Efforts to expand carbon capture, utilisation and storage (CCUS) took some important steps forward in 2025. 

Despite delays and cancellations in some areas, projects reached notable milestones in key markets, while growing financing provided further momentum.

CCUS deployment in Europe saw a step-change as the world’s first dedicated carbon dioxide CO2 storage hub began operating in Norway. 

Major projects were also commissioned in China and North America, and the construction of new facilities began in eight countries worldwide. 

The newest annual update to the International Energy Agency (IEA) CCUS Project Database – which incorporates developments between the first quarter of 2025 and the first quarter of 2026 – found that capture capacity that was operational or under construction during this period was over 10 per cent higher than in the previous Database update, which covered the first quarter of 2024 through the first quarter of 2025. 

Meanwhile, storage capacity increased by around 25 per cent.

In terms of future prospects, the total potential capture capacity remained at similar levels of around 425 million tonnes (Mt) – although the timeline for deploying much of this planned capacity has been pushed back towards 2035 amid delays in permitting and construction, as well as broader market uncertainties.

Insights from our forthcoming publication, Financing CCUS at Scale, show that more than $15 billion in commercial debt has been raised over the past two years – almost exclusively in markets where the government reduced risks across CO2 capture, transport and storage, providing enough certainty and confidence for lenders and investors to step in. 

This suggests that new CCUS policies are helping spread project risks across the public and private sectors, which in turn is allowing unprecedented levels of private capital to flow into projects. 

Ensuring this extends beyond a small number of projects, however, will require additional policy support to enable viable business models and target specific risks that need to be addressed for more projects to reach final investment decisions (FIDs).

Supportive policies are unlocking private capital in select markets

Regionally, Europe and the Middle East saw the strongest gains in 20251, with both capture and storage capacity expanding. 

North America also recorded significant additions in CO₂ storage capacity, although progress on capture was tempered by the pause or delay of many projects.

Recent progress was enabled by targeted government support that helped strengthen project economics and reduce investment risks. 

In Europe, long‑term revenue guarantees – mostly through carbon contracts for difference – together with risk‑sharing mechanisms have enabled higher‑cost capture projects (such as those associated with cement production) and major transport and storage hubs to reach FIDs. 

In North America, tax credits continued to underpin capture projects, particularly in low‑cost applications such as fertiliser and bioethanol. 

In the Middle East, progress was supported by hydrocarbon operations and anticipated demand for low‑emissions fuels and materials, with risks largely managed by the participation of state-owned oil and gas companies as project sponsors.

Commercial bank lending flowing into the sector has reached unprecedented levels. 

However, it remains heavily concentrated in markets with strong frameworks for reducing the financial risks associated with CCUS projects. 

The UK, which combines long‑term contracts for emitters, cross‑chain compensation mechanisms and a government backstop for long‑term risk exposure, accounted for around 85 per cent of this financing over the past two years.

Weak demand and delays held back project development in some sectors and markets

At the same time, several segments of the CCUS sector faced growing headwinds in 2025. 

This was notably the case for projects that plan to capture CO2 from hydrogen production facilities, which struggled to advance globally due to the lack of firm long‑term offtake agreements.

This led to pauses or delays – even for projects that had already reached FIDs, including major developments in the US and Canada. 

Even in markets with government‑backed demand frameworks, such as the UK, several announced CCUS projects linked to hydrogen were cancelled.

Carbon dioxide removal (CDR) projects faced similar difficulties securing bankable demand.

The biomass-fired district heating plant operated by Stockholm Exergi in Sweden stood out as a rare example of a bioenergy with carbon capture and storage (BECCS) project that moved forward with substantial offtake commitments, but this remained the exception rather than the norm. 

Several planned BECCS projects in Sweden and elsewhere were cancelled or delayed in 2025.

Developers struggled with uncertainty in the voluntary carbon market, particularly with the lack of liquid long-term contracts needed to support project financing.

In the US, projects associated with high capture costs that typically go over the $85 per tonne tax credit (as is typically the case with industry and power applications) faced delays and cancellations, particularly after the withdrawal of major government grants to fund detailed engineering studies. 

Emerging interest from data centres in CCUS as a pathway to securing firm, low‑emissions power also has yet to materially shift the broader challenges facing capture projects in these sectors. 

Permitting also remains a bottleneck in US states for which storage permitting is overseen at the federal rather than state level, slowing the development of new storage sites and causing the delay of planned projects to 2035. 

On the transport side, community concerns  continued to constrain new CO₂ pipeline development, with the Trailblazer project standing out as an exception because it repurposed an existing natural gas pipeline. 

What to look for in 2026

As CCUS markets continue to develop, the IEA will monitor what this means for policymakers, financiers and the energy system, including through granular tracking of the hundreds of planned projects.

In 2026, several major CCUS projects are expected to reach further key milestones. The Porthos project in the Netherlands is set to begin operations, becoming Europe’s second large‑scale CO₂ transport and storage network. In the United Kingdom, remaining Track‑1 capture projects should progress toward construction. Additional momentum in storage development is anticipated in the Mediterranean, with Italy’s Ravenna Phase 2 and Greece’s Prinos CO2 projects both expected to reach final investment decisions. At the same time, many CCUS projects that are tied to oil and gas operations in the Middle East face significant uncertainty in the current geopolitical context.

Against this backdrop, several emerging trends could shape the year:

The gap between capture and storage development could widen in 2026, creating uncertainty for transport and storage developers. Storage projects continue to move ahead – with several large sites under construction or approaching FID – yet committed capture volumes are not keeping pace. The decision of the Norwegian oil and gas company Equinor to scale back parts of its storage investment plans illustrates the risks of under‑utilised infrastructure. Without clearer demand signals, some developers may hesitate to proceed, reinforcing the need for policies that provide greater volume certainty.

New markets could also emerge. A wave of new government frameworks for CCUS are poised to broaden the geographic base of deployment. In Germany, France and Japan, new long-term revenue schemes could help lower revenue risks for capture project developers, stimulating demand for shared infrastructure. India’s new $2.2 billion industrial decarbonisation support package could also open opportunities for early projects, particularly in hard‑to‑abate sectors.

Regulatory alignment will determine the pace of cross‑border CO₂ shipping in Southeast Asia. While it remains a key area of interest, momentum has softened as some major oil and gas companies have stepped back from planned CCUS investments, suggesting the region may be entering a consolidation phase. Policy clarity and regional cooperation will be essential to unlock continued progress.

Risk‑sharing mechanisms will be critical to catalyse private capital. Steps forward in 2025 underscored the importance of robust risk‑sharing frameworks, as did some setbacks. In Europe, several companies withdrew their bids from Denmark’s CCUS fund amidst concerns that risks associated with the availability of transport and storage infrastructure were too high. Targeting support to address the specific risks that matter most – long-term revenue certainty, volume risk mitigation and clear liability allocation – will be essential for the next wave of projects to reach FID. -OGN/TradeArabia News Service