Sustainability Atlas
Clean Energy·13 min read··...

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

Signals to watch, value pools, and how the landscape may shift over the next 12–24 months. Focus on duration, degradation, revenue stacking, and grid integration.

The global CCUS market reached $4.89 billion in 2024 and is projected to hit $8.04 billion by 2030, yet only 50-55 million tonnes of CO₂ capture capacity is currently operational—a fraction of the 812 Mt/year required to meet 2030 climate targets. This gap between investment momentum and deployed capacity defines the central tension facing European procurement teams evaluating CCUS integration into decarbonization strategies. With 67.5% of the 2030 capacity pipeline having passed feasibility stage according to the IEA, the next 24 months will determine which projects convert from PowerPoint to operations—and which remain stranded in development purgatory.

Why It Matters

For European procurement professionals, CCUS has shifted from theoretical decarbonization option to immediate strategic imperative. The EU has established targets of 50 Mt capture capacity by 2030 and 280 Mt by 2040, with the Innovation Fund committing €1.5 billion to CCUS projects. The UK's £21.7 billion Carbon Capture and Storage Infrastructure Fund represents the most aggressive national deployment program globally. Netherlands has committed €7.3 billion, Denmark €1.2 billion.

The procurement implications extend across multiple dimensions. First, Contracts for Difference (CfD) mechanisms now govern CCUS economics in the UK, creating long-term price certainty that fundamentally changes project bankability. Second, the EU Emissions Trading System price—hovering around €80-90/tonne in 2025—increasingly makes capture economically rational for high-emitting facilities without additional policy support. Third, cross-border CO₂ transport networks (Northern Lights connecting Norway to European emitters; emerging UK-EU corridors) create new infrastructure that procurement teams must understand to evaluate offtake options.

Perhaps most critically, 75% of oil and gas sector involvement in CCUS creates both opportunity and risk. Legacy energy companies bring balance sheet strength and project execution capability, but also potential conflicts between continued fossil fuel extraction and genuine decarbonization. Procurement teams must distinguish between carbon capture that enables continued high-emission operations versus capture that supports genuine transition pathways.

Key Concepts

The CCUS Value Chain

Understanding CCUS requires disaggregating four distinct activities, each with different technology readiness, cost structures, and procurement implications:

Capture removes CO₂ from industrial processes, power generation, or ambient air. Technologies include post-combustion capture (58-66% of current projects), pre-combustion capture, and oxyfuel combustion. Post-combustion dominates because it can retrofit existing facilities; newer greenfield projects increasingly consider pre-combustion approaches offering higher efficiency.

Transport moves captured CO₂ from source to storage or utilization sites. Pipeline transport dominates for large volumes; ship transport enables cross-border movement and flexibility. Northern Lights' first voyage in 2025 demonstrated commercial CO₂ shipping at scale, opening new market structures where emitters can access storage without geographic proximity.

Utilization converts CO₂ into products including building materials, chemicals, fuels, and enhanced oil recovery. The carbon capture utilization (CCU) chemicals market is projected to reach $527 billion by 2035 at 20.6% CAGR, though critics note that many utilization pathways merely delay rather than permanently remove emissions.

Storage injects CO₂ into geological formations for permanent sequestration. Depleted oil and gas reservoirs, saline aquifers, and basalt formations offer different capacity, cost, and permanence characteristics. Storage capacity often constrains overall CCUS deployment more than capture technology.

Revenue Stacking and Business Model Evolution

CCUS project economics increasingly depend on stacking multiple revenue sources:

Revenue StreamMechanismValue (2025)Availability
Carbon CreditsVoluntary markets, compliance markets$20-150/tonneVariable by jurisdiction
Tax CreditsUS 45Q, UK investment allowances$85/tonne (US)Policy-dependent
Contracts for DifferenceUK CCUS CfDStrike price vs. referenceUK projects only
ETS Avoided CostsEU/UK ETS€80-90/tonneRegulated emitters
Offtake PaymentsCO₂ product salesVariableUtilization projects
Storage ServicesThird-party storage fees$10-30/tonneStorage operators

Successful projects typically combine 3-4 revenue streams. Single-revenue-stream projects rarely achieve bankability without exceptional cost structures or policy support.

Grid Integration and Virtual Power Plant Potential

An emerging opportunity involves integrating CCUS facilities with electricity markets. Carbon capture units represent significant flexible load—they can modulate capture rates in response to electricity prices, effectively acting as demand response assets. During periods of low renewable output (high electricity prices), facilities can reduce capture rates; during renewable oversupply (low or negative prices), they can maximize capture while consuming excess generation.

This VPP (Virtual Power Plant) integration adds another revenue stream: grid services. However, practical implementation requires:

  • Capture technology capable of flexible operation (not all technologies tolerate rapid cycling)
  • Commercial arrangements allowing variable operation without contractual penalties
  • Grid operator frameworks recognizing capture facilities as demand response assets

What's Working

Northern Lights: Cross-Border Infrastructure at Scale

Norway's Northern Lights project represents the most significant CCUS infrastructure achievement in Europe. As the world's first open-source CO₂ transport and storage network, it enables emitters across Europe to ship captured CO₂ for permanent storage in Norwegian offshore reservoirs. Initial capacity of 1.5 Mt/year is expanding to 5+ Mt/year by 2027.

