Carbon Capture Utilisation and Storage Project Finance Is Starting to Clear the Bankability Threshold in the US and Europe

What Changed to Make CCUS Project Finance Viable When Earlier Attempts Failed

Carbon capture, utilisation, and storage technology has been technically demonstrated at commercial scale in industrial applications for over thirty years, with projects including the Sleipner CO2 injection operation in Norway, the Quest CCS project in Alberta, and the Boundary Dam CCS retrofit in Saskatchewan establishing the engineering viability of carbon capture from industrial point sources and geological storage in saline aquifers and depleted hydrocarbon reservoirs. Despite this technical validation, the project finance market for CCUS has been largely dormant through most of this history because the economics of CO2 capture and storage as a standalone investment required a carbon price or policy incentive whose level and durability was sufficient to attract the long-term debt financing that capital-intensive infrastructure projects with twenty to thirty year repayment horizons require, and the carbon policy environment of the 2010s provided neither the price level nor the policy durability that project finance lenders require to underwrite infrastructure debt at the scale that commercial CCUS projects demand.

The policy environment that has changed the CCUS project finance calculus in the United States is the Inflation Reduction Act's enhancement and extension of the Section 45Q tax credit, which increased the credit value from $35 per tonne of CO2 sequestered in geological storage to $85 per tonne for industrial carbon capture and $180 per tonne for direct air capture, and which established a twelve-year credit duration from the project's placed-in-service date and a transferability provision that allows the tax credit to be monetised through third-party tax equity transactions rather than requiring the project owner to have sufficient tax liability to utilise the credit directly. These provisions collectively address the three obstacles that had prevented 45Q from driving commercial CCUS investment in its earlier iterations: insufficient credit value relative to the cost of capture and storage for most industrial applications, insufficient credit duration to support project debt repayment schedules, and restricted monetisation pathways that limited the credit's value to projects whose owners had substantial tax positions.

The Project Finance Structures That Are Closing in 2026

The CCUS project finance deals that are closing in 2026 have converged on a limited recourse project finance structure whose risk allocation framework addresses the specific risks that distinguish CCUS from the renewable energy project finance market whose structures have provided the template that CCUS developers and their financial advisors have adapted. The technology risk that was the primary barrier to CCUS project finance in early applications has been substantially mitigated for the point-source capture technologies, including post-combustion amine scrubbing, oxy-fuel combustion, and pre-combustion decarbonisation at natural gas processing facilities, whose operational track records at commercial scale across multiple projects and jurisdictions provide the performance data that project finance lenders require to underwrite technology risk at the insurance and reserve account treatment rather than the equity cushion treatment that unproven technology requires.

The storage risk, which encompasses the long-term containment of CO2 in geological formations and the regulatory liability for storage site monitoring, reporting, and corrective action over the post-injection period, has been addressed in the US market through a combination of the EPA's Underground Injection Control Class VI well permitting framework, which assigns federal regulatory oversight responsibility to the EPA rather than leaving it with the project developer, and the early development of CCUS hubs whose shared storage infrastructure aggregates CO2 from multiple capture sources into large-scale storage formations whose geological assessment and monitoring infrastructure can be shared across contributors. The Oxy Low Carbon Ventures and 1PointFive direct air capture project in the Permian Basin, the Summit Carbon Solutions Midwest carbon pipeline and storage hub, and the Tallgrass Energy CO2 pipeline expansion represent the infrastructure investment that is creating the shared storage and transportation backbone whose existence is enabling individual industrial emitters to contract for carbon removal services without bearing the full capital cost of dedicated CO2 transport and storage development. The first CCUS project finance closings in 2025 and 2026 have demonstrated that lenders including JP Morgan, Bank of America, Goldman Sachs, and the Department of Energy's Loan Programs Office can structure the tax equity, senior debt, and government credit support combination that achieves the levelised cost of carbon removal that offtake contracts at $50 to $100 per tonne of CO2 can support economically.

European CCUS Finance and the Northern Lights Infrastructure Model

The European CCUS project finance market has developed along a different trajectory from the US market, driven by the EU Emissions Trading System carbon price rather than production tax credits as the primary revenue support mechanism, and organised around a shared cross-border CO2 transport and storage infrastructure model that the Northern Lights project in Norway represents. Northern Lights, a joint venture between Equinor, Shell, and TotalEnergies with Norwegian government support, is developing the offshore CO2 injection and storage infrastructure in the North Sea that will receive CO2 from industrial emitters across Europe through ship-based transport, providing the shared storage infrastructure model that addresses the economic challenge of geological storage for individual industrial emitters whose CO2 volume is insufficient to justify dedicated storage site development. The first phase of Northern Lights, targeting 1.5 million tonnes of CO2 per year injection capacity from 2024, is fully contracted to Yara's ammonia production facility in Porsgrunn and HeidelbergMaterials' cement plant in Brevik, establishing the commercial template for European industrial CCS in which the shared infrastructure model enables the project economics that individual source point development cannot achieve.

