Trend watch: Carbon capture, utilization & storage (CCUS) in 2026 — signals, winners, and red flags

Global CCUS capacity reached approximately 50 million tonnes of CO2 per year by the end of 2025, yet the IEA estimates that the world needs to capture and store over 1 billion tonnes annually by 2030 to stay on track for net zero by 2050. That twenty-fold gap between current operations and climate targets makes CCUS one of the most consequential scaling challenges in energy, and one of the most closely watched sectors heading into 2026.

Why It Matters

Carbon capture, utilization, and storage sits at the nexus of industrial decarbonization, climate policy, and energy finance. Hard-to-abate sectors such as cement, steel, chemicals, and power generation collectively account for roughly 30% of global CO2 emissions. Many of these processes lack viable electrification pathways, meaning CCUS represents one of the few proven options for deep emissions reductions at industrial scale.

The economic stakes are enormous. The Global CCS Institute estimates that the CCUS industry could generate over $4 trillion in cumulative investment by 2050 under net-zero scenarios. In the near term, government incentives have reshaped project economics. The United States' enhanced 45Q tax credit, expanded under the Inflation Reduction Act, now offers up to $85 per tonne for dedicated geological storage and $180 per tonne for direct air capture with storage. These credits have catalyzed a pipeline of over 200 announced projects across North America alone.

Beyond climate targets, CCUS connects to energy security, industrial competitiveness, and workforce transition. Countries with established oil and gas infrastructure, including the United States, Canada, Norway, the United Kingdom, and Australia, hold natural advantages in subsurface expertise, pipeline networks, and geological storage capacity. For these nations, CCUS offers a strategy for retaining energy sector jobs and expertise while pivoting toward lower-carbon operations.

The urgency is underscored by recent IPCC assessments, which identify CCUS as essential across all modeled pathways limiting warming to 1.5 degrees Celsius. Without rapid CCUS deployment alongside renewables, efficiency, and electrification, the arithmetic of net zero does not close.

Signals to Watch

Regulatory acceleration across multiple jurisdictions. The United States, European Union, United Kingdom, Canada, and Australia have all introduced or expanded CCUS incentive frameworks since 2022. The EU's Net Zero Industry Act set a target of 50 million tonnes of annual CO2 injection capacity by 2030, requiring member states to map and permit storage sites on accelerated timelines. In the UK, the government approved the first two Track-1 CCS clusters (HyNet in northwest England and the East Coast Cluster on Teesside) with up to 20 million tonnes per year of combined capacity. Watch for policy durability: the sector's capital intensity means project economics depend on multi-decade policy certainty.

Direct air capture moving from demonstration to early commercial scale. Climeworks' Mammoth plant in Iceland, the world's largest operational DAC facility at 36,000 tonnes per year, began commissioning in mid-2024. Occidental Petroleum's STRATOS plant in Texas targets 500,000 tonnes per year when fully operational, a step change in scale enabled by 45Q credits and long-term carbon removal purchase agreements from Microsoft, Airbus, and others. The trajectory from Climeworks' first 4,000-tonne Orca plant to Mammoth to the next generation of 100,000-plus tonne facilities will reveal whether DAC cost curves follow the learning rates seen in solar and wind.

Hub and cluster models replacing standalone projects. Rather than building single-source capture facilities with dedicated pipelines and storage, the industry is converging on shared infrastructure models. The Northern Lights project in Norway, a joint venture between Equinor, Shell, and TotalEnergies, offers open-access CO2 transport and storage as a commercial service to European emitters. Similarly, the Houston CCS Innovation Zone aims to aggregate capture from multiple refineries, petrochemical plants, and power stations across the Ship Channel into shared pipeline and storage infrastructure. This aggregation model reduces per-tonne costs and de-risks individual projects.

Corporate carbon removal procurement gaining momentum. Frontier, the advance market commitment backed by Stripe, Alphabet, Meta, Shopify, and McKinsey, has committed over $1 billion to purchase permanent carbon removal, including CCUS-based approaches. Microsoft alone contracted for over 5.6 million tonnes of carbon removal through 2030, making it the largest buyer globally. These voluntary commitments provide revenue certainty that complements government subsidies.

