Market Trends in CCUS: How Will the Next Decade Shape Carbon Capture?

Across the globe, over 140 countries have set a net-zero target, with many committed to reaching net-zero CO₂ emissions by 2050. Currently, humans emit nearly 40 billion tonnes of CO₂ every year, so reaching this goal will be no small feat. This Herculean task will require many emission reduction technologies in tandem - and the groundwork must be laid now. CCUS (carbon capture, utilization, and storage) solutions have been identified as one such vital tool with the ability to decarbonize existing industry assets. The insights provided in this article draw from IDTechEx's report "Carbon Capture, Utilization, and Storage (CCUS) Markets 2025-2045: Technologies, Market Forecasts, and Players".

 

Carbon capture involves either trapping CO₂ directly from a point-source of emission before it can enter the air or capturing legacy emissions from the atmosphere. This CO₂ can then be stored deep underground or recycled for a range of useful applications. CCUS projects have existed for over 50 years. Until recently, development has been limited to enhanced oil recovery, a method of extracting more oil using CO₂, due to lack of profitability in other use cases.

 

Climate concerns have increasingly motivated governments to subsidize CCUS deployment over the past 10 years. In 2011, only 19 million tonnes of CO₂ was captured each year across the globe. As of 2023, this had risen to a modest 52 million tonnes per annum (still accounting for only 0.1% of anthropogenic emissions). Government funding can only go so far, so the development of carbon markets over the coming decade will be needed to elevate CCUS to new heights. If carbon markets are successfully developed, the carbon capture space will look very different in 2035. IDTechEx forecasts CCUS capture capacity will reach 1.2 billion tonnes per year by 2035, although this will still fall short of the necessary progress net-zero by 2050 demands. By far the biggest driver for CCUS growth will be a paradigm shift in the CCUS business model, with an increased focus on dedicated geological storage of carbon dioxide.

 

 

 

Storing captured carbon dioxide deep underground is great for the atmosphere - but where is the financial motivation for companies to start doing this? No physical product is created that can generate revenue, unlike CO₂-utilization based business models such as enhanced oil recovery. For CO₂ storage to flourish, economic mechanisms must be introduced by governments. This could take the form of a tax credit, or a cost, such as carbon pricing, could be applied to greenhouse gas emissions to encourage reductions in pollution and create carbon markets.

 

The past decade has seen carbon pricing rise in value and spread across jurisdictions. The World Economic Forum reports that a quarter of all CO₂ emissions now fall under some form of carbon pricing, with perhaps the most famous example being the European Union's Emissions Trading System (EU ETS). This shift to a market driven approach will be needed to unleash the full potential of CCUS and reach net-zero targets. Another approach - championed in the United States - involves providing tax credits for CCUS installations. The 45Q tax credit policy has ensured the US remains at the forefront of the CCUS space, with half of the world's planned project pipeline being US-based.

 

There are other changes to the CCUS business model that will also boost deployment. Historically, most CCUS projects have been full-chain: the CCUS project is developed, owned and operated by a single entity. While this is a natural model for first-of-a-kind projects, it requires operators to possess the technical and operational expertise in all areas of the CCUS value chain. Because developing a new major carbon dioxide transportation and storage project themselves would be out of the question for most emitters, a transition to a partial-chain approach is expected to stimulate CCUS project development.

 

In the partial chain approach, the CCUS value chain is split so that CO₂ capture, CO₂ transportation, and CO₂ storage facilities are owned and operated by separate entities, creating carbon dioxide transport and storage service providers. More and more such players plan to be operational by 2030. For example, the Northern Lights Longship project is set to become the first ever cross-border, open-source CO₂ transport and storage infrastructure network in December 2024.

 

Increased focus on creating CCUS storage infrastructure, economies of scale, and financial incentives over the next ten years will grow the amount of CO₂ being stored deep underground and dethrone enhanced oil recovery as the leading end-fate of captured CO₂. IDTechEx forecasts 800 million tonnes of captured CO₂ will end up in dedicated geological storage each year by 2035.

 

 

 

Carbon capture can play a crucial role in decarbonizing existing assets, preserving industries and jobs. In some sectors, such as power generation, its role may be transitionary as renewable electricity generation slowly ramps up. For other sectors, such as cement production with intrinsic process CO₂ emissions from limestone calcination, CCUS may be the ultimate decarbonization solution. Emerging sustainable industries - such as bioenergy and blue hydrogen production - also rely on CO₂ emissions being captured and stored.

 

According to IDTechEx's conversations with key players, early opportunities in the next 5 years exist for sectors with high CO₂ concentrations in flue gases and/or alternative revenue generation schemes. Sectors with high CO₂ levels - such as natural gas processing or ethanol production - have the lowest capture cost, and can already be entirely supported by existing financial carbon mechanisms (such as the US 45Q tax credit). Alternatively, projects capturing and storing CO₂ from biogenic sources have found early success using voluntary carbon market finance instead of needing to rely on government subsidies or compliance targets.

