Carbon Capture and Storage Explained

Climate change is one of the most pressing issues facing our planet today, and reducing carbon emissions is a key part of tackling this problem.

One strategy for achieving this is Carbon Capture and Storage (CCS), which has been proposed as an effective way to reduce CO2 emissions from large-scale industrial sources. We'll cover the basics of this technology, its benefits, and challenges.

The scale of investment behind this strategy reflects how seriously it's being taken. The global carbon capture and storage market is estimated to be valued at $7.59 billion in 2026 and is expected to reach $17.64 billion by 2033, growing at a compound annual growth rate of 12.8%, driven largely by stringent government regulation and a broader push to lower the transition risks tied to decarbonization.

What is Carbon Capture and Storage?

Carbon dioxide capture and storage technology is one of the ways used to deal with global warming. The technology entails capturing carbon dioxide and storing it underground. This technology is important as greenhouse gasses cause global warming.

There are two methods by which carbon dioxide can be captured. These include pre-combustion and post-combustion carbon dioxide capture technologies. Pre-combustion can be applied to power plants to capture carbon dioxide. Post-combustion technology can be applied to existing or new power plants.

Carbon dioxide can be captured in two ways, through pre-combustion capture and post-combustion capture. Pre-combustion capture can be used in power plants to reduce the amount of CO2 released into the air. Post-combustion capture can be used at existing power plants or in new construction.

A large number of projects are currently being developed worldwide. The United States is the leading user of CCS technology. There are over 25 commercial-scale projects underway or in advanced development around the world.

The largest potential storage sites are saline aquifers. These formations span enormous volumes of ground deep underground. When injected into a saline aquifer, the carbon dissolves into water and sinks to the bottom of the aquifer.

Carbon capture and storage can be applied to industries ranging from fossil fuel-based hydrogen production plants to power generation facilities.

By capturing carbon at the source and converting it to other valuable substances, it can help maintain industrial production while also reducing emissions.

Three trends are shaping where this technology goes next. Policy support keeps expanding, most visibly through tax incentives like the U.S. 45Q credit, which has already pushed some operators to accelerate project timelines by years rather than shrink them. Direct air capture costs are falling sharply, with per-ton capture costs on some large-scale projects trending down from roughly $600 toward a projected $150 as the technology matures and solvent efficiency continues to improve. And artificial intelligence is quietly improving day-to-day operations, with machine learning models now predicting capture efficiency and solvent degradation in commercial facilities, which helps operators fine-tune performance and reduce unplanned downtime. Together, these shifts are gradually making the carbon capture and storage market more economically competitive with straightforward carbon taxation, rather than remaining a purely regulation-driven cost.

How Does Carbon Capture and Storage Work?

Carbon Capture and Storage can prevent the emission of greenhouse gases from occurring through the reduction of up to 90% of carbon dioxide emissions before they reach the atmosphere. This technology is used for the decarbonization of industries that cannot stop the emission of carbon entirely.

Carbon is injected in a geological formation underground through an injection process, which can be costly and complex at times. However, there are many projects currently being implemented in the United States, Canada, and Australia in order to inject carbon dioxide from different sources.

Some of the most common places where CO2 is usually injected include coal beds, oil and gas reservoirs, and deep saline aquifers.

In order to transport carbon dioxide from an emission source to a storage site, pipelines must be constructed. This requires significant energy, as pipelines must be maintained at low temperatures. Impurities in the stream can cause leaks and explosions, so careful planning and engineering are necessary.

The captured carbon dioxide is stored in underground reservoirs or ocean depths to prevent it from contributing to climate change.

The most common method of capturing carbon dioxide is to use a process called flue-gas desulfurization, which works by passing the power plant's exhaust gasses through a filter that absorbs the carbon dioxide molecules.

When the carbon dioxide is captured, it is then compressed and piped to the underground storage location, like a deep saline aquifer or a depleted oil or gas well.

At the underground storage location, the carbon dioxide will stay trapped in the underground reservoir as a liquid or a supercritical fluid. Carbon capture and storage can therefore help keep carbon dioxide from entering the atmosphere, and in some cases, it can even be used to increase oil and natural gas production from the underground reservoirs.

Apart from the reduction of global warming, carbon capture and storage technology is used for enhanced oil recovery and commercialization of products. Some of the products that can be made using captured CO2 include concrete and plastics.

