The Global Race To Capture Carbon Has Begun!

The Global Race To Capture Carbon Has Begun - Carbon Herald
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After the Inflation Reduction Act (IRA) was enacted in August 2022, there seems to be a race between countries and regions when it comes to carbon capture. With this particular technology expected to prevent 14% of all global CO2 emissions entering the atmosphere, are we on the verge of a carbon capture boom?

Carbon capture was part of the decarbonization conversation even before the IRA, but it does seem like this particular piece of legislature provided a shot in the arm when it comes to motivating everyone along the value chain in multiple different countries. If you’d like to jump ahead to your country of interest you can use the links below.

With its sheer scale and broad application the IRA has boosted investment in the U.S. from oil and gas corporations, created a raft of new companies focused on carbon capture and is acting as the foundation of multiple carbon storage and transportation hubs.

Legislators from Ottawa, Brussels and London have also been paying attention and all of them have responded with policy changes of their own.

Last month the UK and EU announced that they will be cooperating more closely on rolling out a carbon border tax, as well as carbon capture. Jeremy Hunt, the UK’s chancellor of the Exchequer, even promised a response to the IRA later in the year. “That doesn’t necessarily mean matching subsidy for subsidy, but it means that making sure the overall package, which means people choose to invest in the UK, remains attractive,” he said.

Sanjay Mehta, an experienced investor in energy transition pathways and Chair of S-One Trust describes the dramatic impact of the IRA: “A year ago, I may have said the UK and European Union were ahead in this area. But I think now we have catch up to do because significant capital is moving to the United States. We are very excited about the energy transition and particularly the pathways related to decarbonization. In our view, the most important way to supercharge decarbonization on commercial scale and at a competitive price point is where you can create shareholder value. There is capital that can flow, but the legislative environment has to keep up.”

And even though carbon capture doesn’t sit in isolation from aforementioned policies like cross border carbon taxes (already enacted in Europe and likely coming to the U.S.) and technologies like carbon removal, there seem to be varying approaches about how to use it. So how are different countries and regions approaching it?

Carbon Capture in the United States

The growth in carbon capture in the U.S., especially in the last few years, has been driven by the Inflation Reduction Act. Perhaps one of its key characteristics is its simplicity when tying funds from its 45Q credit to exact quantities of captured and stored carbon emissions. Here are the key numbers:

  • $85/tonne for CO2 storage in geologic formations from capturing carbon on industrial or energy facilities.
  • All projects that have begun construction before January, 2033 qualify for the 45Q credit.
  • The credit has a duration of 12 years after the capturing equipment has been installed.
  • The minimum requirement for eligiblity of a facility is 12,500 tonnes of captured CO2 per year.

According to decarbonization intelligence company Decarbonfuse, 2022 was a record year for new carbon capture projects. A total of 66 projects were announced, spurred by the availability of the credits.

“We anticipate 2023 spending to reach $13 billion in carbon capture. The players in the market are working through the financial and operational risks associated with the carbon capture projects. Not every single project will move forward but there is significant momentum to demonstrate the economic, environmental, and social results to the investors” said Todd Bush, Managing Director at Decarbonfuse when unveiling the numbers in March.

New carbon capture projects in North America in 2022. Source: Decarbonfuse

Generally located around the largest emitters –  Midwest for ethanol production and the Gulf Coast around oil and gas – a third of the projects are focused on creating carbon storage hubs.

ExxonMobil has taken a particular interest in such projects and recently announced a sizable partnership with Linde in Beaumont, Texas for the transport and permanent storage of up to 2.2 million metric tons of CO2 annually for the gas company’s hydrogen production site.

Key clusters for low-carbon projects. Source: ExxonMobil investor presentation

The energy giant is already active in three of the clusters in the region and has also highlighted to its investors the sheer size of the opportunity decarbonization as a whole offers. Calling it a $6 trillion opportunity, the company says it has planned projects for its Low Carbon Solutions business in three clusters along the Gulf Coast.

Denbury is another interesting name in the sector, with the company constructing a CO2 pipeline network in Louisiana and Texas. It expects its CCUS venture to generate between $650 to $900 million by 2030 with a break even point coming around 2026-27.