Utilization pathways expanding beyond enhanced oil recovery. Historically, most captured CO2 went to enhanced oil recovery (EOR), a practice that improves fossil fuel extraction. Now, CO2 utilization is diversifying into building materials (CarbonCure, Solidia), sustainable aviation fuels (via Fischer-Tropsch synthesis), chemicals (methanol, ethylene), and mineralization for permanent sequestration. The shift matters because non-EOR pathways face less criticism from environmental groups and align better with net-zero narratives.

Winners and Red Flags

Potential Winners

Integrated energy companies with subsurface expertise. Companies like Equinor, Shell, and Occidental Petroleum hold decades of reservoir characterization, drilling, and well management experience directly transferable to CO2 injection and monitoring. Their existing pipeline networks and surface infrastructure reduce capital requirements compared to greenfield developers.

Industrial gas and engineering firms. Air Liquide, Linde, and Mitsubishi Heavy Industries supply the capture equipment, solvents, and process engineering that underpin most CCUS projects. As the pipeline of announced projects converts to final investment decisions, these firms stand to benefit from equipment and services demand.

Carbon removal marketplaces and brokers. Companies like CarbonCure, Heirloom, and intermediaries such as Patch and Cloverly are building the commercial infrastructure for carbon removal credits. As compliance markets begin to accept engineered removal alongside nature-based offsets, these platforms will intermediate a growing share of transactions.

Regions with favorable geology and policy alignment. The U.S. Gulf Coast, the North Sea basin, and Australia's Cooper and Gippsland basins combine vast storage capacity with supportive policy. Projects sited in these regions benefit from lower transport costs, proven geology, and regulatory clarity.

Red Flags

Overreliance on enhanced oil recovery economics. Projects justified primarily by EOR revenue face dual risks: oil price volatility can undermine project returns, and tightening carbon accounting standards may exclude EOR-linked capture from net-zero claims. The Boundary Dam project in Saskatchewan, while pioneering, experienced operational challenges and lower-than-expected capture rates, in part because its economics depended on EOR revenue streams.

Permitting bottlenecks for Class VI injection wells. In the United States, the EPA's Class VI well permitting process for dedicated CO2 storage has been criticized for multi-year timelines. As of early 2026, fewer than a dozen Class VI permits had been issued despite hundreds of applications. Several states, including Louisiana, North Dakota, and Wyoming, have sought primacy to accelerate state-level permitting, but the handoff introduces its own regulatory uncertainty.

Capture rate claims versus verified performance. Many project proposals cite 90%+ capture rates, but operational data from existing facilities often shows lower performance. The Petra Nova project in Texas, the largest post-combustion capture installation on a coal plant at the time of its commissioning, was mothballed in 2020 after persistent underperformance and was later restarted under new ownership. Investors should demand independently verified capture data, not just design specifications.

Technology lock-in with first-generation solvents. Most operational capture facilities use amine-based solvents that are energy-intensive to regenerate, consuming 25 to 40% of a power plant's output. Next-generation approaches including solid sorbents, membrane separation, and cryogenic capture promise lower energy penalties, but remain at earlier development stages. Projects locked into first-generation technology may face competitive disadvantage as newer methods mature.

Sector-Specific KPI Benchmarks

Sector	KPI	Laggard	Average	Leader	Notes
Power generation	Capture rate	<70%	80-85%	>90%	Post-combustion on coal/gas
Cement	CO2 avoided cost ($/tonne)	>$120	$80-100	<$70	Oxyfuel and post-combustion
Hydrogen (blue)	Lifecycle emissions intensity	>4 kg CO2/kg H2	2-3 kg CO2/kg H2	<1.5 kg CO2/kg H2	Includes upstream methane
Direct air capture	Cost per tonne removed	>$600	$400-500	<$300	Targeting <$100 by 2040
Transport & storage	Pipeline utilization rate	<40%	55-70%	>85%	Hub models outperform
EOR/utilization	Net CO2 stored per tonne injected	<0.3 t	0.5-0.7 t	>0.85 t	Accounting for produced oil

What's Working

The 45Q credit has unlocked unprecedented project pipelines in North America. Since the Inflation Reduction Act expanded credit values in 2022, the number of announced CCUS projects in the United States has surged past 200. The credit's transferability provision, allowing project developers to sell tax credits to third parties, solved a longstanding financing challenge for companies without sufficient tax liability to use credits directly. Summit Carbon Solutions, Navigator CO2, and other pipeline developers have secured billions in commitments based on 45Q-backed economics.