The project's commercial model—offering storage-as-a-service rather than requiring emitters to develop their own infrastructure—fundamentally changes procurement options. European facilities can now access permanent geological storage without the capital and permitting requirements of developing dedicated storage sites. Heidelberg Materials, Yara, and other major industrials have signed offtake agreements, validating the model.

UK CCUS Clusters: Policy-Driven Momentum

The UK's cluster-based approach—concentrating CCUS infrastructure in industrial regions including Teesside, Humber, and Merseyside—demonstrates how coordinated policy can accelerate deployment. The East Coast Cluster (Net Zero Teesside and Northern Endurance Partnership) received final investment decisions in 2024, with first CO₂ injection expected by 2027.

Key success factors include:

  • CfD mechanisms providing 15-year revenue certainty
  • Shared transport and storage infrastructure reducing per-project capital requirements
  • Anchor tenants (BP, Equinor) providing balance sheet credibility
  • Coordinated permitting reducing regulatory timeline uncertainty

Moomba CCS: Cost Benchmark Achievement

Santos's Moomba CCS project in Australia achieved lifecycle costs below $30/tonne by leveraging depleted natural gas reservoirs for storage. This cost point—achieved in a favorable geological and regulatory context—establishes a benchmark that other projects must approach to achieve widespread deployment without policy support.

The project illustrates that CCUS economics vary dramatically by application. Natural gas processing facilities produce high-purity CO₂ streams requiring minimal treatment before injection. Power plant flue gas, by contrast, requires extensive purification, roughly doubling costs. Procurement evaluation must account for source-specific factors.

What's Not Working

The Utilization Credibility Gap

Enhanced oil recovery (EOR) still accounts for 44.5% of CO₂ utilization pathways, creating fundamental credibility challenges. When captured CO₂ is injected to extract additional oil—which is then burned, releasing CO₂—the climate math becomes questionable. While EOR can achieve net negative emissions under specific accounting frameworks, the optics undermine public acceptance and increasingly trigger ESG screening concerns.

Beyond EOR, many utilization pathways face similar scrutiny. Converting CO₂ to synthetic fuels that are subsequently combusted provides no permanent removal. Building materials that sequester CO₂ permanently offer more defensible claims but represent smaller markets. Procurement teams must evaluate utilization claims rigorously, distinguishing permanent sequestration from emissions delay.

High Costs and Long Lead Times

Despite investment growth, fundamental economics remain challenging. The gap between current costs ($30-100+/tonne depending on application) and levels required for unsubsidized deployment ($20-30/tonne for most applications) persists. Development timelines of 3-7 years from concept to operation mean projects initiated now won't deliver emissions reductions until 2028-2032.

ABI Research notes that "growth is still limited by high costs and long lead times," constraining the pace at which CCUS can contribute to near-term emissions targets. For procurement teams facing 2030 decarbonization commitments, CCUS often cannot deliver impact within required timeframes.

Technology Risk and Performance Uncertainty

First-of-a-kind project risk remains significant. Several high-profile projects have experienced operational difficulties:

  • Capture rates below design specifications
  • Higher-than-projected energy consumption
  • Accelerated equipment degradation requiring early replacement
  • Unplanned outages during commissioning

While the industry has learned from these experiences, procurement teams evaluating CCUS integration must price technology risk appropriately. Vendor performance guarantees, liquidated damages provisions, and realistic contingency allowances are essential.

Key Players

Established Leaders

Shell (Netherlands/UK) — Operating multiple CCUS facilities globally including Quest in Canada (1 Mt/year) and developing Porthos hub in Rotterdam (2.5 Mt/year starting 2027). Strong position in both capture technology and storage development.

Equinor (Norway) — Lead developer of Northern Lights storage infrastructure; extensive offshore storage experience from decades of Sleipner operations (1 Mt/year since 1996). Critical enabler of European cross-border CCUS markets.

ExxonMobil (USA) — Largest capture capacity operator globally; Baytown facility expanding from 40,000 to 80,000 tonnes/year. Aggressive expansion strategy despite scrutiny over historical emissions.

TotalEnergies (France) — Developing multiple European CCUS hubs; partner in Northern Lights and Danish storage projects. Integrating CCUS with low-carbon hydrogen production.

Emerging Startups

Climeworks (Switzerland) — Leading direct air capture developer; Mammoth facility in Iceland targeting 36,000 tonnes/year using geothermal-powered solid sorbent technology. Premium pricing (~$600-1000/tonne) but highest-integrity removal pathway.

44.01 (Oman) — Pioneering CO₂ mineralization in peridotite rock, converting gaseous CO₂ to solid carbonate minerals. Potentially lower costs than geological storage with inherent permanence.

LanzaTech (USA) — Converting industrial emissions to ethanol and other chemicals through gas fermentation. Commercial facilities operational in China and Europe; represents bridge between capture and utilization.

