Investment in large-scale U.S. carbon capture, utilization and storage (CCUS) projects is being hindered by inflation, rising capital costs, and policy uncertainty under President Trump’s administration, according to a report by Reuters on Wednesday.
CCUS is seen as vital to decarbonizing hard-to-abate sectors like cement, steel, and chemicals by capturing carbon dioxide (CO2) emissions for storage or reuse.
While Biden-era tax credits like the 45Q—offering $85 per ton of CO2 stored—spurred over 270 project announcements, inflation has since eroded their impact.
Developers now face roughly 30% higher costs, made worse by high interest rates and slow permitting processes.
Optimism from the Infrastructure and Inflation Reduction Acts has largely evaporated, said Howard Herzog of the MIT Energy Initiative, as cited by Reuters.
While the Biden administration launched over $1.7 billion in CCUS funding, new support—including a $750 million program by the U.S. Department of Energy (DOE)—may be cut under Trump’s spending review.
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Unlike oil and gas, CCUS lacks a mature investment ecosystem. External funding for unproven tech at scale is very limited, a Baker Hughes spokesperson noted.
Still, emerging power demands from AI and data centers are offering fresh opportunities. Baker Hughes and Frontier Infrastructure recently partnered to integrate CCUS with gas-fired power for data centers.
State incentives like California’s low-carbon fuel standard and shareholder pressure continue to encourage investment.
Meanwhile, Republican-held states hosting many CCUS projects may help preserve the 45Q credit under the Trump administration, though broader DOE grants remain vulnerable.
Cement is a major focus for CCUS, with Heidelberg Materials planning a 2-million-tonne facility in Indiana by 2030.
The company will also open a 400,000-ton/year CCUS plant in Norway this year, aided by strong public support and co-funding.
Overall, experts agree that over the past decade U.S. federal policy has laid a solid foundation, but further efforts are needed to scale CCUS as a key tool in meeting climate goals.
Read more: Louisiana Lawmakers Reject Local Control Over Carbon Capture Projects
