The global energy system is undergoing a massive transformation, but the money isn't flowing where many expected. While total energy spending will remain flat at $6.5 trillion annually through 2050, the distribution of that capital tells a story of winners and losers in the race to decarbonize. Grid infrastructure is claiming the lion's share of investment, while carbon capture and storage technologies struggle to secure the funding they need to scale at climate-relevant speeds.
According to DNV's 2025 Energy Transition Outlook, this flat spending trajectory masks a dramatic shift in where capital is being deployed. As GDP doubles over the same period, energy's share of the global economy shrinks thanks to efficiency gains from electrification and the low operating costs of renewable technologies. The question isn't whether decarbonization will happen, it's whether carbon management will get enough support to play its essential role.
Grid infrastructure is emerging as the undisputed champion of energy transition spending. Global grid expenditure needs to more than double to $970 billion annually by 2050, according to DNV's New Power Systems report. This massive investment reflects the fundamental challenge of electrification: you can't decarbonize without dramatically expanding the transmission and distribution systems that deliver power.
In North America alone, $12 trillion will flow to renewables and grid infrastructure through 2050. The region's grids need to grow 2.5 times their current size to accommodate surging electricity demand from transportation, buildings, and industrial processes. Lithium-ion battery storage will provide three times more capacity than hydropower and pumped storage combined by mid-century.
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The economics are compelling. Renewables combined with grid expansion deliver predictable returns and benefit from established supply chains. Project developers know what they're building, financiers understand the risk profile, and governments can point to job creation in manufacturing and construction. It's a formula that attracts capital.
The outlook for carbon capture and storage presents a stark contrast. Despite being essential for hard-to-abate sectors, CCS will capture only 2% of global emissions by 2040 and 6% by 2050, according to DNV's forecast. For hydrogen and its derivatives, the picture is even more challenging as DNV revised its forecast downward by 20%, from 5% to 4% of final energy demand by 2050.
These numbers reveal a fundamental mismatch. Climate pathways that limit warming to 1.5°C require massive deployment of carbon removal technologies, with net negative emissions of 6 gigatons per year between 2050 and 2100. Technologies like direct air capture, bioenergy with carbon capture and storage, and industrial CCS need to scale 120 times current levels by 2050.
"This is the moment carbon capture moves from pilot to platform. We need companies like Conestoga to scale these solutions regionally and embed them in real industries."
Brad Crabtree, Assistant Secretary for the U.S. Department of Energy's Office of Fossil Energy and Carbon Management
The reasons for carbon management's funding shortfall are complex but not mysterious. First, the technology risk profile differs significantly from renewables. While solar and wind have decades of deployment data proving reliability and cost curves, many industrial carbon capture applications are still at demonstration scale. Investors naturally gravitate toward proven technologies with established markets.
Second, the revenue models remain underdeveloped. Grid infrastructure generates returns through regulated utility structures or power purchase agreements. Carbon management projects often depend on policy mechanisms like the 45Q tax credit, carbon pricing schemes, or voluntary markets that can shift with political winds. That uncertainty increases the cost of capital.
The United States is working to address these barriers through policy support. The Inflation Reduction Act expanded the 45Q credit to $85 per metric ton for CO2 captured and stored permanently, or $180 per ton for direct air capture projects. The Department of Energy has committed over $3.5 billion for carbon management demonstration projects, and regional hydrogen hubs received $7 billion in federal backing.
These investments are beginning to show results. More than 270 carbon capture projects have been publicly announced across the United States, representing $77.5 billion in potential capital investment. Companies like ExxonMobil have secured contracts to store up to 5.5 million metric tons of CO2 annually for multiple customers. Occidental Petroleum's Stratos facility in Texas is nearing completion as the world's largest direct air capture plant.
In the carbon storage sector, momentum is building. Chevron aims to capture 25 million metric tons annually by the end of the decade through projects like the Bayou Bend CCS Hub, which could store over 1 billion metric tons. Several states including Texas, Arizona, and West Virginia are advancing Class VI primacy applications to streamline permitting for carbon storage projects.
"With our growing roster of customers ready to deploy CCS, we'll be driving substantial emissions reductions along the Gulf Coast."