Carbon capture from ethanol plants has prompted three companies Summit Carbon Solutions, Navigator CO2 and Wolf Carbon Solutions to invest in large-scale pipeline projects that span multiple states in the corn belt. The projects have run into various difficulties in terms of local legislation and opposition from farmers along the route but are still being actively pursued.

Planned pipeline route of Navigator CO2’s Heartland Greenway project. Source: Navigator CO2

There are also new companies whose primary focus is carbon capture. Carbon America has two active projects for capturing CO2 from ethanol plants in Bridgeport, Nebraska and Yuma, Colorado. In an interview with Carbon Herald CEO Brent Lewis described the effect of the IRA by saying: “It’s a game changer for the industry. We believe that a lot of a lot of key elements of the IRA are going to drive a much larger total addressable market in the US. We can now move beyond some of the easiest to abate industries like ethanol and natural gas processing plants, and we can start tackling the carbon dioxide emissions from flue gas power plants and others.”

Relevant: Carbon America CEO: The Inflation Reduction Act Is A Game Changer For The Industry

There could be even more support for carbon capture quite soon. The industry is eagerly awaiting the announcement of EPA requirements for existing and future power plants which are rumored to impose

Even without specific numbers at this point, utility companies will likely have to make a choice between new natural gas plants with the additional cost of carbon capture, or shift towards renewables.

But with all these positive developments we also have to note some of the challenges facing carbon capture in the U.S.

One that has been making headlines in the industry is the bottleneck for using Class VI wells for storing carbon. This has caused multiple states to take primacy over their approval and race ahead of the rest in terms of attracting projects.

Another challenge is the threat to the IRA from House republicans who want to raise the federal debt limit and revoke most of the green tax incentives that are currently in place.

At the moment chances of this happening don’t seem high, especially with Democrat control of the Senate but changes after the presidential elections could bring about a different tone.

In summary, this is an exciting time for carbon capture in the U.S. The general feeling is one of opportunity and growing speed with more and more options revealing themselves through the IRA. Sanjay Mehta summarizes it by saying: “Decarbonization with monetary value attached to carbon creates an investment opportunity. The number and quantum of investment decisions made in the United States in the last 12 months for carbon capture, blue and green ammonia and hydrogen production is just amazing.”

Carbon Capture in Canada

After the unveiling of the IRA last year Canada has been trying to catch up. With a net-zero emissions target for 2050 and a large oil industry, there were already incentives for capturing carbon through a system of carbon taxes, but the government was compelled to act in its latest budget.

In March, 2023 Finance Minister Chrystia Freeland added C$500 million ($370 million) to the C$4.1 billion ($3 billion) previously allocated for supporting carbon capture, utilization and storage.

This provides more funds but doesn’t fundamentally change how large emitters from the oil and gas industry are motivated to invest in projects. By essentially rewarding avoidance and taxing emissions Canada doesn’t provide an additional tool for financing these capital-intensive initiatives – debt capital.

Projects now have to look for internal funding sources or from state and federal governments, which isn’t necessarily flawed, but can generate friction between the parties involved.

Heated negotiations between the state of Alberta and Ottawa about the level of contribution have been ongoing and don’t seem to be helping the ramp-up of carbon capture in the country.

But these bumps in the road don’t mean there isn’t serious support for carbon capture already. The tax is currently CA$65 ($48) per ton of emitted CO2 and will gradually rise to CA$170 ($125) in 2030.

These incentives have been enough to generate four large-scale carbon capture projects:

The Alberta Carbon Trunk Line – capturing CO2 from the North West Redwater Partnership Sturgeon Refinery and te Nutrien Redwater Fertilizer Facility, CO2 is transported 240km to be injected in a Enhance Energy reservoir.

Boundary Dam in Saskatchewan – managed by SaskPower it captures emissions from a coal power plant and has been operational since 2014. The CO2 has been mainly utilized for enhances oil recovery at the Weyburn Oil Field.

Project CO2Ment in British Columbia – run by Lafarge Canada, Toal and Svante, this is a demonstration project to trial the latter’s carbon capture technology.

Quest Carbon Capture and Storage Project, Alberta – operated by Shell for the Athabasca Oil Sands Project. It has managed to capture and store over 5 million tons since its launch in 2015.

