Trend watch: CO2 utilization pathways (mineralization, fuels, chemicals) in 2026 — signals, winners, and red flags

The carbon capture and utilization (CCU) sector is experiencing a decisive inflection in 2026, as companies move from laboratory proofs of concept to first-of-kind commercial facilities. Global investment in CO2 utilization technologies reached USD 4.8 billion in 2025, a 62% increase over 2024, driven by regulatory mandates in the US and Canada, corporate demand for low-carbon materials, and the declining cost of renewable electricity that underpins electrolytic pathways. Yet the sector remains fragmented across radically different technology readiness levels, business models, and market structures. Mineralization is scaling fastest, e-fuels are attracting the largest capital commitments, and CO2-to-chemicals occupies a middle ground of commercial promise and execution risk. This assessment identifies the signals that matter, the companies positioned to win, and the red flags that founders, investors, and procurement leaders should monitor closely.

Why It Matters

The fundamental logic of CO2 utilization is straightforward: rather than treating captured carbon dioxide as waste requiring permanent geological storage, convert it into products that displace fossil-derived incumbents and generate revenue. The addressable market is enormous. According to the International Energy Agency, CO2 utilization pathways could consume 5 to 10 gigatonnes of CO2 annually by 2050 if fully scaled, roughly 15 to 25% of current global emissions. In 2025, actual utilization volumes remained below 250 million tonnes, the vast majority in enhanced oil recovery and urea production, applications that offer limited or no net climate benefit.

The US policy environment is the most favourable in history. The Inflation Reduction Act's Section 45Q provides tax credits of USD 60 per tonne for CO2 utilized in products (rising to USD 85 per tonne when combined with direct air capture), while the Section 45V hydrogen production tax credit of up to USD 3 per kilogram makes green hydrogen, a critical input for e-fuels and CO2-to-chemicals pathways, cost-competitive with grey hydrogen for the first time. Canada's Investment Tax Credit for Carbon Capture, Utilization, and Storage provides a 50% refundable tax credit for CCU equipment, creating significant capital cost advantages for projects sited north of the border. California's Low Carbon Fuel Standard (LCFS), with credit prices averaging USD 65 to 80 per tonne CO2e in 2025, provides additional revenue streams specifically for fuels produced from captured CO2.

The demand side is equally consequential. Over 200 major corporations have committed to purchasing low-carbon materials and fuels under initiatives including the First Movers Coalition, which counts Boeing, Delta Air Lines, and Maersk among its members. The US Federal Buy Clean initiative mandates consideration of embodied carbon in federal procurement of construction materials, creating a guaranteed initial market for mineralized CO2 products including low-carbon concrete and aggregates. These demand signals are critical because CO2-derived products currently carry cost premiums of 20 to 200% over conventional alternatives; without policy support and committed buyers, the unit economics remain challenging at current scale.

Key Concepts

Carbon Mineralization refers to the reaction of CO2 with metal oxide minerals (primarily calcium and magnesium silicates) or alkaline industrial wastes to form thermodynamically stable carbonates. The resulting products, including calcium carbonate, magnesium carbonate, and supplementary cementite materials, permanently sequester CO2 in solid form. Mineralization offers the most durable storage of any utilization pathway (effectively permanent on geological timescales) and can be integrated into existing building materials supply chains. The process can occur at ambient conditions (slow) or be accelerated through elevated temperature and pressure (energy-intensive but faster).

Electrofuels (E-fuels) are synthetic hydrocarbons produced by combining green hydrogen (from water electrolysis powered by renewable electricity) with captured CO2 through processes including Fischer-Tropsch synthesis, methanol synthesis, or methanation. The resulting fuels, including synthetic kerosene, methanol, and methane, are chemically identical to their fossil counterparts and can use existing infrastructure. E-fuels are most relevant for hard-to-abate transport sectors, particularly aviation, where battery electrification is not feasible for long-haul routes. However, the thermodynamic efficiency of the full pathway (electricity to hydrogen to fuel) is only 30 to 45%, making e-fuels the most energy-intensive utilization pathway.

CO2-to-Chemicals encompasses diverse catalytic and electrochemical processes that convert CO2 into chemical feedstocks including ethanol, ethylene, formic acid, carbon monoxide, and polycarbonates. These pathways range from mature (CO2 to methanol, practiced industrially for decades) to early-stage (direct electrochemical CO2 reduction to ethylene, still at pilot scale). The chemical sector's annual consumption of approximately 450 million tonnes of fossil-derived feedstocks represents a substantial addressable market, and CO2-derived chemicals can, in principle, achieve price parity with fossil incumbents at sufficient scale and with adequate renewable electricity pricing.