Norway's Northern Lights project has proven the open-access storage model. Northern Lights received its first CO2 shipment from a Heidelberg Materials cement plant in late 2024, marking the first cross-border CO2 transport and storage operation. The project's commercial structure, offering storage as a service at a published price, provides a template that other regions are replicating. By removing the need for each emitter to develop its own storage infrastructure, Northern Lights dramatically lowers barriers to entry.

Point-source capture on industrial processes is achieving consistent performance. The Quest project in Alberta, operated by Shell, has captured and stored over 8 million tonnes of CO2 since 2015 from hydrogen production at the Scotford upgrader. Quest consistently achieves its design capture rate of roughly one million tonnes per year, demonstrating that mature capture technology applied to high-concentration CO2 streams delivers reliable results.

What Isn't Working

Capture on dilute flue gas streams remains expensive and underperforming. Post-combustion capture from coal and natural gas power plants, where CO2 concentrations are 4 to 15%, involves higher energy penalties and capital costs than capture from industrial processes with 20 to 90% CO2 concentrations. The Boundary Dam and Petra Nova experiences showed that power sector applications face particular challenges around parasitic energy load, equipment reliability, and economic sensitivity to electricity prices.

Voluntary carbon removal markets lack standardized quality frameworks. While corporate procurement of carbon removal is growing, the absence of universally accepted standards for permanence, additionality, and monitoring creates confusion. Different registries apply different criteria, and buyers face reputational risk if their purchased removals are later questioned. The Integrity Council for the Voluntary Carbon Market's Core Carbon Principles represent progress, but sector-specific methodologies for CCUS credits remain under development.

Public opposition and environmental justice concerns slow permitting. Several proposed CO2 pipeline projects in the U.S. Midwest, including Navigator CO2's Heartland Greenway, faced strong opposition from landowners and environmental groups concerned about pipeline safety, eminent domain, and the perception that CCUS extends the life of fossil fuel infrastructure. Navigator ultimately canceled its project in 2023. Community engagement and benefit-sharing frameworks remain underdeveloped relative to the scale of planned infrastructure.

Key Players

Occidental Petroleum / 1PointFive: Developing the STRATOS DAC plant in Texas, the largest planned facility globally at 500,000 tonnes per year. Occidental's acquisition of Carbon Engineering in 2023 for $1.1 billion signaled major oil and gas commitment to DAC.

Equinor / Northern Lights JV: Operating Europe's first open-access CO2 transport and storage service. Phase 1 capacity of 1.5 million tonnes per year is expandable to 5 million tonnes.

Climeworks: Swiss DAC pioneer operating the Mammoth plant in Iceland (36,000 t/yr) and developing next-generation facilities targeting costs below $400 per tonne by 2030.

Linde / Air Liquide: Industrial gas majors supplying capture technology, CO2 purification, and compression systems across the project pipeline.

Summit Carbon Solutions: Developing one of the largest carbon capture pipeline networks in the U.S. Midwest, aggregating CO2 from ethanol plants across multiple states for geological storage in North Dakota.

Heidelberg Materials: First industrial customer to ship captured CO2 to Northern Lights for permanent storage, demonstrating the viability of third-party storage services for cement producers.