Regardless of the challenges, an ecosystem of companies has developed. Companies like Carbon Engineering, Svante, Carbicrete and CarbonCure all come from Canada and have developed innovative approaches to both carbon capture and carbon removal.

Notably, both Carbon Engineering and Svante have announced multiple partnerships with U.S. companies. The former is working in close cooperation with Occidental, while the latter has received a substantial investment from Chevron.

Carbon Capture in the UK

The UK has been developing its carbon capture program as part of a broader push to decarbonize its economy for many years. With a target to capture approximately 30 million tonnes of CO2 by 2030 and to reach zero emissions by 2050, a CCUS supply chain roadmap was produced in 2021 by the government to provide a platform for industry.

But the impact of the Inflation Reduction Act has acted as a wake-up call and in March, 2023 the Chancellor of the Exchequer Jeremy Hunt included a £20 billion ($24 billion) package directly aimed at carbon capture projects.

Through this cash injection £1 billion ($1.25 billion) will be distributed each year to four of its six industrial clusters: North Wales, the North West of England and the East Coast. This amount builds on previously announced funding of £1 billion each ($1.25 billion) for projects in the HyNet Cluster and the East Coast.

NTZ and ZCH carbon storage area in the North Sea. Source: Wikipedia

Subsequent investments have also been mentioned for the remaining clusters. The Accorn project in Scotland is one of the projects awaiting confirmation that could unlock its potential.

Behind the scenes the UK has also been working on setting up the necessary regulatory framework. The UK Oil and Gas Authority, founded in 2015 to support the growth of the oil and gas industry, has been renamed the North Sea Transition Authority (NSTA) to reflect its evolving role in the energy transition.

Taking its lead from the Energy Act of 2008 which governs CO2 storage, the NSTA manages carbon storage licensing and updated its requirements in December 2022. A large scale survey by The Crown Estate has also been launched, in order to determine suitable carbon capture sites for upcoming leasing rounds.

All of these efforts have started to bear fruit. The first natural gas plant fitted with a carbon capture system has also been approved. When fully operational in 2027 Keadby 3 will provide 5% of the government’s target by capturing 1.5 million tonnes of CO2.

It seems the threat of capital flight and projects heading to the U.S. is still too great to ignore. Earlier this week Jeremy Hunt told MPs he would publish a full response to the IRA later in the year. “That doesn’t necessarily mean matching subsidy for subsidy, but it means that making sure the overall package, which means people choose to invest in the UK, remains attractive,” he said.

Some of the ways to make the UK competitive have already been utilized when the wind energy industry was being developed according to Sanjay Mehta: “Incentives such as Contracts for Difference (CfD) and RAB are very critical at an early stage in order to create investor confidence, market resilience, growth and industry leadership. We have a very good example in offshore wind where the UK has been successful. For instance, when the government came up with a CfD mechanism in 2015, the first round of CfDs was at about £120 ($150) per megawatt hour. The last round of offshore wind development it was £37 ($46) per Mwh. About 70% less within 7 years.

The UK has been at the front end in terms of developing the (carbon capture) technology and has lots of IP and development related to offshore oil and gas besides skilled workforce. The decarbonization focus (with CCUS) could be an enormous opportunity in terms of not just creating jobs, but also creating value for early investors and global industry leadership.”

Another indirect consequence of the IRA, as well as the EU’s carbon border adjustment tax, is that the UK would have been stranded in terms of investments. And it seems government has changed tac and will be working with the EU on this matter.

“The most important question here is how quickly the UK and EU legislation environment develops. We have seen the IRA and 45Q credits leapfrogging what the UK and EU are doing in terms of attracting investments. I think the competition is very helpful. But, at the end of the day, globally we are trying to solve same problem – carbon doesn’t know national boundaries,” adds Mr Mehta.

There also appear to be conversations about exemptions for the EU when it comes to climate tech investments in the U.S., so watch this space.

Carbon Capture in the EU

The European Union has always been at the forefront of green technology and has stated its clear intention of becoming a decarbonized economy. Aiming to become fully climate-neutral by 2050 with initiatives like the $270 billion European Green Deal and RePower EU set up to provide broad support for technologies that reduce emissions.

Even though a unified carbon capture strategy hasn’t been clearly formulated as such, we can safely say large portions of it are already operational.

