A new report from the Sustainable Markets Initiative (SMI), developed by its Financial Services Task Force, argues that while carbon capture and storage (CCS) project pipelines are growing, structural financing barriers continue to delay final investment decisions across key markets.
The study, produced under the group’s CCS Lighthouse Project, frames carbon capture as a multi-billion-dollar opportunity constrained less by technology than by risk allocation and revenue uncertainty.
Independent developers, particularly on the capture side, often struggle to secure late-stage development funding or long-term offtake contracts robust enough to attract institutional capital. Many early projects have relied heavily on government grants and subsidies – a model the report suggests is insufficient to scale the sector globally.
A three-part strategy to crowd in capital
To address the bottleneck, the report proposes a coordinated package of financial interventions. First, it calls for the creation of a catalytic pre-FID development fund, potentially backed by major banks, to provide flexible capital to projects nearing investment decision.
Target regions highlighted include the Nordics and the US, where policy frameworks are relatively advanced but funding gaps persist.
Second, the finance sector is encouraged to aggregate demand for carbon removal credits and low-carbon products, converting voluntary corporate pledges into structured, investment-grade offtake agreements.
By pooling buyers and layering in credit enhancement mechanisms, banks could help create the predictable revenue streams required for project bankability.
Relevant: CCSA Warns CCUS Delays Could Drive Industry Out Of The EU
Third, the report recommends establishing a global CCS financing forum to accelerate learning across jurisdictions. A structured platform for sharing best practices on risk-sharing, contract design and policy alignment could shorten development timelines and reduce the cost of capital.
The analysis aligns with projections from the International Energy Agency, which sees CCS delivering a meaningful share of global emissions reductions by mid-century.
With more than a hundred projects targeting FID before 2027 and operational capacity rising year-on-year, momentum is building. And as the report clearly shows, the primary constraint is no longer technology readiness, but mobilizing private finance at scale.
Read more: What’s Next For Carbon Capture, Utilization & Storage (CCUS) In 2026?