Action Checklist

• Assess your facility's CO2 emission profile, including concentration, volume, and purity, to determine which capture technologies offer the best technical and economic fit
• Map available government incentives including 45Q credits, EU Innovation Fund grants, UK CCS Infrastructure Fund allocations, and state-level programs that apply to your geography and sector
• Evaluate hub and cluster opportunities by contacting regional storage operators and pipeline developers to determine whether shared infrastructure models reduce your per-tonne costs compared to standalone approaches
• Conduct a storage site pre-screening or engage with permitted storage operators to secure sequestration capacity before the pipeline of announced projects creates bottleneck competition for injection permits
• Develop a monitoring, reporting, and verification (MRV) plan that meets both regulatory requirements and voluntary market standards, ensuring captured and stored CO2 is independently verified
• Engage affected communities early, incorporating environmental justice assessments and benefit-sharing frameworks into project planning to build social license and reduce permitting risk
• Stress-test project economics under multiple scenarios including changes to carbon credit values, energy prices, capture rates, and policy durability over the project's 20-to-30-year operational life

FAQ

Q: Is CCUS just a lifeline for the fossil fuel industry? A: CCUS applications span far beyond fossil fuels. Cement, steel, chemicals, and waste-to-energy all produce process emissions that cannot be eliminated through electrification or fuel switching. The IEA's net-zero pathway assigns roughly half of CCUS deployment to industrial applications and direct air capture, with the remainder in power generation and hydrogen production. Whether CCUS extends fossil fuel operations or accelerates industrial decarbonization depends on project selection, policy design, and transparent accounting.

Q: How permanent is geological CO2 storage? A: Well-characterized geological formations, particularly deep saline aquifers and depleted oil and gas reservoirs, can retain CO2 for thousands to millions of years. The Sleipner project in Norway has safely stored over 20 million tonnes of CO2 since 1996 with no detected leakage. Regulatory frameworks require operators to demonstrate containment integrity through seismic monitoring, well integrity testing, and pressure management. The key risk factor is wellbore integrity in legacy oil and gas regions where old, improperly sealed wells could provide leakage pathways.

Q: What does CCUS cost per tonne of CO2? A: Costs vary dramatically by application. Capture from high-purity industrial streams (ethanol, natural gas processing) costs $15 to $30 per tonne. Post-combustion capture from power plants runs $50 to $100 per tonne. Cement and steel capture ranges from $60 to $120 per tonne. Direct air capture currently costs $400 to $600 per tonne, with targets of $100 to $200 per tonne by 2040. Transport and storage add $10 to $30 per tonne depending on distance and geology.

Q: How does the 45Q tax credit change project economics? A: The enhanced 45Q credit offers $85 per tonne for dedicated geological storage and $60 per tonne for CO2 used in enhanced oil recovery. For direct air capture with storage, the credit rises to $180 per tonne. These values, combined with transferability provisions allowing developers to sell credits to tax equity investors, have made many industrial capture projects economically viable without additional revenue. The credit applies to facilities that begin construction before January 1, 2033.

Q: What role does CCUS play in blue hydrogen production? A: Blue hydrogen pairs natural gas reforming with carbon capture to produce low-carbon hydrogen. The economics are currently more favorable than green hydrogen (electrolysis powered by renewables) in regions with low natural gas prices. However, lifecycle emissions depend heavily on upstream methane leakage rates and capture efficiency. Projects achieving >95% capture rates and sourcing gas with <0.5% methane leakage can produce hydrogen with lifecycle emissions below 1.5 kg CO2 per kg H2, competitive with green hydrogen on a carbon intensity basis.

Sources

• IEA. (2024). "CCUS in Clean Energy Transitions." International Energy Agency. https://www.iea.org/reports/ccus-in-clean-energy-transitions
• Global CCS Institute. (2024). "Global Status of CCS Report 2024." https://www.globalccsinstitute.com/resources/global-status-of-ccs/
• U.S. Department of Energy. (2024). "Carbon Capture, Utilization, and Storage." Office of Fossil Energy and Carbon Management. https://www.energy.gov/fecm/carbon-capture-utilization-and-storage
• Equinor. (2024). "Northern Lights: The World's First Open-Source CO2 Transport and Storage Infrastructure." https://northernlightsccs.com/
• Climeworks. (2024). "Mammoth: Our Newest Direct Air Capture Plant." https://climeworks.com/plant-mammoth
• European Commission. (2024). "Net Zero Industry Act: Carbon Capture and Storage Targets." https://ec.europa.eu/commission/presscorner/detail/en/ip_23_510
• Clean Air Task Force. (2024). "Carbon Capture in the United States: Project Tracker and Policy Analysis." https://www.catf.us/ccus/