Regional spotlight: Carbon capture, utilization & storage (CCUS) in China — what's different and why it matters

China captured approximately 5 million tonnes of CO2 through CCUS projects in 2025, representing less than 0.04% of its total annual emissions of roughly 12.6 billion tonnes (Global CCS Institute, 2025). Yet China simultaneously operates more CCUS pilot and demonstration projects than any country outside the United States, with over 40 facilities either operational or under construction across coal-to-chemicals, power generation, cement, steel, and enhanced oil recovery applications. This paradox: world-leading project count paired with negligible capture volumes relative to emissions, defines the central tension of China's CCUS landscape and creates a strategic environment that differs fundamentally from North American and European markets.

Why It Matters

China accounts for approximately 33% of global CO2 emissions, making its decarbonization trajectory arguably the single most consequential variable in global climate outcomes. The country's energy system remains dominated by coal, which provided roughly 56% of primary energy consumption in 2024 (National Bureau of Statistics, 2025). China's coal fleet of approximately 1,170 GW is the world's largest, with an average plant age of just 14 years, meaning most facilities will remain technically operational well into the 2050s without early retirement. CCUS is one of the few technology pathways capable of decarbonizing this installed base without stranding hundreds of billions of dollars in relatively new infrastructure.

China's CCUS operating environment diverges from Western markets in several structural dimensions. The country has no economy-wide carbon price equivalent to the EU ETS, though its national emissions trading scheme (ETS), launched in 2021, covers the power sector and is expanding to include additional industries. ETS allowance prices have averaged CNY 80 to 100 ($11 to $14) per tonne through early 2026, well below the levels needed to incentivize most capture configurations. There is no direct per-tonne subsidy comparable to the US 45Q tax credit. Instead, China's CCUS support operates through state-directed industrial policy: five-year plan mandates, state-owned enterprise (SOE) capital allocation, and national key technology programs that channel funding through a combination of government grants and SOE balance sheets.

The scale of China's industrial emissions creates a project pipeline that dwarfs other markets. Coal-to-chemicals plants, a sector with minimal presence in Western economies, emit high-purity CO2 streams at concentrations above 90%, making them among the cheapest capture targets globally. China operates over 30 coal-to-chemicals complexes, primarily in Inner Mongolia, Shaanxi, and Ningxia provinces, with combined CO2 emissions exceeding 200 million tonnes per year (Chinese Academy of Sciences, 2025). This unique industrial profile means that China's near-term CCUS deployment pathway looks fundamentally different from markets where power sector or heavy industry capture dominates.

Key Concepts

China's Geological Storage Capacity

China's Ministry of Natural Resources completed an updated national CO2 storage assessment in 2024, building on earlier surveys by the Chinese Academy of Sciences. The assessment identifies theoretical storage capacity of approximately 2.4 trillion tonnes distributed across four primary formation types: deep saline aquifers in sedimentary basins such as the Songliao, Ordos, and Sichuan basins (estimated at 2.0 trillion tonnes), depleted oil and gas reservoirs primarily in the Bohai Bay, Songliao, and Tarim basins (estimated at 15 billion tonnes), deep unmineable coal seams in northern and northeastern China (estimated at 12 billion tonnes), and basaltic formations and other structures accounting for the remainder (Ministry of Natural Resources, 2024).

Practical bankable storage, however, is a fraction of theoretical capacity. China has conducted detailed characterization on fewer than 15 sites to the level required for commercial-scale injection permitting. The Ordos Basin in Inner Mongolia and Shaanxi has received the most attention, with CNPC's Changqing Oilfield providing subsurface data from decades of oil and gas operations. The Shengli Oilfield in Shandong has also advanced storage characterization through Sinopec's megaproject (discussed below). Storage site maturation timelines in China run 4 to 7 years from screening to injection, slightly faster than global averages due to the state's ability to expedite permitting and land access through administrative mechanisms.