Dan Ammann, President of ExxonMobil Low Carbon Solutions
The Inflation Reduction Act creates a critical window of opportunity by front-loading investments in CCS, hydrogen, and DAC during the 2030s. This timing is deliberate. Projects that secure financing and begin construction this decade can establish proof points that derisk the technology for broader deployment in the 2040s and beyond.
For carbon management to reach the scale needed for climate goals, several things need to happen in parallel:
While grid investment dominates globally, certain regions are positioning themselves as carbon management leaders. The Gulf Coast is becoming a CCS hub thanks to existing oil and gas infrastructure, geological storage capacity, and industrial clusters that generate concentrated CO2 streams. Louisiana, Texas, and Mississippi are home to some of the largest announced projects.
The Midwest is leveraging its ethanol industry for bioenergy with carbon capture, which can generate carbon-negative fuels. Companies like Conestoga Energy are completing Class VI wells for permanent CO2 storage from ethanol production. The region's geology offers significant storage potential in deep saline formations.
Appalachia is pursuing hydrogen with carbon capture through initiatives like the ARCH2 hub, which could produce clean ammonia at scale. The region has access to low-cost natural gas, workforce expertise from the energy sector, and carbon sequestration capacity in depleted gas fields and saline formations.
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The carbon management industry faces a communication challenge. Unlike solar panels on rooftops or wind turbines on hillsides, carbon capture infrastructure operates largely out of sight. The benefits accrue over decades through avoided climate damages rather than immediate cost savings on utility bills. This makes it harder to build the political constituency that drives sustained investment.
Yet the economic opportunity is substantial. Global CCS investment could reach $80 billion by 2030, with North America and Europe expected to comprise more than 80% of deployed capacity thanks to supportive policies and established infrastructure. The sector is creating high-paying jobs in engineering, construction, and operations across regions transitioning from traditional energy industries.
For industries that can't fully electrify, carbon management represents not just an environmental necessity but a competitive advantage. Steel producers, cement manufacturers, and chemical plants that achieve low carbon intensity will access growing markets for green materials. Airlines purchasing sustainable aviation fuel made with captured CO2 can credibly claim emissions reductions to customers and regulators.
For carbon management to claim a larger share of that $6.5 trillion in annual energy spending, the industry needs to deliver on several fronts. First, projects currently under development must demonstrate that the technology works reliably at commercial scale across diverse applications. Every successful operation reduces perceived risk for the next project.
Second, costs need to come down through innovation and scale. Early movers in solar and wind benefited from policy support that allowed the industry to move down the cost curve. Carbon management deserves similar treatment given its role in addressing emissions from sectors where alternatives don't yet exist at scale.
Third, the permitting process for both capture facilities and CO2 storage needs to accelerate without compromising safety. The EPA's Class VI well program for CO2 injection is rigorous but slow. States gaining primacy can potentially streamline approvals while maintaining environmental protections.
The $6.5 trillion energy system of 2050 will look dramatically different from today's, even if total spending remains flat. Grid infrastructure will command the largest investment flows, and rightly so given the central role of electrification in decarbonization. But achieving net-zero emissions requires a diverse toolkit.
Carbon management technologies bring unique capabilities that complement rather than compete with renewables. They address emissions from existing industrial assets, create pathways for carbon-negative energy systems through bioenergy with CCS, and potentially reverse historical emissions through direct air capture. The question isn't whether we need these technologies, climate science has answered that. The question is whether investment will flow at the pace and scale required.
The 2030s represent a make-or-break decade. Projects moving forward now with support from the Inflation Reduction Act and Department of Energy funding can prove the economic and technical viability that attracts private capital at scale. Success creates momentum that allows carbon management to claim a growing share of energy transition investment in the 2040s and beyond.
For now, the industry must focus on execution. Deliver projects on time and on budget. Drive down costs through innovation and scale. Build the infrastructure that turns carbon management from a series of one-off projects into an integrated system. And make the case that investing in carbon removal today prevents far more costly climate impacts tomorrow. The $6.5 trillion isn't growing, but there's still time to redirect more of it toward the technologies that will actually get us to net zero.
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