch approach to NPT, with providers bearing cross-chain risk and receiving no direct capex support. Additionally, despite the publication in February 2026 of initial commercial principles for open access (see our commentary on the “Transition Access Agreement” above), there has been scant development of UK policy in this respect since the decision to proceed with cluster sequencing and pipeline transportation as the priority for the development of CCUS in the UK.  In this respect the UK’s regime for NPT is likely to be considered by industry to be significantly under-developed in comparison to the Norwegian and Danish examples.

Comment and next steps

The lack of policy direction on NPT has been one of the primary areas of uncertainty for UK CCUS over the last few years, and so the additional colour that DESNZ has provided in the Consultation will be welcomed by industry, subject to views on the specific policy proposals.

Key areas to monitor include how the market responds to a throughput‑only NPT fee structure (DESNZ’s indicative preference), which DESNZ believes offers simplicity (particularly given that NPT providers will not be subject to economic licensing) but could bring greater financing challenges for developers off the back of exposing them to cross-chain risk. Experience from the Track-1 clusters suggests that ensuring the involvement of private finance (by developing a risk allocation framework with which they are comfortable) will be a key driver of the ultimate NPT regime, and so to the extent that a throughput-only structure does present those challenges, we would expect to see plenty of active engagement from industry on that point.

The vital gap that remains unaddressed in the UK is access to CCUS infrastructure, which will inform how unsupported and semi‑supported emitters and NPT projects can connect to existing T&S networks (as is the case for Longship/Northern Lights and Greensand). As mentioned above, DESNZ has recently published draft commercial principles for a “Transition Access Agreement” that will enable pipeline projects (not NPT) to connect to existing networks. The ability for them to use NPT to connect to a store will be key for the expansion of carbon capture for dispersed emitters and sectors where pipeline connection is unviable, and so the ultimate form and content of any Transition Access Agreement which facilitates NPT will be crucial.

Responses to the Consultation are invited by 1 May 2026, after which DESNZ aims to publish a response in 2026 outlining the proposals it intends to implement.

Stakeholders wishing to respond can do so via the e‑consultation platform or by email to NPTandCrossBorderCO2@energysecurity.gov.uk.