State-Directed Industrial Policy Model

China's CCUS development model is fundamentally different from the market-driven, incentive-based approaches in the US and EU. The central government's 14th Five-Year Plan (2021-2025) identified CCUS as a "key frontier technology" and directed state-owned energy companies to develop demonstration projects. The 15th Five-Year Plan (2026-2030), finalized in early 2026, escalates CCUS to "strategic emerging industry" status, mandating that national oil companies and major power generators achieve cumulative capture capacity of 30 million tonnes per year by 2030 (State Council, 2026).

This SOE-driven model means that project economics operate on different criteria than in private-sector-dominated markets. SOEs evaluate CCUS investments partly on commercial returns but also on strategic compliance with government mandates, technology sovereignty objectives, and industrial positioning. CNPC, Sinopec, and CNOOC collectively allocate capital to CCUS not purely on internal rate of return but as directed investments within their state-assigned roles in the national decarbonization strategy.

National ETS Expansion and Carbon Pricing

China's national ETS covered approximately 2,200 power sector entities and 5 billion tonnes of CO2 emissions by 2025, making it the world's largest emissions trading system by coverage volume. However, the system operates on an intensity-based benchmark rather than an absolute cap, and compliance has been structured to avoid significant cost impacts on power generators. Allowance prices have remained in the CNY 70 to 110 ($10 to $15) range, far below the $50 to $100 per tonne needed to incentivize post-combustion capture from coal power plants.

The Ministry of Ecology and Environment has confirmed plans to expand the ETS to cover cement, aluminum, and steel sectors by 2027, with petrochemicals and chemicals following by 2028. This expansion will bring total ETS coverage to approximately 8 billion tonnes, or roughly 70% of national emissions. Market analysts project that allowance prices could reach CNY 200 to 300 ($28 to $42) per tonne by 2030 as the system transitions toward absolute caps and tighter intensity benchmarks (International Carbon Action Partnership, 2025). While still below the levels that would make most capture configurations commercially viable on carbon pricing alone, the trend creates a long-term signal that strengthens the investment case for CCUS infrastructure built today.

What's Working

China's most advanced CCUS project is Sinopec's Qilu Petrochemical-Shengli Oilfield project in Shandong Province, which achieved full-scale operations in 2023 and captured 1 million tonnes of CO2 in its first full operating year. The project captures CO2 from an ethylene oxide production unit at the Qilu Petrochemical complex, compresses it, and transports it via a 75 km pipeline to the Shengli Oilfield for enhanced oil recovery. The high-purity source stream (above 95% CO2) keeps capture costs at approximately $20 to $30 per tonne, and EOR revenues at 2025 oil prices cover operating costs. Sinopec has announced plans to expand the project to 3 million tonnes per year by 2028, making it one of the largest integrated CCUS operations globally (Sinopec, 2025).

CNPC's Jilin Oilfield CO2-EOR project in Jilin Province has operated since 2018, injecting approximately 350,000 tonnes of CO2 per year sourced from a nearby natural gas processing plant. The project has demonstrated sustained incremental oil recovery of 10 to 15% of original oil in place across multiple injection patterns. CNPC has used the project as a testbed for monitoring technologies, including downhole fiber-optic sensing and satellite-based ground deformation monitoring, building operational expertise that is being transferred to new projects.

In the coal-to-chemicals sector, the Yanchang Petroleum Group's integrated CCUS project in Shaanxi Province captures approximately 150,000 tonnes of CO2 per year from a coal-to-liquids facility and injects it into saline aquifer formations in the Ordos Basin. This project is significant because it represents one of the first commercial-scale saline aquifer storage operations in Asia, providing data on injection performance, pressure management, and containment monitoring in formations that could eventually absorb billions of tonnes.

China National Offshore Oil Corporation (CNOOC) launched the Enping 15-1 offshore CCS project in the Pearl River Mouth Basin in 2023, capturing CO2 from offshore natural gas production and injecting it into subsea formations. The project stores approximately 300,000 tonnes per year and is the first offshore CCS project in China, demonstrating capabilities that could be scaled across China's extensive offshore sedimentary basins.