Key Investors & Funders

EU Innovation Fund — €1.5 billion committed to CCUS projects; critical funding source for European first-of-a-kind facilities.

Breakthrough Energy Ventures — Bill Gates-backed fund with significant CCUS portfolio including Climeworks, CarbonCure, and multiple capture technology developers.

UK Infrastructure Bank — Mandated to support net-zero infrastructure; positioned to provide concessional financing for UK CCUS projects meeting government criteria.

Oil Majors' Venture Arms — Chevron Technology Ventures, Equinor Ventures, Shell Ventures, and BP Ventures collectively deployed hundreds of millions into CCUS startups, providing both capital and potential offtake routes.

Examples

  1. Northern Lights First Shipment (2025): The project's inaugural commercial CO₂ shipment from continental European emitters to Norwegian offshore storage demonstrated that cross-border CCUS markets can function at commercial scale. The voyage proved technical feasibility of maritime CO₂ transport while validating commercial frameworks for storage-as-a-service. European procurement teams now have a functioning offtake option that didn't exist 18 months prior.

  2. Porthos Rotterdam Hub (Netherlands): The €2.3 billion project will capture CO₂ from multiple industrial emitters in Rotterdam's port area, transporting it via shared pipeline to offshore storage. With 2.5 Mt/year initial capacity and injection starting 2027, Porthos demonstrates industrial cluster approaches where shared infrastructure reduces per-emitter costs by 30-40% versus standalone projects. The Dutch government's €7.3 billion commitment de-risks project economics.

  3. HeidelbergMaterials Brevik (Norway): The world's first full-scale cement plant carbon capture project, capturing 400,000 tonnes CO₂ annually starting 2025. As cement accounts for 7% of global emissions, successful demonstration at Brevik could catalyze sector-wide deployment. The project ships captured CO₂ to Northern Lights storage, illustrating integration between industrial capture and cross-border storage infrastructure.

Action Checklist

  • Map your emissions sources by CO₂ concentration, volume, and geographic location to identify capture-ready facilities and potential cluster synergies
  • Evaluate storage access options including Northern Lights offtake, UK cluster participation, and emerging continental European storage hubs
  • Model CfD and ETS economics to understand at what carbon price and contract terms CCUS becomes financially viable for your specific applications
  • Assess vendor technology maturity by requesting performance data from operating facilities; prioritize proven technologies over laboratory-stage innovations for near-term commitments
  • Engage early with transport infrastructure developers to secure capacity in emerging pipeline and shipping networks—capacity may become constrained as demand scales
  • Develop internal carbon accounting capabilities to properly recognize CCUS in emissions reporting frameworks (GHG Protocol, SBTi, regulatory disclosures)

FAQ

Q: Should European procurement teams prioritize capture, utilization, or storage investments? A: Most organizations should not directly invest in storage infrastructure—access this through commercial offtake arrangements with storage operators like Northern Lights or emerging UK clusters. Capture technology selection depends on your specific emission sources. Utilization investments require careful evaluation of permanence claims and market viability; focus on applications with genuine long-term sequestration rather than delayed emissions.

Q: How do Contracts for Difference work for CCUS in the UK? A: CCUS CfDs provide payment equal to the difference between an agreed strike price and a reference price (typically linked to carbon market values). If your capture costs exceed carbon credit values, the CfD tops up the difference; if carbon prices rise above strike prices, you return the excess. This mechanism provides 15-year revenue certainty, dramatically improving project bankability. However, CfD allocation is competitive—projects must demonstrate cost-effectiveness and deliverability to secure contracts.

Q: What's the realistic timeline for integrating CCUS into our 2030 decarbonization strategy? A: Honest answer: limited. Projects initiated today face 3-7 year development timelines, meaning operational capture by 2028-2032 at earliest. For 2030 targets, prioritize immediately available decarbonization options (efficiency, electrification, renewable sourcing). Position CCUS for post-2030 phases by beginning feasibility work now, engaging with cluster infrastructure developers, and building internal technical capabilities. Don't over-rely on CCUS for near-term commitments.

Q: How should we evaluate the credibility of CCUS-based carbon credits in the voluntary market? A: Focus on three criteria: (1) Permanence—geological storage offers 1000+ year permanence; most utilization pathways offer temporary storage. (2) Additionality—would this capture happen anyway due to regulatory requirements or economic drivers? (3) Verification—is third-party MRV robust and continuous? Premium credits from DAC with geological storage (Climeworks, etc.) command $500-1000/tonne precisely because they satisfy all three criteria. Industrial capture credits at $20-50/tonne typically involve trade-offs on one or more dimensions.

Q: What red flags should we watch for when evaluating CCUS project partnerships? A: Key warning signs include: reliance on unproven technology at commercial scale; single revenue stream dependence without diversification; unclear storage access or permitting status; unrealistic cost projections compared to operating benchmarks; counterparty credit risk (startup developers without balance sheet backstops); and utilization pathways that delay rather than permanently remove emissions. Request third-party technical assessments and counterparty due diligence before significant commitments.

Sources

Topics

carboncapturestandardsunit economicsVPPgrid reliabilityCfD

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