Making carbon capture & storage work

By Ruirui Zong-Rühe

Carbon capture and storage (CCS) is a vital technology for decarbonizing energy-intensive industries and mitigating climate change. After decades of evolution, over 200 million tons of CO₂ safely stored globally and costs declining toward breakeven, the challenge is no longer technical - it's aligning the institutional, regulatory, and social conditions that allow economically viable CCS projects to get built.

Interviews with industry leaders across the CCS value chain – including emitters, technology providers, infrastructure operators, and financial institutions - revealed three unanimous concerns: persistent financial viability challenges, unclear liability frameworks that make projects unbankable, and low social acceptance compared to other climate technologies. The ultimate insight: CCS is less a sole technical challenge than an orchestration challenge, requiring synchronization across companies, regulators, financial institutions, infrastructure operators, countries, and communities - each with fundamentally different incentives, capabilities, and constraints.

The window of opportunity for CCS

The next decade represents a unique period where early movers will capture advantages that cannot be replicated later. Costs are declining but remain high enough that green premiums provide meaningful revenue, carbon prices are rising but infrastructure is still being established, and an emerging group of customers is willing to pay for differentiation before decarbonized products become commoditized expectations.

For instance, low-carbon cement currently commands 5-10% price premiums, while net-zero cement achieves 20-30% premiums. But this premium window will not remain open indefinitely. As markets mature and more competitors deploy CCS, decarbonized products will go from differentiated premium offerings to commodity expectations. Companies that move now will establish customer relationships, develop technical expertise, and secure advantageous infrastructure access while capturing premium pricing.

CCS economics are improving - but context matters

The economics of CCS are improving gradually, with costs declining toward carbon price breakeven across multiple sectors - but the details vary dramatically by geography, sector, and strategic choices.

Energy consumption represents approximately 70% of CCS operating costs, with the amine reboiler - which regenerates the chemical solvent absorbing CO₂ - consuming roughly two-thirds of energy-related expenses. This energy intensity creates sharp cost differentials across countries and fundamentally shapes the geography of CCS competitiveness.

Our analysis across 42 countries examining three energy sourcing scenarios reveals dramatic variation: heat pump technology enables CCS viability in 35 countries by 2040, compared to just six countries using electric resistance heaters. The choice between waste heat integration, electric heating, or heat pumps can determine whether a project achieves viability in the 2020s, 2030s, or not at all.

Sectoral variation is equally pronounced. Chemicals and ammonia production enjoy substantially lower baseline costs—often 40-50 USD per ton—because their processes naturally generate higher CO₂ concentrations. In ammonia production, CO₂ concentration can reach 99%, compared to just 15-20% in cement or 3-5% in natural gas power generation. This difference translates directly into energy requirements and economics, creating a natural hierarchy of sectoral readiness.

Scale economics compound these advantages. Pipeline transport costs plummet by 85% when transporting 10 million tons annually compared to half a million tons—from 75 USD/t to 11 USD/t for offshore networks over 1,000 kilometers. This dramatic scale dependency explains why CCS hub development is not just operationally convenient but economically essential for smaller emitters. A facility producing 100,000 tons annually cannot economically justify dedicated pipeline infrastructure; participation in shared transport systems becomes necessary for viability.

The implication is clear: geography, energy strategy, CO₂ characteristics, and infrastructure access matter as much as technology selection. Projects that make economic sense in Norway or Saudi Arabia may struggle in Germany or Japan—not due to technical factors but economic geography.

Three barriers to CCS viability

1 Policy & regulatory uncertainty

Uncertainty in policies and regulations emerged as the most frequently mentioned barrier to CCS investment in our interviews. CCS projects require investment horizons of 15 to 20 years from initial planning through operational maturity. Policy changes within this window can transform viable projects into stranded assets.

For example, in 2024, Denmark introduced a carbon pricing mechanism featuring ceiling and floor provisions that bound price fluctuations within a predictable range. While not particularly generous compared to other European schemes, it transforms uncertainty into manageable risk that companies can price and hedge. Emitters know carbon prices will remain within defined boundaries, enabling confident scenario modeling. In contrast, 45Q tax credit in the US is among the world's most generous CCS incentives, but regulatory instability has repeatedly disrupted deployment, with the Department of Energy canceling funding for over 20 previously awarded projects.

Our analysis shows that regulatory stability matters even more than regulatory generosity for enabling investment. A stable but modest carbon price floor with legislated escalation paths provides more investable certainty than a generous but unpredictable subsidy subject to political reversal.

2. Low social acceptance of CCS

Regardless of country, public perception of CCS lags other sustainability and decarbonization technologies. Solar and wind projects may face local opposition, but they benefit from broad public understanding and general agreement that they contribute positively to climate goals. CCS faces different challenges: public opposition often comes from communities with limited understanding of what carbon capture involves, how CO₂ is transported and stored, and why CCS is necessary as part of decarbonization strategies.

Social acceptance also varies systematically across geographies. Countries with established offshore oil and gas industries, strong government backing with visible investment, and clear economic benefits show systematically higher CCS acceptance. Conversely, countries where CCS is perceived as way to prolong fossil fuels rather than decarbonize genuinely hard-to-abate industrial processes face substantially greater skepticism.

Factors that boost acceptance include policy support, economic benefits to local communities, trust in government and developers, existing knowledge of the technology, and transparent decision-making processes. But even in favorable contexts, perfect acceptance is unrealistic. The goal is sufficient acceptance for permitting and operation with continued engagement to maintain social license, rather than waiting for opposition to disappear.

3. Liability ambiguity

Banks and investors require clarity about who bears consequences if storage fails, if transport incidents occur, or if CO₂ losses happen during decades-long operational periods. When liability remains ambiguous, projects become unbankable regardless of their economic merits or social acceptance.

Private operators can reasonably manage liability during operational periods - perhaps 20-30 years covering active injection and initial monitoring. But no private entity can credibly commit to monitoring and remediation over 50-100 year timeframes or longer that permanent CO₂ storage requires. No insurance market can provide coverage for such durations.

Norway's model demonstrates a practical solution: the government assumes liability for CO₂ storage after a defined period of successful operation and demonstrated performance. This approach recognizes that very long-term risks extending beyond commercial planning horizons require public sector bearing, while operational risks that companies can manage through their actions remain with private operators.

Current liability frameworks in most jurisdictions remain unclear, and de-risk mechanisms remain immature. Cross-border and cross-chain liabilities create particular complexity when CO₂ flows across political boundaries or passes through multiple operators. Regulatory stability and clear frameworks for liability allocation across the value chain are urgently required to make projects financeable.

The technical components of CCS are proven. The economics are increasingly favorable. What remains difficult is aligning diverse actors around shared timelines, risk allocations, and value distributions that allow complex, multi-decade projects to proceed.

The full report, “Making Carbon Capture & Storage Work”, provides detailed analysis decision-makers need, including:

• A decision framework with critical questions at each value chain gate
• Energy sourcing scenario and cost curve analysis across 42 countries
• Sector-by-sector viability timelines through 2040
• Risk management strategies
• Prioritized policy recommendations for regulators

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