What's Not Working

Despite the impressive project count, China's aggregate CCUS capture volumes remain orders of magnitude below what is needed. The 5 million tonnes captured annually represents less than 0.04% of total emissions, and the project pipeline, even under aggressive assumptions, is unlikely to exceed 30 million tonnes per year by 2030: still less than 0.25% of current emissions.

The cost gap remains the primary barrier. Post-combustion capture from coal power plants costs $45 to $75 per tonne in China (lower than US and European equivalents due to lower labor and EPC costs), but with ETS prices at $10 to $15 per tonne and no direct capture subsidy, power sector CCUS generates negative returns. Cement and steel capture costs of $60 to $100 per tonne face the same economics. Until carbon prices rise substantially or direct incentives are introduced, large-scale deployment beyond high-purity sources and EOR will remain economically challenging.

CO2 transport infrastructure is fragmented. China has fewer than 200 km of dedicated CO2 pipelines, with most projects relying on trucking for short distances. The distances between major industrial emission clusters in eastern and central China and the most promising storage formations in western and northern China (the Ordos and Songliao basins) range from 500 to 1,500 km, creating transport costs of $20 to $60 per tonne that significantly erode project economics. A national CO2 pipeline network comparable to China's 90,000 km natural gas transmission system does not exist even in planning stages.

Monitoring, reporting, and verification (MRV) standards for geological storage remain underdeveloped. While individual projects implement site-specific monitoring programs, there is no nationally standardized MRV framework for long-term CO2 storage. International investors and voluntary carbon market buyers require third-party verified storage permanence, and the absence of standardized MRV protocols limits access to international carbon finance mechanisms.

Public engagement on CCUS is minimal. Unlike in Europe and North America, where community acceptance has emerged as a significant project risk factor, China's administrative structure allows projects to proceed with limited public consultation. However, environmental incidents at chemical and energy facilities have generated increasing public scrutiny of industrial operations, and community opposition could emerge as a factor as projects move closer to populated areas.

Key Players

Established companies: Sinopec (operates China's largest integrated CCUS project at Qilu-Shengli, expanding to 3 Mtpa), CNPC (CO2-EOR operations at Jilin Oilfield, storage characterization in the Ordos Basin), CNOOC (first offshore CCS project at Enping 15-1), China Huaneng Group (post-combustion capture R&D at coal power plants), China Energy Investment Corporation (coal-to-chemicals CCUS integration), Yanchang Petroleum Group (saline aquifer storage demonstration in Shaanxi)

Startups and technology providers: Carbon Clean (modular capture systems deployed at Chinese industrial sites), Kairos Carbon (AI-optimized capture process control), Sichuan Carbon Capture Technology (domestic solvent and membrane development), Beijing SJ Environmental Protection (flue gas purification and CO2 conditioning)

Investors and development finance: Asian Development Bank (concessional CCUS financing across Asia including China), World Bank (technical assistance for storage characterization), Asian Infrastructure Investment Bank (green infrastructure lending with CCUS eligibility), China Green Development Fund (domestic climate technology investment), Breakthrough Energy Ventures (early-stage investments in capture technology companies with China deployment potential)

Action Checklist

• Prioritize engagement with SOE-led CCUS projects, as state-owned enterprises control the vast majority of China's capture, transport, and storage infrastructure development
• Evaluate coal-to-chemicals facilities in Inner Mongolia, Shaanxi, and Ningxia as lowest-cost capture opportunities with CO2 concentrations above 90%
• Monitor the 15th Five-Year Plan implementation guidelines for CCUS-specific mandates, subsidies, and SOE performance targets expected in 2026-2027
• Track national ETS expansion timelines and price trajectories, particularly the inclusion of cement, aluminum, and steel sectors by 2027
• Assess co-location opportunities where industrial emitters sit within 100 km of characterized storage formations, particularly in the Ordos Basin corridor
• Structure China CCUS investments to account for SOE partnership requirements, as foreign entities typically participate through joint ventures or technology licensing rather than direct project ownership
• Engage with the Ministry of Natural Resources on access to updated CO2 storage characterization data from national survey programs
• Evaluate CO2-EOR opportunities at mature onshore oil fields where infrastructure adjacency and production revenue reduce net capture costs

