Eni said Oct. 17 it has reached an agreement in principle with the U.K. government for the company’s HyNet North West industrial carbon capture and storage (CCS) cluster. The terms and conditions of the agreement could help to shape a regulated model on which the region can scale CCS.

The step is key in moving HyNet toward becoming the world’s first asset-based regulated CCS business, Eni said. The project, one of the first of its kind in the region, aims to address climate change by capturing carbon from energy intensive industrial districts and storing it.

The first phase of the project has a storage capacity of about 4.5 million tonnes (MMtonnes) of CO2 per year.

“CCS will play a critical role in energy transition, cutting safely emissions from industries that currently don’t have the technology to do so another way,” Eni’s CEO Claudio Descalzi said in a news release. “Today’s agreement is a significant step towards establishing a significant new industry for the country.”

The agreement paves the way toward completed definitive agreements in the coming months, Eni said.

HyNet North West is expected to be operational by the mid-2020s. It has the potential to remove about 10 MMtonnes of CO2 annually after 2030.

Speaking during the Carbon Capture & Storage Association annual conference Oct. 17, U.K. Secretary of State Claire Coutinho said CCS is a great opportunity to decarbonize while boosting jobs and investment.

“We have the right geology, the right infrastructure, and the right skills to be at the forefront of carbon capture and to lift other economies by cutting the cost of decarbonizing,” she said. “That’s why the government is making a massive commitment to this game-changing technology.”

Eni said HyNet North West will make a major contribution to the U.K.’s target of storing 20 MMtonnes to 30 MMtonnes of CO2 annually by 2030. Coutinho said that would be the equivalent of removing between 4 million and 6 million cars from road each year.

There are currently six CO2 appraisal and storage licenses on the U.K. Continental Shelf.

Besides Eni, other companies awarded CCS licenses by the U.K. Oil and Gas Authority include Pale Blue Dot Energy (Acorn) Ltd. for its Acorn Carbon Capture and Storage project; Harbour Energy’s Viking CCS project; and the National Grid, BP and Equinor’s joint Northern Endurance Partnership. Two separate licenses were also issued to BP and Equinor for the Northern Endurance Partnership East Coast Cluster.

Eni’s license is for the Liverpool Bay area of the East Irish Sea, where the company plans to use and repurpose depleted hydrocarbon reservoirs and associated infrastructure to permanently store CO2 captured in Northwest England and North Wales.