Carbon capture, utilization, and storage in Europe - Part 2: Costs, financing and the race to scale up

Carbon capture, utilization, and storage (CCUS) is gaining significance in Europe as an essential element towards reaching net zero. There is an urgency to use all available and feasible solutions for emission reductions to keep climate ambitions on track. As outlined in the first part of our series, CCUS offers a viable pathway to reduce emissions from hard-to-abate sectors such as cement, chemical production (e.g., ammonia), and waste-to-energy, where alternatives are limited or insufficient.

The CCUS value chain is a complex ecosystem consisting of several phases and stakeholders (see figure 1) as discussed in Part 1.

With over 240 projects in various stages of development and a growing body of supportive policies, momentum is clearly building. While undeniable, the scaling up of the sector comes with challenges and complex dynamics that define the speed of project deployments.

In Part 2 of this series, we examine the economics and policy landscape shaping CCUS in Europe. We explore how costs vary across the value chain, how national support schemes are structured, and what the current project pipeline tells us about the likelihood of meeting the targets set by the EU and the UK. As these regions move from ambition to implementation, understanding these dynamics is essential for assessing the future of CCUS – not just as a technology, but as a system-wide solution.

The costs of CCUS reflect the complexity of the value chain and vary widely by process type, capture technology, transportation method and storage location. The costs mentioned in this chapter refer to the average unit costs expressed per metric ton (mt) of CO2. These figures combine both capital expenditure (capex) and operational expenditure (opex), as collected from available project information. Due to the limited number of operational projects, costs are presented as aggregated values without a detailed split between capex and opex. Wherever possible, we provide qualitative insights on how capex and opex contributions characterize each step along the value chain.

Capture costs: The role of flue gas composition

Capture costs per mt of CO2 (carbon dioxide) vary widely based on the origin of the CO2. Key factors influencing the total costs include CO2 concentration, pressure, facility scale, and site-specific conditions such as infrastructure and labor costs. These costs comprise both capital and operating components.

A major cost driver is flue gas[1] composition: the more complex the gas mixture, the more energy required to separate CO2. Therefore, the energy intensity of the process could significantly raise costs. This explains the differences between capturing CO2 from an ammonia production plant (EUR 10 to EUR 30/mt CO2), where the flue gas has a high CO2 concentration, compared to capturing from iron or steel facility (EUR 50 to EUR 90/mt CO2) where the gas mixture has low CO2 concentration (see figure 2).

[1] The mixture of gases released from the combustion of fuels in industrial furnaces, boilers, or power plants, typically discharged through a flue or chimney.

Transport costs: Balancing flexibility and scale

Transporting CO2 from the point of capture to its final destination – whether for storage or utilization – is a critical step and its costs are shaped by a range of factors, including distance, volume, pressure, terrain, and most importantly, the transport method itself. Figure 3 illustrates the average unit costs of CO2 transport, which includes both capex and opex elements.

Pipelines are generally the most cost-effective option (EUR 2 to EUR 16/mt CO2) for large volumes over short to medium distances (see figure 3) because, despite high upfront capex for construction, their OPEX per mt CO2 is low. Offshore pipelines are more expensive due to complex installation and maintenance requirements.

Shipping has higher unit costs because of recurring opex for vessel rent and fuel, but it offers flexibility for dispersed sources and early-stage networks. Rail transport shows the widest cost range and higher costs overall because it requires specialized loading infrastructure and CO2 wagons, and operating costs scale poorly with distance and volume compared to pipelines or ships.

These differences reflect the trade-off between capex intensity and opex variability across transport modes.

Storage costs: The least known step in the chain

Storage costs are less variable than capture and transport but remain uncertain due to limited data availability, as there are only a few operational projects and most estimates come from projects under development. The average unit cost of storage typically covers subsurface assessments, drilling, the installation and operation of injection wells, and long-term monitoring, thus comprising capex and opex elements. Figure 4 represents the average unit cost ranges for storage sites most suitable for large-scale projects.