FAQ

Q: How does China's CCUS cost structure compare to the US and Europe? A: China benefits from significantly lower engineering, procurement, and construction costs, with total installed capture system costs typically 25 to 40% below equivalent projects in North America or Europe. Post-combustion capture from coal power runs $45 to $75 per tonne in China versus $60 to $120 in the US and EU. High-purity source capture (coal-to-chemicals, ammonia, hydrogen) costs $15 to $25 per tonne, roughly comparable to global benchmarks. However, the absence of meaningful carbon pricing or direct subsidies means that net project economics are often worse than in the US (where 45Q provides $85 per tonne for storage) or Europe (where ETS prices of EUR 60 to 80 provide market-based revenue). China's cost advantage in capex is offset by its revenue disadvantage in policy support.

Q: Will China's national ETS drive CCUS deployment? A: Not at current price levels. ETS allowances at CNY 80 to 100 ($11 to $14) per tonne are insufficient to incentivize any capture configuration except the cheapest high-purity sources paired with utilization revenue. The expansion to cover cement, steel, and chemicals by 2027-2028, combined with a likely transition toward absolute caps, should push prices toward CNY 200 to 300 ($28 to $42) by 2030. This would make some industrial capture configurations viable but still falls short of the $50 to $85 per tonne range needed for broad power sector CCUS deployment. The ETS is best understood as a long-term price signal that de-risks infrastructure investment today rather than a near-term revenue driver.

Q: What role do state-owned enterprises play in China's CCUS development? A: SOEs dominate every segment of the value chain. CNPC, Sinopec, and CNOOC control upstream storage access and CO2-EOR operations. China Huaneng, China Energy Investment Corporation, and China Datang control the largest coal power and coal-to-chemicals emitters. State Grid and PipeChina would likely operate any future CO2 pipeline infrastructure. Foreign companies and private Chinese firms participate primarily as technology suppliers, equipment manufacturers, and joint venture partners rather than as project developers or asset owners. Understanding SOE capital allocation cycles, government mandate compliance timelines, and joint venture structures is essential for any entity seeking to participate in China's CCUS market.

Q: How does China's CCUS project pipeline compare to global peers? A: China has the second-largest CCUS project pipeline globally after the United States, with over 40 facilities operational or in construction. However, aggregate capture capacity of approximately 5 million tonnes per year trails the US (approximately 25 million tonnes per year) and is roughly comparable to Europe's operational fleet. The pipeline is heavily weighted toward small demonstration-scale projects (under 500,000 tonnes per year), with Sinopec's Qilu-Shengli project as the only megascale operation. The 15th Five-Year Plan target of 30 million tonnes per year by 2030 would require a sixfold increase in capture capacity over five years, a trajectory that is ambitious but not unprecedented given China's track record of rapid infrastructure deployment in solar, wind, and high-speed rail.

Sources

• Global CCS Institute. (2025). Global Status of CCS 2025: China Country Profile. Melbourne: Global CCS Institute.
• National Bureau of Statistics. (2025). China Statistical Yearbook 2025: Energy Balance Sheet. Beijing: National Bureau of Statistics of China.
• Chinese Academy of Sciences. (2025). Assessment of CCUS Technology and Deployment Potential in China. Beijing: Institute of Rock and Soil Mechanics, CAS.
• Ministry of Natural Resources. (2024). National CO2 Geological Storage Capacity Assessment Update. Beijing: China Geological Survey.
• Sinopec. (2025). Qilu Petrochemical-Shengli Oilfield CCUS Project: Annual Operations Report. Beijing: China Petroleum and Chemical Corporation.
• International Carbon Action Partnership. (2025). China National ETS: Status Report and Price Outlook. Berlin: ICAP.
• State Council. (2026). 15th Five-Year Plan for National Economic and Social Development: Energy and Climate Chapter. Beijing: State Council of the People's Republic of China.