CCUS Revolution: How 120x Growth Could Transform Net Zero

The carbon capture, utilization, and storage (CCUS) industry stands at an unprecedented inflection point. After decades of struggling to find commercial footing, CCUS technologies are now positioned as essential tools for achieving global net-zero commitments. The scale of transformation required is staggering: CCUS uptake needs to grow 120 times by 2050 for countries to achieve their net-zero commitments.

This represents a shift from approximately 110 million tons per annum (MTPA) of CO₂ expected to be captured by 2030 in the current project pipeline to the 4,200 MTPA required by 2050. The technology will need to decarbonize 45 percent of remaining emissions in the industry sector, making it a cornerstone of global climate strategy.

The Scale Challenge: From Subsidy to Market Reality

Over more than 25,000 global industrial CO₂ emitters across 11 industrial sectors could be decarbonized through CCUS. These facilities are distributed worldwide, with China, Europe, India, and the United States accounting for more than 60 percent of industrial point-source emissions. The highly distributed nature means solutions won't come from a few large hubs but require deploying capital across numerous projects globally.

To achieve net-zero commitments pledged by 64 governments at COP26, approximately 715 MTPA are required by 2030 and 4,200 MTPA by 2050. Even conservative scenarios show CCUS demand reaching approximately 2,000 MTPA by 2050, representing a 60-fold increase over today's pipeline.

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Policy Revolution: Enhanced Support Mechanisms

The regulatory landscape has transformed dramatically. The United States leads with enhanced 45Q tax credits under the Inflation Reduction Act (IRA), increasing sequestration payments from $50 to $85 per ton for industrial emissions and from $50 to $180 per ton for direct air capture projects. The IRA makes credits easier to claim by lowering capture volume requirements, implementing direct pay for five years, and enabling credit transfers.

Europe operates the world's largest greenhouse gas emissions trading scheme through the EU Emissions Trading System (ETS), covering approximately 40 percent of the European Union's GHG emissions from around 10,000 manufacturing facilities. The upcoming carbon border tax in 2026 will charge importers for carbon emissions in their goods, leveling the playing field between decarbonized EU products and higher-carbon imports.

Regulatory Innovation Across Regions

United States: Tax credits like 45Q historically benefited established companies with significant tax burdens, but the enhanced version supports higher-cost sectors like cement and steel. The IRA addresses barriers that limited benefits to revenue-generating companies by allowing direct pay and credit transfers.

European Union: Beyond the ETS, product standards mandate certain volumes of green commodities in construction projects. Low-carbon fuel standards create market-priced incentives for approved pathways that lower fuel carbon intensity.

United Kingdom: The decision to phase out unabated gas power by 2035 effectively forces gas providers to switch to hydrogen or install CCUS to continue providing flexible power.

Canada: Has committed to capping oil and gas sector emissions without capping production, creating clear incentives for CCUS deployment.

>> In Other News: Frontier and Wild Assets Sign Agreement for 120,000 Tonnes of Verified Carbon Removal Credits

Four Revenue Streams Beyond Subsidies

The industry's evolution from subsidy dependence requires developing four distinct revenue streams. Each addresses different market segments and creates sustainable commercial pathways for CCUS deployment at scale.

1. Green Product Premiums

Market research shows consumers and businesses demonstrate willingness to pay premium prices for green products, whether cars with net-zero bill of materials, cleaning products in net-zero plastic packaging, or buildings constructed with zero-carbon cement. Today, recycled polyethylene terephthalate (rPET) trades at a 10 to 20 percent price premium over conventional alternatives.

Several automakers have signed deals with steelmakers to procure green steel, demonstrating industrial willingness to pay premiums. The construction industry faces significant pressure to adopt green materials through policies like France's RE2020 regulation, creating premium markets for CCUS-enabled products.

Since cement typically represents around 3 percent of construction costs, substantial green premiums on materials have modest impacts on final building prices, making CCUS-enabled cement economically viable for premium market segments.

2. CO₂ as Valuable Feedstock

Most CCUS business cases assume captured CO₂ will be transported and sequestered, essentially operating as a waste-disposal business. The utilization of CO₂ as a product offers revenue to offset capture costs. Enhanced oil recovery represents the primary current use, employing CO₂ to extract additional oil while storing some underground.

Commercial offerings of CO₂-based polymers, particularly polyurethane foams and polycarbonates, are gaining momentum. Cement and aggregates could potentially store high volumes of CO₂ through reactions between CO₂ and minerals in the mix. Additionally, CO₂ can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel.

3. Voluntary Carbon Markets

CCUS pathways like bioenergy with carbon capture and storage (BECCS), direct air capture (DAC), and hydrogen production based on biofuels have potential to deliver negative emissions. Negative-emissions credits can be monetized in voluntary carbon markets as demand for high-quality offsets grows.