A key cost driver is the type of storage site. Offshore storage is more expensive – typically 1.5 to 3 times higher than onshore – due to the need for platforms, subsea equipment, and more complex logistics. Saline aquifers[2] require more upfront work – including data collection and modelling – and, in most cases, require drilling additional wells due to lower pressure margins. Depleted hydrocarbon fields from oil and gas extraction, by contrast, often allow the reuse of existing infrastructure, which can reduce costs.

[2] Saline aquifers are deep underground porous and permeable rock formations saturated with saltwater, commonly located 800-3000 meters below the surface.

From scale to innovation: Five pathways for cost reduction

Reducing the cost of CCUS is essential for scaling deployment. Key pathways include:

Today, CCUS economics remain challenging. High capex and opex, as outlined above, mean that most projects still depend heavily on government support to move forward. Yet the long-term goal is clear: to evolve into a self-sustaining market where projects can generate predictable revenues beyond subsidies. This transition has just started, and with it, market-based revenue streams are beginning to take shape. Below are the key opportunities that could define this emerging landscape:

Avoided compliance costs

Capturing and storing CO2 can reduce exposure to carbon pricing mechanisms, such as emissions trading systems or carbon taxes. These savings become meaningful when carbon prices exceed the cost of CCUS, creating a direct incentive for emitters.

Carbon removal credits – voluntary market

Projects capturing biogenic or atmospheric CO2 can earn high-value credits in voluntary carbon markets. These credits are increasingly sought by companies with net-zero commitments, offering a premium revenue stream once robust certification frameworks are in place.

CO2 utilization markets

Captured CO2 can be used as a feedstock for products like synthetic fuels, chemicals, and building materials. While these markets are currently niche and immature, they represent a promising avenue for monetizing captured carbon beyond storage. CO2 is currently used for carbonated drinks and in greenhouses to enhance plant growth.

Low-emission products

Capturing CO2 from the production of cement and steel, enables the production of low-carbon materials, which could command premium prices in markets driven by sustainability standards and procurement mandates. Demand initiatives are emerging to stimulate the uptake of such products.

Transport and storage services

As CCUS hubs and shared infrastructure expand, tariff-based models for CO2 transport and storage are gaining traction. When structured as regulated business models – such as those emerging in the UK – these frameworks can provide predictable cash flows for service operators, investors, and financial institutions. Over time, such models could evolve into regulated markets, offering greater revenue certainty and supporting the long-term viability of CCUS infrastructure.

Even though these revenue streams are not yet sufficient to replace government support, they signal the direction towards a self-sufficient market. As carbon markets deepen, certification standards mature, and demand for low-emissions products grows, CCUS could shift from a compliance-driven activity to a competitive business model.

Part 1 of this article series covered European policies shaping CCUS development, with a focus on EU ambitions. But policies alone do not guarantee deployment – national action does. National governments are now critical in turning ambition into reality by bridging the financial gap to create a business case. CCUS requires high upfront investment, long payback periods, and faces uncertain revenue streams, making public support indispensable to get projects financed. Climate benefits such as avoided emissions and permanent storage are still hard to monetize, leaving limited commercial incentives within the current environment.

To turn ambition into action, countries are using targeted support mechanisms that reduce risk and improve project economics. These instruments vary widely across Europe, reflecting different national strategies and priorities.

Diverse support instruments are available for CCUS projects

To overcome those financial and market barriers, governments are leveraging a range of tools to accelerate deployment and bridge the financing gap. While the overall goal of these instruments is similar – making CCUS projects bankable – the design and scale differ significantly across countries, shaping the pace and scope of deployment. Below are some of the key support instruments that are used to support CCUS projects directly:

The design of support instruments in frontrunner countries

To understand how these support instruments are deployed in practice, we examined four CCUS frontrunner countries, the UK, the Netherlands, Denmark, and Norway. Table 1 provides a comprehensive overview of the regulatory framework and funding schemes underlying each country’s approach to support CCUS.

