Carbon capture and storage gains momentum – but challenges remain

The biggest obstacle to rollout of CCUS projects around the globe is time itself. Between slow regulatory approvals, complex cross-border negotiations, and drawn-out construction timelines, CCUS infrastructure has been a start-stop development. But the landscape could change rapidly over the next decade, as over 500 CCUS projects in the development pipeline begin to break ground.

Challenges facing United States (U.S.) stakeholders

Permitting issues abound and arise at both the Federal and State level: The Environmental Protection Agency (EPA) has been slow to approve the mounting backlog of permits for Class VI wells, which are necessary for permanent carbon sequestration.  However, a number of States – North Dakota, Wyoming and Louisiana - now have primacy and essentially have control over the permitting of Class VI wells in their jurisdiction.

Permitting issues related to CO₂ pipelines have arisen in some states (e.g., Iowa and Illinois) that have led to delays in the development of CCUS projects in those states. In fact, in Illinois the Governor signed more stringent safety and environmental standards for carbon capture and sequestration projects into law, which includes a moratorium on new CO₂ pipeline construction until at least July 1, 2026, unless federal CO₂ pipeline safety regulations are finalized earlier.

Some known leaks of sequestered CO₂ from a project in Illinois have hurt public perception for CCUS projects and resulted in a Federal fine against the Company responsible for the leak.

Legal uncertainty surrounding pore space, the empty space between geologic formations where carbon is often captured, has diminished. Today, leases are increasingly being used by surface owners to grant pore space access beneath their lands. However, the property rights of pore space remains unclear in a number of states.

Long-term liability: Companies are responsible for injection wells during the life of a CCUS project, which can last up to 50 years – and sometimes longer. But the regulatory patchwork between various U.S. states means it’s often unclear who assumes liability after the company’s lease expires. If state governments aren’t willing to assume responsibility for carbon storage projects once operations wind down, then investors could be on the hook for maintaining those wells for decades. Texas is one state that has passed legislation which essentially provides that title to and responsibly for the CO₂ that has been injected beneath Texas lands or waters will revert to the State once a Company’s lease of that space has expired.

The first known tax equity investment in a U.S. CCUS project occurred in 2024, demonstrating another potential source of funding for CCUS projects.

Considerations for United Kingdom (UK) and European Union (EU) stakeholders

• Stymied cooperation between countries: Sequestered carbon has been largely stored beneath the European seabed, often in the North and Adriatic seas, to take advantage of natural processes that redistribute CO₂ across the deep ocean. But restrictions laid out by the London Protocol have made it difficult for landlocked EU countries to export their carbon for storage. A 2009 amendment allowing for the transborder export of carbon has only been ratified by 10 nations – 36 approvals are needed for it to become legally binding. Energy leaders should look to capitalize on other bilateral agreements that allow for the export of CO₂, such as the trailblazing pact between Belgium and Denmark that enables permanent offshore carbon storage.
• EU regulatory framework: The CCS-Directive of the European Union, which was optional to be implemented by the Member States, has not been implemented in a number of countries, including, for example, Germany. However, this is necessary to establish the required legal framework.
• Government support and regulation in the UK: The country’s Department for Energy Security and Net Zero has selected eight CCUS projects, across a mix of technologies, to negotiate for government assistance in Phase 2 of its Track-1 initiative. These projects will connect into the existing Track-1 clusters (comprising a T&S storage network and initial carbon capture projects), awarded in Phase 1. Selection enables projects to access initial capital grant funding and long-term price support, either under an economic license model (for T&S Networks) or (otherwise) government-backed Contracts-for-Difference. The UK Government is still consulting on the legislative and regulatory framework that will underpin these business models, and acceleration of that process from here will be key to realising the UK Government’s ambition to capture 20-30 Mt CO₂ per year by 2030.

A solution in lockstep with clean fuel and renewables

CCUS is most successful when deployed by companies with existing infrastructure for energy production and industrial processing. Its contribution to the clean energy transition will be historic, especially as the production of low-carbon fuels and renewables heats up, and research into the alternative uses of carbon advances.

Take a renewable natural gas project, for example. By converting methane from agricultural use or feedstock into less potent CO₂, and storing it as an injectable, some companies are now achieving negative emissions. CCUS is also playing a key role in blue hydrogen production, which uses natural gas to split hydrocarbons, generating carbon emissions that are later stored. This pairing could prove crucial to meeting the EU’s production target of 10 million tons of clean fuels by 2030.

Though investing in CCUS can require significant upfront capital and time investment, it will undoubtedly play a vital role in clean energy production in the next decade and beyond.