CCUS (Carbon Dioxide) NPT Consultation Summary

In February of this year, the government published a draft consultation titled Carbon Capture, Usage and Storage (CCUS): Non-pipeline Transport outlining its plans for carbon capture, usage, and storage (CCUS) (carbon dioxide). The government has positioned CCUS as an essential process for the Net Zero Strategy, which they aim to achieve by 2050, and is prioritising its deployment. The official government target is to store between 20 and 30 million tonnes of CO₂ by 2030, presenting a significant opportunity for a new rail freight market and growth. The consultation mentions rail as one of several methods of Non-Pipeline Transportation (NPT) that will be essential for achieving Net Zero.

NPT solutions are expected to be most widely used in areas where constructing or financing a pipeline is infeasible. This can provide a real opportunity for rail freight to be at the forefront of CO₂ transport generally and, in some cases, to negate the need for pipelines. Transport methods, including trucks, trains, ships, or barges, will complement pipelines and play a crucial role in moving carbon from sites both outside and inside planned CCUS clusters.

The government is asking for responses from organisations that are likely to be a part of the development of infrastructure transportation solutions required to build and maintain a robust CCUS system. Interested parties are expected to respond before 1 May 2026.

Some of the proposed financial models are complex, so member input is highly valuable. We would appreciate it if interested members could:

  • Read through the consultation and identify areas of concern/interest
  • Send us any thoughts before 31 March 2026
  • Consider sending a separate response through your organisation

How it works

Carbon capture storage, in particular, is a three-step process:

  1. Capture CO₂ produced by power generation, industrial activity, bioenergy production (e.g. conversion of biomass to energy) or directly from the air
  2. Transport it
  3. Permanently store it deep underground

In addition to CO₂ transported for permanent storage, there is also the potential for CCU (carbon capture and usage), which would see the same process as above, but the CO₂ would be reused in industrial processes by converting it into, for example, plastics, concrete or biofuel. However, while there is an opportunity for rail to be a critical component of carbon usage, it is not included in current government plans, such as this consultation.

Financing NPT value chain costs

The government recognises that “some NPT projects may merit government support for capital and operational costs across the NPT value chain. […] Support for costs associated with the NPT solution would need to be alongside the government support that is already provided for capture costs and T&S charges in the capture business models.”

Overcoming hurdles such as high CCUS costs, revenue uncertainty, and uncoordinated logistics across capture, transport, and storage will be key for encouraging private investment, and the government is prepared to provide various levels of support. However, they aim to eventually cut funding as the market grows larger and more self-sufficient.

They’ve set out five options for funding delivery mechanisms that are summarised in the following paragraphs:

  • Option A: “Direct contracts between government and the NPT service providers”

Through direct government contracts, there will be assurance that investors in the industry can confidently move forward with projects with minimal risk. Additionally, the government can directly ascertain and track NPT costs.

  • Option B: “NPT services are operated by regulated transport and storage companies (T&SCos) (store-led archetype). NPT costs are paid through the capture business models, with payment flowing from the capture project to the T&SCo.”

Market-led model that relies on T&SCos delivering services and directly recovering their costs from the capture project payments, with higher commercial risk for investors.

  • Option C: Capture project operated NPT services — thereby extending the project.

This model seeks to optimise NPT services by relying on the pre-existing foundations of carbon capture processes, not relying on NPT to be wholly independently developed.

  • Option D: Government grant funding or capital co-investment agreement

This could open doors for NPT projects with high capex costs and increased revenue uncertainty risks, but still ensure that the market can become self-sustaining.

  • Option E (Government’s preferred option): The government does not permit only one structure. Projects can choose between capture-led, intermediary-led, or store-led business structures.
  1. This will allow for effective risk management and for NPT service providers to decide how the market and wider industry are structured. However, this option may complicate policy design and introduce challenges stemming from NPT service providers not having direct government contracts.

NPT fee

To provide additional support, the government is proposing a separate “NPT fee” with an indicative position that this would be paid based on volumes of CO₂ reaching the storage site. This pounds-per-tonne model would also be used to calculate overall carbon capture costs, which means that selected NPT solutions would directly impact capture projects, with projects bearing the risk. However, there were two other options presented for NPT fees, with the most updated information coming from a consultation discussion at the end of February.

The second option is for the NPT fee to consist of a base component determined by NPT solution performance, reduced if the overall system underperforms, and a throughput component based on pounds per tonne delivered to storage facilities. This would eliminate capture costs being contingent on CO₂ delivery, placing performance risk on the NPT system collectively. However, this model places all NPT solution providers at risk if one or more providers are underperforming.

The final option is for the NPT fee to be divided into a base component based on the individual NPT service provider’s availability and delivery performance, and the same throughput component as in the second option (tonnes reaching the storage point). This model prevents the overall NPT provider sector from being exposed to the failures of particular providers.

Other areas of interest

The consultation also seeks views on:

  • Regulatory framework development for carbon transport operators
  • Economic regulations and licensing
  • Carbon transport system standardisation
  • Logistical coordination between capture, transport and storage providers
  • External/third-party access to storage and networks.

Giving rail freight a voice

The NPT consultation is likely to shape the future commercial framework for CO₂ transportation, and responses from across our membership are strongly encouraged to ensure diverse rail views are represented.