This flue-gas desulfurization method sits within post-combustion capture, which is the leading technology segment in the market, accounting for around 41.2% share in 2026, largely because it can be retrofitted onto existing power plants and industrial facilities without major infrastructure changes. By application, oil and gas leads with roughly 28.8% share, driven by the dual benefit of lowering emissions while supporting enhanced oil recovery, since captured CO2 injected into a mature field can boost extraction rates while it's stored. And by service type, capture itself accounts for close to 35.1% of market revenue, reflecting the high commercial value placed on the equipment, engineering, and expertise needed to separate CO2 in the first place, well ahead of the transportation, utilization, and storage services that follow it.

Benefits of Using Carbon Capture and Storage Technology

Using the technology to reduce CO2 emissions will provide economic benefits, environmental benefits, and social benefits.

For example, the United States is using CCS to address its greenhouse gas emissions, but the technology is only a small part of a larger plan. There are several other countries in the world that are also taking advantage of the technology, including China and Australia. The Global CCS Institute (GCCI) has evaluated the benefits of large-scale deployment of the technology, benefits that show up clearly in how fast the carbon capture and storage market has grown even through periods of broader economic uncertainty.

One of the benefits of using carbon capture and storage technology is that it helps to keep industrial production going. Specifically, it helps to maintain the energy demands of a power plant while reducing its carbon emissions. It is estimated that the average coal plant will still be operating for decades to come.

A carbon price may be a key financial incentive for power plants to reduce their carbon emissions. If a carbon price is implemented, the extra cost of capturing additional CO2 would be offset by a tax on the carbon that enters the atmosphere.

North America leads global adoption by a wide margin, holding an estimated 45.8% share of the carbon capture and storage market in 2026. Within that, the U.S. alone operates around 15 large-scale CCS facilities capturing more than 25 million tons of CO2 annually, supported directly by the 45Q tax credit and a concentration of oilfields well suited to CO2 injection and storage. That combination of policy support and existing infrastructure is a big part of why so many new commercial-scale projects continue to break ground in the U.S. specifically, rather than in regions with comparable emissions but less developed pipeline and storage networks. Asia Pacific, responsible for over 50% of global CO2 emissions, is regarded as the fastest-growing region, with China in particular running pilot projects at coal and gas facilities backed by strong state funding.

Challenges for Carbon Capture and Storage

One of the most basic concerns is the cost and technical feasibility of building a CCS facility.

It would require investment in capital-intensive, long-lived assets, such as CO2 transport pipelines and geological storage resources. Moreover, it will require government support in the form of financial subsidies, operational subsidies, or capital grants.

Despite its promises, many people doubt whether carbon capture and storage is the answer to climate change. The technology is not perfect, and there are a number of drawbacks.

It may be difficult to transport and store the resulting CO2. There is also the potential for catastrophic leaks and earthquakes.

Another major obstacle to widespread deployment is the lack of clear regulations in many jurisdictions. This is a problem that can only be resolved by a unified, national regulatory framework that allows the industry to move forward.

Other barriers to implementation include the economics and technical feasibility of the various projects. Several approaches have been proposed, but little success has been seen.

The only true solution to the climate crisis is a transition to 100% renewable energy. It is important to understand that the technology will not be sufficient to solve the problem.

Even with these obstacles, a fairly concentrated group of established players keeps investing in the space. Honeywell International, Schlumberger, Aker Solutions, Siemens Energy, Shell, Linde, Mitsubishi Heavy Industries, Equinor, ExxonMobil, and Fluor Corporation are among the companies most active in the market today, spanning everything from capture technology and engineering services to project development and long-term storage infrastructure. Several of these players have recently expanded partnerships across national borders, aligning carbon credit frameworks and joint investment structures to make cross-border CCS projects more financially viable than they were even a few years ago. Their continued investment, alongside supportive government policy, is what keeps the overall outlook pointed toward steady double-digit growth through 2033, even as cost and infrastructure challenges remain very real for smaller operators trying to enter the space.

Conclusion

Carbon capture and storage (CCS) is a promising technology for reducing emissions of carbon dioxide from power plants, industries, and other sources. CCS systems capture carbon dioxide from industrial operations, transport it to a storage site, and inject it into geological formations deep underground.

The storage sites may be oil and gas reservoirs, coal beds, deep saline aquifers, or other underground formations. CCS systems are a cost-effective way to reduce emissions that would otherwise be released into the atmosphere and contribute to climate change.