Life Cycle Assessment (LCA) and Carbon Intensity are essential analytical tools for evaluating whether a CO2 utilization pathway delivers genuine climate benefit. Not all CCU products reduce net emissions; the carbon footprint of energy inputs, process emissions, and end-of-life product fate must be carefully accounted. A synthetic fuel that requires fossil-derived electricity for its production can have higher lifecycle emissions than the conventional fuel it replaces. Credible LCA methodology, aligned with ISO 14040/14044 standards, is necessary to distinguish climate-beneficial utilization from greenwashing.

CO2 Utilization KPIs: Benchmark Ranges

Metric	Early Stage	Developing	Commercial Ready	Market Leading
CO2 Conversion Efficiency	<50%	50-70%	70-85%	>85%
Energy Intensity (GJ/tonne CO2)	>15	10-15	5-10	<5
Cost Premium vs. Fossil Product	>200%	100-200%	30-100%	<30%
Carbon Intensity Reduction (LCA)	<30%	30-60%	60-80%	>80%
Production Scale (tonnes CO2/year)	<1,000	1,000-50,000	50,000-500,000	>500,000
Levelized Cost of CO2 Product (USD/t)	>500	250-500	100-250	<100

Signals That Matter

Mineralization Is Reaching Commercial Velocity

Carbon mineralization has emerged as the most commercially advanced utilization pathway in North America, driven by its integration with the massive construction materials market (USD 600 billion annually in the US alone). CarbonCure Technologies, based in Halifax, Nova Scotia, has deployed its CO2 injection technology in over 700 concrete plants across North America, mineralizing CO2 into calcium carbonate during the concrete mixing process. Each installation sequesters 10 to 30 kg of CO2 per cubic metre of concrete produced, with the added benefit of improving compressive strength by 5 to 10%, reducing cement content requirements, and lowering material costs. CarbonCure's revenue model, charging concrete producers a per-yard technology licensing fee while delivering measurable material savings, has proven scalable across diverse plant configurations.

Separately, Heirloom Carbon Technologies opened its first commercial direct air capture facility in Tracy, California, in 2023, using accelerated mineralization of calcium oxide to absorb atmospheric CO2. The facility's output of mineralized carbonates is contracted to Microsoft and other corporate buyers. Blue Planet Systems, also California-based, manufactures synthetic limestone aggregate from industrial flue gas CO2, with a 100,000-tonne-per-year production facility under construction in Pittsburg, California. The San Francisco International Airport's Harvey Milk Terminal 1 used Blue Planet aggregate in its construction, representing one of the first large-scale deployments of CO2-mineralized building materials.

E-fuels Attract Historic Capital but Face Unit Economics Pressure

The e-fuels sector attracted over USD 2 billion in committed capital in 2025, anchored by projects targeting sustainable aviation fuel (SAF). HIF Global, backed by Porsche and ExxonMobil, is advancing its Haru Oni pilot plant in Chile (producing methanol from wind-powered green hydrogen and captured CO2) and planning a full-scale facility in Texas with capacity for 200 million gallons of e-fuels annually. Infinium, headquartered in Sacramento, is commissioning its first commercial e-fuels plant in Corpus Christi, Texas, converting waste CO2 and green hydrogen into ultra-low-carbon synthetic diesel and jet fuel, with offtake agreements in place with Amazon and American Airlines.

However, the unit economics remain challenging. Current e-fuel production costs of USD 3 to 6 per gallon significantly exceed conventional jet fuel at USD 2 to 3 per gallon. Even with Section 45Q credits, LCFS credits, and the SAF blender's credit under the Inflation Reduction Act (up to USD 1.75 per gallon), e-fuels require stacking multiple subsidies to approach price parity. The critical variable is renewable electricity cost: e-fuel economics become viable at electricity prices below USD 0.02 to 0.03 per kWh, currently achievable only in locations with exceptional wind or solar resources. As renewable electricity continues to decline in cost (BloombergNEF projects global average solar PPA prices of USD 0.018/kWh by 2030), the economics will improve, but near-term profitability without subsidies remains elusive.

CO2 Electrochemistry Enters Pilot-to-Commercial Transition

The direct electrochemical reduction of CO2 to valuable chemicals, long confined to laboratory demonstrations, is entering the pilot-to-commercial transition. Twelve (formerly Opus 12), based in Berkeley, California, has developed membrane electrode assemblies that convert CO2 and water directly to carbon monoxide, syngas, or formic acid using renewable electricity. Their technology avoids the hydrogen intermediary step required by Fischer-Tropsch pathways, potentially reducing both capital costs and energy intensity. Twelve's E-Jet facility, producing SAF from CO2 for the US Air Force, demonstrated the pathway's feasibility at small scale in 2024 and is now scaling toward a 50,000-gallon-per-year demonstration.