These projects provide additional revenue sources while supporting CCUS transportation and storage infrastructure development. Connection costs for local players in clusters could be reduced, overcoming infrastructure barriers through shared negative-emissions credit revenues.

4. Regulatory Support and Tax Incentives

Direct subsidies, tax credits, and price support mechanisms are encouraging CCUS investment globally. The enhanced 45Q credit in the United States represents the most significant policy shift, while the EU ETS creates carbon pricing that makes CCUS-enabled products cost competitive with high-emitting alternatives.

Product standards and regulatory backstops provide additional support. These can make CCUS-equipped products like cement competitive by mandating green commodity volumes in public construction projects or protecting more expensive, CCUS-enabled products through structured markets.

Learning From Historical Challenges

Past CCUS deployment faced significant barriers that limited commercial success. Projects have been large, unproven, and commercially fragile. Every CCUS project to date has been essentially unique, creating delivery challenges typical of first-of-a-kind projects while operating in fragile commercial environments.

Carbon capture through CCUS-anchored industrial hubs requires synchronized development across the value chain. Capture projects need transportation and storage networks to come online simultaneously, requiring collaboration between organizations with different corporate objectives, timelines, investment requirements, and risk tolerances.

Technology Types and Applications

Three main CCUS technology categories serve different decarbonization needs. Industrial point-source capture is most important for short and midterm decarbonization because the technology is ready today and can capture large volumes from hard-to-abate industries with few other options.

Direct air capture (DAC) has potential to unleash decentralized carbon removals at scale, predicated on achieving significant cost reductions. DAC can combine with revenue-producing technologies from sustainable aviation fuel to hydrogen production. Bioenergy with carbon capture and storage (BECCS) will be critical as net-zero transitions progress, particularly as attention shifts to atmospheric carbon removal and nature-based solutions reach capacity limits.

Industrial Applications

1. Point-Source Capture: Ready for immediate deployment in cement, steel, chemicals, and power generation
2. Hard-to-Abate Sectors: Industries with limited decarbonization alternatives where CCUS represents the primary pathway
3. Hub Development: Shared infrastructure connecting multiple emitters to centralized storage facilities

Investment Requirements and Opportunities

Scaling the CCUS industry requires $130 billion per year from now until 2050, according to McKinsey analysis. This investment level is comparable to global liquefied natural gas ($120 billion per year), electric vehicle charging ($140 billion per year), and hydrogen ($140 billion per year) sectors, indicating realistic scale for energy infrastructure investment.

Early clusters in Canada, Europe, and the United States are demonstrating how to overcome project complexity. These pioneering efforts provide templates for synchronized development across capture, transportation, and storage components while managing multi-stakeholder coordination challenges.

The distributed nature of global industrial emissions means deployment requires capital allocation across numerous projects worldwide rather than concentration in a few large hubs. This creates opportunities for regional specialization and technology adaptation to local industrial profiles.

Industry Action Requirements

Companies need to develop business cases beyond subsidy dependence by leveraging multiple revenue streams. This requires new forms of collaboration and supply chain connections to access green premiums, CO₂ utilization opportunities, and carbon credit markets simultaneously.

Collaboration and coordination mechanisms are essential for shared infrastructure development. Current clusters have moved slowly, and lessons must transfer quickly to next-generation projects. This requires organizational leadership to make difficult infrastructure decisions and coordinate multi-stakeholder investments.

Regulatory Support Needs

Governments must decide whether CCUS will be a major industrial policy feature, requiring difficult trade-offs among industry, financiers, citizens, and stakeholders. Once decided, regulatory, tax, and reporting frameworks must enable industry scaling through both fiscal and non-fiscal measures.

Early projects will need subsidies and direct support, which shouldn't be viewed as "picking winners" but rather as priming future industry development and derisking to help companies decarbonize assets more quickly.

The Path Forward

The CCUS industry's transformation from promising technology to essential climate solution is accelerating. Policy support provides the regulatory foundation, while diverse revenue streams create sustainable business models beyond government subsidies. The question is no longer whether CCUS will scale, but how quickly it can overcome coordination challenges and reach required deployment levels.

Success depends on continued collaboration between governments, industry, and investors. Early projects must demonstrate commercial viability while building infrastructure networks that enable broader deployment. The next five years will determine whether CCUS achieves the 120-fold growth necessary for global net-zero commitments and industrial sector decarbonization.

Despite decades of unfulfilled promises, current conditions differ fundamentally from past attempts. National commitments covering more than 90 percent of global emissions provide clear regulatory direction, while multiple revenue streams reduce dependence on subsidies alone. The CCUS industry finally has the policy support, market opportunities, and technological readiness required for large-scale deployment.