Funding is provided by multiple programs which touch on different parts of the value chain. Chief among them is the Innovation Fund which uses money raised from the EU Emissions Trading System and reinvests it in low-carbon technologies. This creates a direct link between emitters and reducing CO2 in the industry.

Its latest round In November 2021, four of the seven winning projects were part of the CCU ecosystem. The second-large scale call also had seven project that have relevant technology involved.

Horizon EU is also used for supporting technology developments, while CO2 infrastructure funds can be received from the Trans-European Networks for Energy program.

With a (legally binding) target of creating 50 million tonnes of annual CO2 injection capacity by 2030, this year saw 70 carbon capture projects underway. Some of the key ones are:

Porthos in the Netherlands – managed by the port of Rotterdam, Gasunie and EBN, this project will store 2mtpa of carbon dioxide in empty gas fields off the Dutch coast. Demand for it has been high and the capacity is already been spoken for with Air Liquide, Air Products, ExxonMobil and Shell taking up everything available even before injections start in 2025.

Greensand in Denmark – led by INEOS and Wintershall Dea, this project is set for completion in 2025 and will provide 1.5 mtpa of CO2 capacity in the Danish North Sea. In March, 2023 the project achieved an important milestone by executing its first gas injection.

Bifrost, Denmark – TotalEnergies is the main company behind this project which aims to sequester 3mtpa in the North Sea starting in 2027 and is looking at another 10mtpa in nearby fields.

Wilhemshaven , Germany – This project is for a CO2 export terminal and is led by Wintershall Dea. Using CO2 liquefaction the gas will then be transported via pipelines or by ship to sequestration points in the North Sea.

Creating an encompassing framework is being done with a top-down approach and will ultimately provide a common CO2 infrastructure, as well as a storage market. There are two challenges when it comes to this.

The nature of this style of governance can slow it down, especially when compared to something like the IRA which incentivizes action.  

The other challenge is focusing attention solely on the big picture, while missing issues that initially may seem of less importance. One example of such a misalignment is the absence of a policy for CO2 transportation by rail and truck, which was pointed out by the Clean Air Task Force.

It was never going to be a smooth road but we have to mention one of the components that the EU has managed to steal a march on – the European Emissions Trading Scheme.

It’s by far the largest market for emission allowances and has managed to have a direct impact on industry’s behavior.

“Through carbon tax or ETS has we have for the first time unearthed the market price of carbon. This was very critical in terms of commercial understanding and commercial application. Industries emitting carbon always thought that emitting carbon was free but now we understand that there is a commercial price attached to carbon emission. IRA is fiscal incentive for investors. The IRA approach might be viewed as progressive but ETS supported by CfD / RAB mechanism should result into more sustainable investments in technology and commercial pathways for reduction of GHG either through CCUS, decarbonised fuels and renewables,” says Sanjay Mehta.  

The mix of challenges and success shows perhaps the most important thing when it comes to cutting and capturing emissions – there is a strong will to act in all stakeholders. Even with a geopolitical crisis at its doorstep in Ukraine, the EU’s resolve to move forward with renewables was not shaken, quick decisions were made and the bloc doubled down on its commitments, sped up a variety of projects and is set to increase the pace.

Mr Mehta agreed that last year was a watershed moment: “Despite the energy crisis that we felt in 2022 and the challenges the EU had in terms of stability of energy supply, the investment flow in energy transition and pathways to decarbonisation has not slowed down. In fact, it has increased. That shows investment appetite.”


The largest economy in the EU is also working on its own policy and 2023 will likely see the introduction and enactment of new carbon capture and storage legislation.

As it stands carbon capture is governed by the Carbon Dioxide Storage Act (KSpG) which was passed back in 2012 with the goal of providing a framework for testing onshore carbon storage sites. But its expiration in 2016 has meant that no new projects have been developed since then, as there’s no approval path for them.

But work is underway and a Carbon Management Strategy is being developed by the government. The German Federal Ministry of Economics and Climate Protection (BMWK) released a new assessment of the KSpG in December last year which will serve as the foundation of the new strategy, expected later in the year.

Part of the report is a proposed plan for the CO2 infrastructure which you can see below. The key features here are the clusters which will be formed around the current industrial centers, enabling the reduction of costs and bridging the gap to potential utilization projects.

