The future of carbon capture and storage: strategies and challenges

According to the International Energy Agency, achieving 2050 net-zero emission targets requires expanding carbon capture and storage (CCS) and carbon capture and utilisation (CCU) technologies this decade, transforming industrial carbon management and accelerating the transition to a low-carbon economy, while preserving jobs, stimulating growth, and diversifying supply chains. Under its 2050 Net Zero Emissions Scenario, the amount of captured CO2 rises to 6.1 gigatonne (Gt) per year in 2050 from 45 million tonnes (Mt) in 2022, with a crossing point of 1 Gt per year in 2030. However, harnessing these techniques on the massive scale needed to achieve this ambitious pace of growth and decarbonise the world economy has yet to occur.

What is the current state of development for CCUS technologies in Europe and globally?

CCUS technology is becoming a reality, with projects and volumes, attracting interest from investors supporting the transition to a low-carbon economy. Despite significant progress, it is still lagging behind the IEA’s net-zero trajectory target of 1 Gt capture rate per year by 2030. Currently, there are over 700 projects at various stages of development across the value chain, which collectively represent capture capacity of 435 Mt of CO2 per year and 615 Mt of storage capacity per year by the end of the decade. 

The sector is currently at the same stage of development as renewable power 25 or 30 years ago: making it an economically viable solution requires the emergence of business models and the deployment of a fully-fledged industry. Today’s challenges are about incentives, cross-chain risks, cost efficiency and return on investment along the value chain. This is why specific public initiatives for this industry are so crucial today.

For instance, the European Union aims to establish a single European CO2 market and attract investments into these technologies. Its innovation fund is due to provide EUR40 billion of support over 2020-2030 for commercial deployment of low-carbon initiatives: 77 decarbonisation projects totalling more than EUR4.2 billion had already finalised grant agreements as at March 2025.

The UK has also recently marked the Final Investment Decision (FID) on the first major project to transport and store CO2 with the East Coast Cluster in Teesside.

In North America, the IRA has provided substantial tax rebates to emitters for every tonne of CO2 removed from the atmosphere and similar legislation has been implemented in Canada with the Carbon Management Strategy finalised in late 2023.

In APAC, the industry is at an earlier development stage, with active discussions ongoing in some countries regarding regulations, public support schemes, and incentives. Against this backdrop, large CCUS projects are starting to appear in the region.  

How are these technologies instrumental to balancing the demands of industrial growth with the goals of transitioning to a low-carbon economy and ensuring the provision of sustainable energy?

The IEA highlights the broad portfolio of technologies needed to achieve deep emissions reductions. Energy efficiency and renewables are central pillars, while other technologies are required to complement these, including CCUS.

This technology can offer a way to absorb emissions from existing power and industrial facilities, which are vital for day-to-day needs and economic growth. CCUS can reduce emissions in the short term as an interim step on the pathway to a low-carbon economy, and act as a bridge to massive deployment of the long-term solutions needed to achieve net-zero goals on a global scale, such as investing in renewable sources.

In hard-to-abate sectors, such as cement, iron, steel, and chemicals, CCUS technologies are central to tackling unavoidable process emissions now, where electrification is currently not feasible or too expensive, and given current technology used.

CCUS also has potential to address process emissions in many other sectors, including fertilisers and lime, as well as waste incineration and recycling, biofuels production, and food among others.

How does the cost of current CCUS technologies impact their overall viability and scalability and what are the levers to address this?

The high costs associated with CCUS technologies remain a challenge: considerable rollout and operational expenses potentially affect scalability. Upfront costs along the value chain can vary greatly depending on the specific processes involved and the scale of implementation. Scaling up and optimising design, construction and operations will be key in reducing costs and making these technologies more attractive to industries.

Given the early development stages in terms of commercial viability as compared with renewables, it will be fundamental to ensure dialogue with all stakeholders along the chain in order to harness CCUS technology and deploy it more broadly. It will be the cornerstone of the industry’s development across authorities, emitters, technical solution providers, Engineering, Procurement and Construction (EPC) companies, transporters, terminals, shipping, and storage.

Regional economic and industrial hubs could offer infrastructure that allows emitters from various sectors to lower costs for CO2 capture and transportation and share risks, as they roll out shared CO2 transport infrastructure within the related regulatory framework. For example, the French CO2 transport framework aims to design a regulatory framework for a shared CO2 transport and terminal network, and highlights the need to address the need for sequestration capacity to have a full value chain. This will also require regulation to incentivise investment from the private sector.

The development of cost-effective solutions, international cooperation and stringent and supportive regulatory mechanisms are pivotal to overcoming these financial barriers, and will be vital to manage cross-chain risks, de-risk investments, and support the expansion of CCUS clusters and further technological development.

What policies and regulations can facilitate the progress?

Robust policies, including the European Union’s Emissions Trading System, incentivise private investment and innovation. Launched in 2005, this system requires emitters to pay for greenhouse gas emissions, with free allowances to be phased out to meet the EU climate goals. A reformed ETS will come into effect starting in 2026, progressively covering 72-75% of emissions in the European Union and European Economic Area. The scope will then be broadened over the coming years. This would particularly support the deployment of carbon capture and storage technology, as all companies operating in the European Economic Area will be required to comply, leading to a massive need for alternatives to current allowances and credits.

Additionally, the EU’s certification framework for carbon removal, approved in November 2024, standardises definitions and requirements for verified carbon removals. Although voluntary, it could be instrumental in enhancing market robustness and integrity on both regional and global levels. 

At COP29 last year, greater attention was paid to the carbon dioxide removal (CDR) market with an agreement on standards to apply a Paris Agreement Crediting Mechanism to international carbon credits trade. This CDR credit mechanism could provide greater overall support for CCUS and the market as a whole.

How are financial institutions supporting the development of CCUS projects as part of global efforts towards the energy transition?

Financial institutions have a vital role to play in dialogue, not only with industrial stakeholders and carbon tech to understand their needs and challenges, but also with (i) investors, private equity and infrastructure funds to identify their appetite and requirements as they support the transition to a low-carbon economy and (ii) authorities who are developing public support schemes. Drawing on our inhouse engineers, here at BNP Paribas, we take a detailed approach to map all risks and mitigants and provide the full spectrum of support – advisory, debt equity, etc. – to fully unlock the potential of carbon capture, utilisation and storage.