August 17, 2026

Carbon Capture’s Biggest Problem Isn’t Capturing Carbon

Carbon capture is still debated as if technical performance were the decisive question. Can a solvent remove carbon dioxide from flue gas? Can the CO2 be compressed, transported and injected underground? Will the storage remain secure?

These questions matter, but they no longer explain why most announced projects do not reach construction.

The missing component is usually commercial. A cement plant can capture carbon and still lose money on every tonne. A storage site can be technically ready and remain empty without contracted volumes. A pipeline can lower costs for an industrial cluster but cannot be financed if every emitter waits for someone else to move first.

Carbon capture will not scale where the technology is most impressive.

It will scale where the contracts make the system investable.

Europe’s Ambition Is Far Ahead of Its Market

The European Commission’s Industrial Carbon Management Strategy sets the scale of the challenge. The EU aims for at least 50 million tonnes of annual CO2 storage capacity by 2030. Its modelling points toward roughly 280 million tonnes of captured CO2 per year by 2040 and around 450 million tonnes by 2050.

Those are industrial-system numbers. They cannot be delivered through a collection of bespoke capture demonstrations.

Europe needs common specifications, transport networks, storage capacity, measurement rules, liability frameworks and customers willing to sign long-term contracts. Capture equipment is only one part of that chain.

This explains why the sector has produced far more announcements than final investment decisions. Each project depends on infrastructure that may not exist until other projects commit. Emitters face a cost without a conventional product premium. Transport operators need guaranteed volumes. Storage developers need confidence that customers will still deliver CO2 years later.

Every participant is waiting for bankability from the others.

Northern Lights Sells a Service, Not a Storage Reservoir

Norway’s Northern Lights project is important because it changes the commercial shape of CCS. Instead of each emitter developing a dedicated pipeline and storage site, customers can liquefy captured CO2, ship it to a receiving terminal and purchase transport and permanent storage as a service.

Phase 1 provides 1.5 million tonnes per year of capacity. The first injection took place in 2025 using CO2 from Heidelberg Materials’ Brevik cement plant, and the initial capacity is fully booked. A second phase is intended to expand capacity to at least 5 million tonnes per year from 2028, supported by contracts including Stockholm Exergi’s planned biogenic CO2 volumes. Related: Venezuela’s Oil Revival Accelerates as U.S. Majors Push Trump’s New Energy Order

The absolute scale remains small compared with Europe’s 2040 ambition. The commercial model is the larger achievement.

Northern Lights separates storage access from ownership of a complete chain. Shipping allows geographically dispersed emitters to participate before a dense pipeline network exists. Standard contracts create a service that industrial companies can place into project finance models.

The reservoir matters. The product is certainty.

The UK Is Contracting Around the Missing Revenue

The United Kingdom has taken a different but complementary approach. It is developing industrial clusters in which capture projects connect to regulated transport and storage networks, while tailored business models support different types of emitters.

The reason for multiple contracts is simple: a gas power station, cement plant, waste incinerator and engineered carbon-removal facility do not earn revenue in the same way. One generic carbon price may not address their different exposure to fuel costs, output markets, capture performance and international competition.

UK industrial carbon-capture contracts are designed to cover part of the gap between the cost of producing a low-carbon product and the market value of the conventional alternative. Transport and storage networks receive a regulated framework intended to support capital investment before utilization reaches maturity.

In late 2025, the government reported final contracts for the Padeswood cement capture project and the Protos waste-to-energy project. These milestones are more important than another large project pipeline. They show where public policy has moved from targets to contractual allocation of risk.

The strongest criticism is obvious: these models can create large and long-lived subsidy commitments. That concern is legitimate. Poorly designed contracts can protect operators from risks they should manage themselves, reward low capture performance or lock consumers into expensive infrastructure.

But refusing to design a business model does not create a market. It creates another decade of pilots.

Carbon Prices Help, but They Do Not Finance the Whole Chain

Europe already has a powerful decarbonization instrument in the EU Emissions Trading System. A higher carbon price improves the economics of capture because each stored tonne avoids the need to surrender an allowance.

Yet a volatile allowance price is not necessarily sufficient security for a project financed over decades. Investors must compare uncertain future carbon savings with very certain construction debt, operating costs and transport fees.

CCS projects also face risks that a carbon price does not allocate. What happens if the storage network is delayed? Who pays when the capture plant is available but the pipeline is not? Who carries long-term liability? What if an industrial facility produces less CO2 than contracted, leaving the network underused?

These are not chemistry questions.

They are contract questions.

Carbon contracts for difference, regulated-asset models, minimum-volume commitments, government-backed storage development and green public procurement can each address part of the gap. The correct mix depends on the sector. The objective should not be to eliminate risk, but to place each risk with the party best able to manage it.

Clusters Turn Cost Into Infrastructure

The cluster model is more than a way to share a pipeline. It changes the strategic value of CCS.

An isolated capture plant is a costly environmental retrofit. A network serving cement, chemicals, waste, refining and carbon removals can become regional industrial infrastructure. Additional customers lower unit costs, while common transport and storage allow companies to invest without becoming subsurface specialists.

Clusters also create options. Biogenic CO2 and direct-air-capture projects can use the same storage system as industrial emitters, potentially generating permanent removals. Future CO2 utilization projects may connect where they offer credible long-term demand, although utilization should not be treated as permanent storage when the carbon is quickly re-released.

This is how transitions scale: not when every company purchases a standalone technology, but when shared infrastructure makes the new operating model normal.

Start With the Customer Who Can Sign

Carbon-capture developers often begin with capture rate, energy consumption and equipment design. Those metrics matter. But the first development question should be more basic: who is purchasing the avoided or removed tonne of CO2, under what contract, for how long and with which performance conditions?

Without that answer, engineering detail can create false progress.

The strongest early markets are likely to remain sectors with few alternatives, concentrated emissions and policy support: cement, lime, some chemical processes, waste-to-energy and selected carbon-removal projects. Gas power with CCS may have a role where systems value dispatchable low-carbon capacity, but its economics depend heavily on utilization and fuel price.

Not every emitter should receive capture equipment. Electrification, efficiency, material substitution and renewable energy should come first where they are cheaper and more direct. CCS becomes credible when it targets residual emissions and proves that captured carbon reaches verified permanent storage.

Europe has already demonstrated that carbon can be captured. The next challenge is building a market in which capture, transport and storage operate as one investable service.

The technology removes the CO2.

The business model removes the reason projects never get built.