Project carbon management infrastructure by 2045. Source: Langfristszenarien

There are two more important features. First is the presence of carbon sinks, so the plan will likely include CO2 storage within the land mass of the country. Second is the external directions of the pipeline network. Heading towards northern ports, as well as Belgium and the Netherlands, these pipelines will likely have the largest capacity, as they transport CO2 for storage sites in the Baltic and North seas.

It seems there is already momentum for moving quickly with this initiative. January saw Robert Habeck, Germany’s Economics Minister establish a relationship with Norway for offshore storage and Chancellor Scholz signed an agreement with Belgium for carbon capture through the port of Antwer-Brugge.

German Chancellor Olaf Scholz ​ and Belgian Prime Minister Alexander De Croo at the event. Source:

Industry has also been calling for more progress with 18 companies signing an open letter calling for faster progress, while also pointing out the benefits of combining CO2 and hydrogen in one single system.

“Hydrogen and the raw material CO2 must be thought of together,” said Uwe Lauber, CEO of MAN Energy Solutions when the letter was publicized. “Shipping, aviation, the chemical industry, they all depend on synthetic fuels. And  these are predominantly derived from H2 and CO2. Technologies for CO2 capture and utilization are therefore indispensable for decarbonizing Germany as an industrial location.”

One of the risks of developing this policy in parallel to that of the EU is the potential for misalignment in standards (and priorities), but this is indeed a challenge for the entire European project. Reaching common and intertwined emission reduction goals should limit the friction and hasn’t stopped partnerships from being established up until now.

Saudi Arabia

Saudi Arabia doesn’t often make the headlines when it comes to carbon capture or decarbonization for that matter. It’s one of the countries with the furthest target for reaching net zero (2060) and oil is the most vital ingredient of its GDP.

But one way to look at Saudi Arabia is like a model for the world as a whole. Both are structurally dependent on fossil fuels and both need to reduce and reuse CO2 to achieve emission goals. Given the country’s drive towards solar energy in tandem with carbon utilization, it’s set to move faster than others and can provide both good and bad lessons when it comes to actual decarbonization.

The Kingdom has actually set one of the highest bars for carbon sequestration, aiming to capture 44 million tons annually by 2035. With a wealth of expertise in the oil industry, as well as an abundance of suitable subsurface storage space, Saudi Arabia has prioritized carbon capture and placed oil firmly at the center of its approach.

Illustration of the Circular Carbon Economy National Program of Saudi Arabia. Source:

It has developed the Circular Carbon Economy National Program which aims to reduce, reuse, recycle and remove CO2 emissions and has set aside a fund of over $10 billion to get the ball rolling.

When it comes to carbon capture the focus is firmly on its utilization. Through Saudi Aramco, the country’s state-owned oil corporation (and world’s largest company), the Kingdom has started working on a value chain which treats CO2 as a commodity that can either be used for enhanced oil recovery or as part of the production process for blue hydrogen.

According to an OGCI report from 2021, Saudi Arabia sees blue hydrogen as part of the energy transition with production set to be ramped up in the coming years.

When it comes to enhanced oil recovery, Aramco runs the Middle East’s most advanced CO2 capture and reinjection project. This is the Uthmaniyah oil reservoir, which is linked to the Hawiyah gas plant.

With a peak capacity of 45 million cubic feet of CO2 every day, the installation has been operational since 2015 and has unlocked substantial quantities of oil. After the CO2 helps with squeezing out the remaining oil, Aramco says a “sizable” portion of the gas remains trapped within the reservoir.

Aramco is also working with the Kingdom’s Ministry of Energy to create a hub in Jubail with a storage capacity of up to 9 million tons a year by 2027.

Whether Saudi Arabia remains as influential on the global energy stage beyond 2050 remains to be seen. But it is clear that the planning horizon for the country extends beyond that deadline and carbon capture will have an important role to play.

The golden age of carbon capture?

Both developed and developing economies seem to be on the cusp of making up their minds about carbon capture. Whether it’s more focused on storage or utilization for different purposes the technology will be part of the conversation in the coming decades.

The will to act is visible, resources are also being made available along with models to even make a profit. It’s up to societies, governments, and the markets to determine to what extent carbon capture influences the energy transition and how fast it reduces emissions during what will very likely be its golden era.

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