OCOchem, headquartered in Richland, Washington, has developed a proprietary electrochemical process for converting CO2 to formic acid, a hydrogen carrier and industrial chemical with a USD 1.2 billion global market. Their process achieves faradaic efficiency exceeding 90% at commercially relevant current densities, a significant technical milestone. Meanwhile, Avnos (a spinout from the Massachusetts Institute of Technology) is commercializing a combined direct air capture and CO2 electrolysis system that produces syngas in a single integrated unit, reducing the capital cost of the capture-to-product chain by an estimated 30 to 40%.

Red Flags

Greenwashing Risk in CO2 Utilization Claims

The most significant red flag in the sector is the proliferation of climate benefit claims that do not withstand rigorous lifecycle analysis. Products that temporarily store CO2 (such as synthetic fuels that release their carbon upon combustion, or polymers with short lifespans) deliver climate benefit only if the embedded CO2 was sourced from the atmosphere (via DAC or biogenic capture) rather than from fossil point sources. A synthetic fuel made from fossil power plant flue gas and grey hydrogen may actually increase net lifecycle emissions compared to conventional fuel. Investors and procurement teams should demand ISO-compliant LCA documentation and reject claims based solely on the mass of CO2 "utilized" without accounting for the carbon intensity of energy inputs and end-of-life fate.

Electrolyser Supply Chain Constraints

Green hydrogen availability is the binding constraint for e-fuels and many CO2-to-chemicals pathways. Global electrolyser manufacturing capacity reached approximately 35 GW per year in 2025, but utilization rates remain below 60% due to supply chain bottlenecks in iridium (for PEM electrolysers) and nickel foam (for alkaline systems). Projects planning to commence production before 2028 face the risk of electrolyser delivery delays, cost overruns, and underperformance of early-generation equipment. Prudent project developers are securing electrolyser supply agreements 24 to 36 months in advance and diversifying across multiple equipment suppliers.

Policy Dependency and Regulatory Uncertainty

The vast majority of CO2 utilization projects in North America are economically dependent on stacking two or more policy incentives (45Q, LCFS, SAF credits, Buy Clean mandates). Any reduction or expiration of these incentives, or uncertainty during political transitions, creates significant revenue risk. The 45Q tax credit is subject to "commence construction" deadlines that require projects to begin physical work or incur 5% of total costs by January 2033. Companies that cannot meet these timelines risk losing their primary economic support mechanism. Political opposition to clean energy subsidies, while not currently dominant, represents a non-trivial tail risk for projects with 20 to 30 year investment horizons.

Key Players

Established Leaders

CarbonCure Technologies leads in concrete CO2 mineralization with 700+ installations and proven unit economics at scale.

Linde plc and Air Liquide dominate industrial gas supply chains that underpin CO2 capture and utilization infrastructure, with growing CCU-specific business divisions.

HIF Global is developing the largest e-fuels production pipeline globally, with projects in Chile, Texas, Uruguay, and Australia.

Emerging Startups

Twelve is commercializing direct CO2 electrolysis to fuels and chemicals, with US Department of Defense contracts providing early revenue.

Blue Planet Systems manufactures CO2-mineralized aggregate for construction, with its first large-scale facility nearing completion.

OCOchem has achieved breakthrough electrochemical efficiency for CO2-to-formic acid conversion at commercially relevant scale.

Key Investors and Funders

Breakthrough Energy Ventures has deployed capital across multiple CCU pathways including mineralization, e-fuels, and electrochemistry.

US Department of Energy provides substantial grant and loan guarantee funding through the Office of Fossil Energy and Carbon Management, with over USD 1.5 billion allocated to CCU projects since 2022.

Amazon Climate Pledge Fund and Microsoft Climate Innovation Fund are active purchasers of CO2 utilization products and equity investors in CCU companies.