The comparison of CCUS support mechanisms underscores how policy design can drive investment certainty and scalability. The UK offers the most integrated and bankable model: CfDs for capture projects, combined with RAB and RSA for transport and storage. This dual approach mitigates both carbon price volatility and cross-chain risk, creating predictable cash flows through which large-scale investments could be unlocked. Beyond this, a critical differentiator is the UK’s fixed reference price trajectory, which shields projects from UK ETS fluctuations and provides long-term certainty.

In contrast, the Dutch and Danish subsidies are tied to the EU ETS price, meaning support decreases as the ETS price rises but projects remain exposed to short-term volatility. Norway diverges entirely, relying – currently – on grants and tax exemption.

Since the publication of Part 1, the number of announced projects has increased by 35, with 240 CCUS projects in various stages now in the pipeline across Europe.

Figure 5 illustrates the sectoral diversity of the total CCUS pipeline. Power generation and cement production dominates the landscape, accounting for 23% and 22%, respectively. These are followed by hub concepts (18%) and hydrogen (12%). Other notable sources include iron and steel manufacturing (5%), direct air capture (DAC 3%) as well as biogas, ammonia and ethanol production.

Shifting the focus to geographical distribution and project maturity, figure 6 provides insights into a country-level view of planned CO2 capture capacity in Europe. The UK leads by a wide margin, with more than 150m mt CO2 per year in projects – though most remain at early stages. Norway, Germany, and the Netherlands follow, each with substantial capacity ambitions, while Belgium also shows significant ambition. Beyond these frontrunners – in terms of the size of planned capacity – countries such as Denmark, France, and Sweden have smaller but notable contributions.

Overall, more than 330m mt CCUS capacity per year is announced, while 111m mt CO2 per year has permits, and 31m mt CO2 per year has financing or is under construction. Just 8m mt CO2 per year is operational – mainly in Norway – highlighting the enormous gap between ambition and delivery. While this figure does not capture permitting lead times or the time companies take to move from concept to permit request, these delays are a critical factor. Without rapid permitting and secured investments, Europe risks missing its climate goals.

From ambition to action: Assessing likelihood of projects becoming operational

While country-level data shows where planned capacity is concentrated, it does not reveal how close these projects are to becoming operational. To assess delivery risk, both project maturity and the likelihood of completion need to be considered. Therefore, BloombergNEF categorizes the CCUS pipeline projects into five likelihood tiers:

Figure 7 shows our projections for the aggregate capture capacity across Europe by likelihood of completion and development stage.

The contrast between ambition and certainty is striking. Commissioned projects represent only a small fraction of capacity – 8m mt CO2 per year. Committed projects add a modest volume, in total 25.5m mt CO2 per year. Capacity grows significantly in the Advanced planning and Optimistic categories, dominated by projects in planned/announced and permits obtained status, indicating that most of this potential is still aspirational. The largest bar, labelled Undefined, exceeds 250m mt CO2 per year, reflecting projects with insufficient data to assess likelihood, which complicates forecasting.

While the total potential capacity appears substantial, the pipeline is mostly dominated by early-stage projects that have a lower likelihood of completion or are undefined. This has several implications:

Total projected capacity versus targets: Close but uncertain

Both the EU and the UK have set initial targets for CCUS within their decarbonization strategies. By analyzing the current project pipeline in its entirety and categorizing commissioning dates, we could compare projected capture capacity against these targets to assess alignment and identify gaps.[3]

Figure 8 illustrates the aggregated capture capacity of CCUS projects in the European Economic Area (EEA), grouped by likelihood of completion and projected commissioning timeframe. Comparing the pipeline against official targets[4] reveals a mixed landscape. By 2030, the pipeline is likely to exceed the 50m mt CO2 per year target by roughly 23m mt CO2 per year when optimistic projects are included. However, when focusing only on projects that are already operational or committed, the expected CCUS capacity drops sharply to just 23.7m mt CO2 per year, signaling a high risk of under delivery in the near term.

