CO2 transport and storage. In 2020 the UK government proposed the use of a business model for CO2 transport and storage that it referred to as the “Transport and Storage Regulatory Investment (TRI) Model”.50 This model is based on an economic regulation funding model and has features derived from similar models in the utility market. The model seeks to provide long term confidence to investors through predictable and stable returns, whilst enabling low-cost decarbonisation across multiple sectors and developing a market for carbon capture. The following features are proposed: Ownership & operation: A Transport and Storage Company (T&SCo) would be responsible for the development, construction, financing, operation, maintenance, expansion and decommissioning of the T&S network. In particular, the T&SCo would be the asset owner for onshore and offshore infrastructure and would need to obtain the licence for the storage site. The T&SCo would also be the system operator, ensuring the network operates within specified limits, managing network access, and associated tasks. Revenue: The User Pays revenue model is proposed in which the T&SCo receives payments from those that use the T&S network, but also has access to contingent financing (from consumers and/or taxpayers) to ensure the revenue stream is predictable and robust. The objectives of this proposed approach are to provide confidence to investors (reliable revenue), provide predictable cost allocation (volume and capacity), and enable future expansion of the network. The allowed revenue for the T&SCo would be determined under the ERR and is expected to consist of: a connection fee, a capacity fee, and a volumetric fee. Economic Regulatory Regime (ERR): The ERR determines the annual allowed revenue that the T&SCo receives based on a pre-established methodology for determining the cost of establishing and operating the T&S network, reflecting efficient costs and a reasonable rate of return. This would be controlled and monitored by an independent economic regulator that would have the power to authorise T&S companies via licence. Government Support Package (GSP): The GSP is a potential component that could be used to protect investors and users from high impact, low probability risks that the private sector is unable to bear at an efficient price, such as defined leakage events from storage facilities. This would be only applicable for specific very remote risks occurring within a finite period of time. BEIS provided a subsequent addi...