Action Checklist

• Evaluate CO2 utilization products in your procurement pipeline using ISO-compliant lifecycle carbon intensity data, not supplier marketing claims
• Assess eligibility for Section 45Q tax credits if developing or hosting CCU infrastructure, and confirm ability to meet commence-construction deadlines
• For aviation and shipping operators, begin securing SAF offtake agreements from e-fuel producers to meet emerging blending mandates (EU ReFuelEU requires 2% SAF by 2025, rising to 6% by 2030)
• Construction companies and developers should pilot CO2-mineralized concrete and aggregates, leveraging Buy Clean procurement advantages for federal and state contracts
• Monitor electrolyser procurement timelines and secure green hydrogen supply agreements 24 to 36 months ahead of planned production start dates
• Demand third-party verified LCA documentation from all CCU product suppliers before making climate benefit claims in sustainability reporting
• Track LCFS credit pricing and policy developments across California, Washington, Oregon, and emerging state programmes
• Evaluate stranded asset risk for fossil-dependent product lines that CO2-derived alternatives may displace within 10 to 15 years

FAQ

Q: Which CO2 utilization pathway offers the best near-term investment returns? A: Carbon mineralization in building materials currently offers the most favourable risk-adjusted returns because it integrates into existing supply chains, delivers permanent carbon storage, and can achieve positive unit economics without subsidies at scale (CarbonCure's model demonstrates this). E-fuels offer the largest addressable market but remain subsidy-dependent and capital-intensive. CO2-to-chemicals occupies a middle ground with attractive margins for specific products (formic acid, methanol) but requires further scale-up to prove commercial viability.

Q: How should procurement teams evaluate the climate credibility of CO2-derived products? A: Require three things: (1) a complete lifecycle assessment conducted to ISO 14040/14044 standards by an independent third party; (2) disclosure of the CO2 source (atmospheric, biogenic, or fossil point source) and the carbon intensity of all energy inputs; and (3) documentation of the product's end-of-life carbon fate (permanent in mineralized products, released upon combustion for fuels). Products claiming "carbon negative" status should demonstrate net atmospheric CO2 removal across their full lifecycle, not merely that CO2 was used as a feedstock.

Q: What are the realistic timelines for e-fuel cost competitiveness without subsidies? A: Most credible projections place unsubsidised e-fuel cost parity with conventional jet fuel in the 2035 to 2040 timeframe, contingent on renewable electricity prices falling below USD 0.02/kWh, electrolyser costs declining by 50 to 70%, and production facilities achieving economies of scale at 100,000+ barrel-per-day capacity. Near-term projects will remain subsidy-dependent, with stacked incentives (45Q, LCFS, SAF credits) bridging the cost gap during the 2026 to 2035 scale-up period.

Q: Is CO2 utilization a substitute for geological carbon storage? A: No. CO2 utilization and geological storage are complementary strategies. Utilization pathways can realistically consume 5 to 10 gigatonnes of CO2 annually at maximum scale, while climate scenarios consistent with 1.5 to 2 degrees C warming require total CO2 management capacity of 10 to 20 gigatonnes per year. Geological storage will remain essential for the volumes that utilization cannot absorb. However, utilization has the advantage of generating revenue from CO2, which can subsidise the capture infrastructure that also serves storage operations.

Q: What role does direct air capture play in the utilization equation? A: DAC-sourced CO2 is the only feedstock that enables genuinely carbon-negative utilization products (products whose lifecycle removes more CO2 from the atmosphere than they emit). However, DAC currently costs USD 400 to 600 per tonne, roughly 5 to 10 times the cost of industrial point-source capture. For utilization pathways where the CO2 source does not affect product quality (fuels, chemicals), point-source capture remains the economically rational choice until DAC costs decline to USD 100 to 200 per tonne, projected by most analysts for 2035 to 2040.

Sources

• International Energy Agency. (2025). CO2 Utilization in the Transition to Net Zero. Paris: IEA Publications.
• BloombergNEF. (2025). Carbon Capture, Utilization and Storage: Market Outlook Q4 2025. New York: Bloomberg LP.
• US Department of Energy. (2025). Carbon Utilization Program: Annual Review and Funding Summary. Washington, DC: Office of Fossil Energy and Carbon Management.
• CarbonCure Technologies. (2025). Annual Impact Report: CO2 Mineralization in Ready-Mix Concrete. Halifax: CarbonCure Technologies Inc.
• National Academies of Sciences, Engineering, and Medicine. (2023). Carbon Dioxide Utilization Markets and Infrastructure: Status and Opportunities. Washington, DC: The National Academies Press.
• Hepburn, C., et al. (2019). "The technological and economic prospects for CO2 utilization and removal." Nature, 575, 87-97.
• California Air Resources Board. (2025). Low Carbon Fuel Standard: Annual Program Review. Sacramento: CARB.
• Mission Innovation. (2025). Carbon Dioxide Removal Mission: Progress Report on Utilization Pathways. Brussels: Mission Innovation Secretariat.