The Carbon Capture Boom Is Starting to Crack

Carbon capture and storage (CCS) technology grew in popularity during the Covid-19 pandemic as several governments and private companies pledged to support a green transition. The use of CCS was expected to help decarbonise hard-to-abate industries until a long-term transition to clean energy could be achieved. However, in recent years, many have become more sceptical about the effectiveness of CCS technologies, as several projects have failed to perform.CCS technology is used to capture carbon dioxide at emission sources, so it can be transported and stored or buried in a suitable underground location. Several CCS technologies have been launched in recent years, including conventional CCS installations and direct air capture (DAC) – which removes CO2 directly from the atmosphere – as they have grown in popularity, particularly across hard-to-abate industries.As governments have put increasing pressure on industries to decarbonise their operations, companies that cannot simply switch to renewable alternatives have invested heavily in CCS activities to reduce emissions. While many have criticised companies for relying on carbon capture rather than cutting emissions at the source, CCS tech has been expected to help companies support a green transition as they assess possible long-term solutions.In 2025, the World Economic Forum predicted that the CCS industry would grow fourfold by the end of the decade. This prediction is supported by a massive pipeline of CCS activities, as several sectors invest heavily in the technology. In the oil and gas industry, ExxonMobil, Shell, Chevron, TotalEnergies, Equinor, and Occidental have all pledged major investments in CCS technologies.Some governments are also backing CCS in a big way. In May, Germany launched a $5.7 billion Carbon Contracts for Difference scheme that aims to promote and support CCS and carbon capture and utilisation (CCU) projects. In 2024, in the United Kingdom, the government announced up to $29 billion of funding over 25 years to make the country an early leader in two growing global sectors, CCUS and hydrogen, to be allocated between these two clusters.Meanwhile, in Denmark, the cement maker Aalborg Portland signed a $2.55 billion CCS contract with the country’s energy agency. Aalborg Portland’s CEO Soren Holm Christensen stated, “We can now take the decisive step toward realising a project that is not only significant in a Danish context, but is also among the largest industrial CO2 capture projects in Europe.”Despite the clear optimism around CCS technology, the cracks are starting to show as several companies fail to see the results expected from CCS operations. An Institute for Energy Economics and Financial Analysis (IEEFA) review of 13 operating CCS projects around the world found that most captured below design levels of 90 per cent, while some failed outright, highlighting the ongoing technical challenges of CCS as a solution and the potential for further cost escalation per tonne. According to the Global CCS Institute, only 50 facilities were operating worldwide in 2024, with the capacity to capture around one thousandth of global emissions.Meanwhile, environmentalists argue that CCS is simply another form of greenwashing, and that funding for the technology could be better spent exploring alternative, clean energy options to decarbonise hard-to-abate industries. Many argue that using CCS technologies will give companies an excuse to use the “transition fuel” of natural gas for longer than necessary. In addition, CCS is being used by the oil industry to allow them to claim that they are producing “low-carbon oil”, even though burning fossil fuels continues to contribute heavily to climate change.CCS technology is extremely expensive to incorporate into operations, with many projects relying on taxpayer support. For this purpose, key industry players suggested that CCS should only be pursued after other green solutions during a 2025 conference in London.In the United States gas industry, the cost of adding CCS to U.S. plants is estimated at $20 to $30 per megawatt hour (MWh), which could potentially double the cost of power production. Meanwhile, in Europe, the think tanks Agora Industry and Oeko-Institut, estimate the cost of carbon capture, transport, and storage at between $170 and $340 a tonne. “According to these calculations, the costs of existing or planned CO2 storage projects are at least 50 per cent higher than previous forecasts,” the think tanks stated in a press release.Several fossil-fuel dependent industries and companies have long promoted CCS technology as key to decarbonising operations. This has helped improve the image of CCS and allowed major oil companies and heavy industry to get government backing. However, the high cost of CCS technology use, as well as the barriers to commercial rollout, suggest that CCS promotion may have been one big (and fairly successful) PR stunt. While it may still be used in a limited capacity, governments should be encouraging companies to invest in long-term decarbonisation solutions if they hope to achieve a green transition.By Felicity Bradstock for Oilprice.comMore Top Reads From Oilprice.comU.S. Refinery Utilization Hits 96.2% as Fuel Markets Tighten WorldwideLNG Importers Seek Lower Qatar and UAE Prices as War Upends DealsIndia’s Fuel Exports Set to Soar in July as Refining Margins Jump