Looking ahead to 2040, total capacity grows substantially, but much of it remains in uncertain categories, meaning that achieving the 280m mt CO2/year target will depend on accelerating projects beyond early planning stages.

By 2050, announced capacity remains far from the 450m mt CO2 per year target, and the heavy representation of undefined projects introduces considerable uncertainty in the long-term planning.

[3] The proposed commissioning times were used to group projects into the different timeframes. Projects with an unknown commissioning date were grouped for the 2050 time frame.

[4] The EU’s ambitions are set out in the Net Zero Industry Act and the Industrial Carbon Management Strategy, which define capacity targets for 2030, 2040, and 2050. While these targets currently apply only to EU member states, discussions are ongoing about EEA countries’ contributions. Through cross-border collaboration, some capacity may be counted toward EU goals, hence they are included in this analysis.

Figure 9 illustrates the aggregated capture capacity of CCUS projects in the UK, grouped by the same factors as for the EEA.

By 2030, the pipeline appears likely to slightly exceed the 25m mt CO2 per year target. If the optimistic projects are included, it might even exceed the target by roughly 73m mt CO2 per year. However, when considering only operational and committed projects, the expected capture capacity is just 6.9m mt CO2 per year, revealing a significant gap between ambition and delivery readiness.[5]

By 2040, the total capacity is likely to grow and, in contrast to the EEA, there is growth among the projects in the advanced planning and optimistic categories. However, achieving the 60m mt CO2 per year depends on accelerating projects beyond early planning stages and securing investment decisions.

By 2050, the current pipeline surpasses the 100m mt CO2 per year target on paper, yet the heavy reliance on undefined projects introduces considerable uncertainty and complicates long-term planning just as in the case of the EEA.

[5] This corresponds to the UK government’s stance where they acknowledged that they will not reach the 25m-30m mt CO2/year by 2030.

Note: The UK has an official target for CCUS capacity only in 2030. The rest of the targets are indicative as no official announcement has been made.
Source: BloombergNEF, Climate Change Committee, RaboResearch 2025
[6] The Seventh Carbon Budget by the Climate Change Committee

Both the EU and the UK show strong ambition for CCUS deployment, but their pipelines reveal similar structural challenges. Both regions face a pronounced near-term gap. The EU has a 23.7m mt CO2 per year of operational and committed capacity against its 50m mt CO2 per year target for 2030, while the UK appears to deliver only 6.9m mt CO2 per year toward its 25m mt CO2 per year goal.

By 2040 and 2050, announced capacities in both regions approach or exceed official targets on paper, yet there is a significant uncertainty. In essence, both regions risk a “paper pipeline” scenario unless early-stage projects are rapidly converted into strong commitments. Achieving these targets will likely depend on factors such as permitting timelines, investment risk management, and transparency in project development..

Europe has the ambition, but ambition alone will not deliver CCUS at scale. Today’s pipeline is dominated by early-stage and undefined projects, while only a fraction has secured financing. Why? Because CCUS is not, yet, an attractive business case. It remains primarily a cost element with limited revenue potential, is highly capital-intensive, and faces long payback periods. In addition, countries differ widely in how they support de-risking investments. This disconnected and widely differing approach also creates uncertainty for investors and slows progress.

Amid these challenges, Europe’s CCUS project pipeline shows impressive potential, with a capacity of 482m mt CO2 per year, considering all projects in various stages. However, the prevalence of optimistic and undefined categories within the pipeline underscores the need for clearer project transparency, policy instruments that incentivize FID, and streamlined permitting and infrastructure development to prevent bottlenecks as capacity scales. Without these measures, both the EU and the UK risk missing their 2030 targets and facing compressed timelines for 2040 and 2050, which could raise costs and strain competitiveness.