 

Point-source capture from natural gas processing dominates the CCUS space as of today. While growth in this sector will continue, new sustainable industries enabled by carbon capture will emerge by 2035. These sectors include blue hydrogen/blue ammonia (where production using fossil fuels is coupled with carbon capture to become a net-zero process) and BECCUS (bioenergy with carbon capture, utilization, or storage - defined as any process where biogenic CO₂ is captured). IDTechEx forecasts about 400 million tonnes per year of CO₂ may be captured from these three sectors in 2035.

 

 

 

Most CCUS projects stop new CO₂ from polluting the atmosphere, but others have bigger ambitions. Using direct air capture technologies - technologies for extracting CO₂ directly from ambient air using large fans pushing air through a filter containing a substance that physically or chemically binds the CO₂ - some players seek to remove legacy CO₂ emissions from the atmosphere and start reversing anthropogenic damage to the climate.

 

While it may sound far-fetched, direct air capture (DAC) reached new heights in 2024 with the inauguration of Climeworks' Mammoth facility. This plant can remove 36,000 tonnes per year of CO₂ directly from the atmosphere. However, an even bigger DAC plant is planned for 2025 with the expected launch of Occidental's Stratos - set to permanently sequester 500,000 tonnes per annum of CO₂. The solvent-based DAC approach that will be used was developed by Carbon Engineering (acquired by Occidental in 2023 for US$1.1 billion). Occidental has ambitious scale-up targets, with plans to build 100 plants by 2035.

 

As of now, direct air capture is seeing increased private sector support through voluntary purchase of carbon credits to meet corporate sustainability targets. For example, in July 2024, Microsoft agreed to pre-purchase 0.5 million tonnes of credits from Stratos. Continued growth will be dependent on the incorporation of DAC within government compliance carbon markets as voluntary demand is vulnerable, with IDTechEx forecasting annual capture capacity for DAC could reach ~50 million tonnes per annum in 2035 in the "Carbon Dioxide Removal (CDR) 2024-2044: Technologies, Players, Carbon Credit Markets, and Forecasts" report.

 

However, the path ahead for DAC may be rocky. Barriers include a large energy demand, which will require renewable energy infrastructure. DAC is very expensive, and economical capture at a large scale is yet to be demonstrated.

 

 

While dedicated geological storage has vast potential, emerging CO₂ utilization applications are still expected to shine. This will especially be true for regions where carbon pricing isn't high enough to cover capture, transportation, and storage costs or regions where necessary CO₂ transportation/storage infrastructure to support large-scale CCUS does not yet exist. Instead of waiting around, CO₂ utilization can enable profitable CO₂ capture using mature carbon capture technologies as of today by recycling CO₂ into valuable carbon-containing products.

 

A key conclusion from the IDTechEx report, "Carbon Dioxide Utilization 2025-2045: Technologies, Market Forecasts, and Players", is that over the next ten years, IDTechEx expects to see significant growth in sustainable alternative fuels made from CO₂. This will be driven by sustainability regulations already being put in place in the maritime and aviation sectors (where fuel electrification is unfeasible). As green hydrogen electrolyzer capacity scales up worldwide, production of e-fuels from carbon dioxide using power-to-x technology (including e-methanol, synthetic natural gas, e-diesel, e-kerosene, and e-gasoline production) will also increase. Several CO₂-derived fuels are already being commercially produced with many more commercial facilities expected over the next decade, with early leaders including Carbon Recycling International and LanzaTech.

 

Another promising utilization application is CO₂-derived concrete. When CO₂ is permanently stored in concrete, performance is improved, and less cement is needed. Growth of CO₂-derived building materials will be driven by new certifications, superior materials performance, and the ability to achieve price parity through waste disposal fees and the sale of carbon credits.

 

 

In 2035, the business case for CCUS will be stronger than ever before, and over 1 billion tonnes of CO₂ will be captured per year according to IDTechEx's forecasting. Carbon pricing will penalize CO₂ emissions, incentivizing carbon capture. More emitters will have access to CO₂ storage infrastructure as partial chain projects emerge associated with industrial networks and clusters. CO₂ utilization will remain an attractive alternative option for point-source emitters, especially those targeting CO₂-derived e-fuels. However, even with unprecedented growth in CCUS, capture capacity will still fall short of net-zero by 2050 roadmaps. Public and private sector support must continue to ramp up for CCUS to reach its full potential.

 

For more information on this report, including downloadable sample pages, please visit www.IDTechEx.com/CCUS.

 

For the full portfolio of sustainability research available from IDTechEx, please visit www.IDTechEx.com/Research/Sustainability.

This article is from "Technology Innovations Outlook 2025-2035", a free collection of insights from industry experts highlighting key technology innovation trends shaping the next decade. You can download the full collection here.

IDTechEx provides trusted independent research on emerging technologies and their markets. Since 1999, we have been helping our clients to understand new technologies, their supply chains, market requirements, opportunities and forecasts. For more information, contact research@IDTechEx.com or visit www.IDTechEx.com.