The EU Innovation Fund, the European Investment Bank's InvestEU programme, and national government support mechanisms in the UK through the Carbon Capture and Storage Infrastructure Fund and the Track-1 cluster development support are providing the concessional finance and grant support that is enabling the first generation of European CCUS projects to reach the bankability threshold where commercial debt can be attracted alongside government support. The UK's Hynet and East Coast Cluster CCUS development programmes, which received government support commitments in 2023 and are advancing toward Final Investment Decisions in 2026, represent the industrial cluster model in which multiple emitters including cement, chemicals, and hydrogen production facilities within geographic proximity share pipeline, compression, and offshore storage infrastructure whose cost allocation across contributors achieves the project economics that stand-alone single-emitter development cannot. The global CCUS investment across industrial point source capture, direct air capture, and associated transport and storage infrastructure is projected to reach $120 billion annually by 2030, with the project finance market expected to provide approximately sixty percent of that investment capital as bankable project structures proliferate and the template risk allocation frameworks developed in early projects become standardised across the CCUS asset class.

Direct Air Capture and the Investment Frontier Beyond Industrial Point Sources

Direct air capture technology, which extracts CO2 directly from ambient air rather than from concentrated industrial point source emissions, is the highest-cost and most capital-intensive category of carbon removal and the one whose project finance development is at the earliest stage relative to industrial CCS, but whose potential scale for addressing the atmospheric CO2 removal that climate scenarios require is the largest because it is not constrained by the geographic concentration of industrial emission sources. The Stripe, Shopify, Alphabet, and Microsoft advance purchase commitments for direct air capture carbon removal credits, organised through the Frontier advance market commitment framework at prices ranging from $300 to $600 per tonne of CO2 removed, have provided the offtake revenue certainty that has supported the first generation of direct air capture project development by Climeworks, 1PointFive, and Carbon Engineering, and the IRA's $180 per tonne 45Q credit for direct air capture has added the tax equity revenue layer that brings the combined revenue available to DAC projects closer to the cost of capture at current technology maturity.

The project finance market for direct air capture is at the stage where the first debt financings are being structured for the commercial-scale projects that Climeworks' Mammoth plant in Iceland and 1PointFive's Stratos plant in Texas represent, with the combination of advance purchase agreements, IRA tax credits in the US case, and government grant support providing the revenue stack that project finance lenders are evaluating as sufficient to support limited recourse project debt at the sub-$200 per tonne cost of removal that the technology roadmaps project for large-scale direct air capture at 10 million tonne per year and above plant sizes. The cost reduction pathway for direct air capture from the current $400 to $600 per tonne range to the $100 to $150 target that would make DAC carbon removal cost-competitive with residual emission mitigation in hard-to-abate sectors follows a learning curve trajectory similar to the cost reduction histories of solar PV and lithium-ion batteries, but requires the accumulated deployment volume that the current project pipeline is only beginning to generate.

Top 10 Companies in Carbon Capture Utilisation and Storage

1. SLB New Energies , US oilfield services company with a dedicated carbon solutions division providing geological assessment, subsurface monitoring, and CO2 injection services for commercial CCUS projects across North America, Europe, and the Middle East.
2. Climeworks , Swiss direct air capture company with the Orca and Mammoth commercial-scale plants in Iceland, the global leader in operational direct air capture capacity with advance purchase agreements from Microsoft, Stripe, and Swiss Re.
3. 1PointFive , US direct air capture company, a subsidiary of Occidental Petroleum, operating the Stratos commercial direct air capture plant in Texas targeting 500,000 tonnes of CO2 per year removal at full capacity, backed by IRA 45Q credits and corporate advance purchase agreements.
4. Equinor , Norwegian energy company and Northern Lights joint venture partner, with the largest operational offshore CO2 storage portfolio including the Sleipner and Snohvit storage projects and the Northern Lights ship-based CO2 receiving and injection infrastructure.
5. Mitsubishi Heavy Industries , Japanese industrial company with the KM CDR Process post-combustion CO2 capture technology licensed across industrial applications in Japan, the US, and the Middle East, with over twenty commercial references in natural gas processing and power generation.
6. Shell , UK-Dutch energy company with Northern Lights equity participation, the Quest CCS project in Alberta, and a portfolio of CCUS infrastructure investments targeting industrial cluster development in the Netherlands and the UK.
7. TotalEnergies , French energy company with Northern Lights equity participation and a dedicated CCUS business unit targeting low-carbon hydrogen with CCS and industrial decarbonisation through carbon capture at cement, steel, and chemical facilities.
8. Summit Carbon Solutions , US carbon capture infrastructure developer building the Midwest Carbon Express, a 3,300-mile CO2 pipeline network connecting ethanol and fertiliser plants in the US Corn Belt to geological storage in North Dakota, targeting 12 million tonnes of CO2 per year by 2030.
9. Carbon Clean , UK carbon capture technology company with a modular CdCNicer capture system targeting industrial emitters at smaller scale than conventional amine scrubbing plants, enabling cost-effective CCS for cement, steel, and waste-to-energy applications below 1 million tonne per year scale.
10. Heirloom Carbon , US direct air capture company using enhanced mineral weathering to accelerate the natural carbon mineralisation process, with a lower capital cost approach than liquid solvent or solid sorbent DAC systems targeting the long-duration carbon removal credit market.