Is Carbon Capture, Utilization, and Storage (CCUS) Worth Pursuing?

2025-02-26

Hanako Hirata | Consulting Intern

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Carbon Capture, Utilization, and Storage (CCUS) encompasses a range of technologies for capturing carbon dioxide (CO₂) emissions at their source—power plants, industrial facilities, and other major emitters—and either reusing the CO₂ or storing it so it does not enter the atmosphere. Although various forms of CO₂ capture have existed for decades, CCUS has gained renewed prominence as governments and industries strive to meet the increasingly stringent climate goals set under the Paris Agreement. This article begins by explaining CCUS, why it matters, and how it works in practice. It then explores several global case studies to illustrate CCUS’s real-world evolution and challenges. It concludes by examining Japan’s emerging CCUS strategy, weighing both the advantages and drawbacks of deploying CCUS at scale.

What Is CCUS?

CCUS encompasses two core concepts: Carbon Capture and Storage (CCS), which permanently stores CO₂ underground, and Carbon Capture and Utilization (CCU), which uses captured CO₂ in products or processes. By intercepting CO₂ emissions before they reach the atmosphere, CCUS can lower overall carbon footprints in sectors that are otherwise difficult to decarbonize, such as cement, steel, and chemicals. Once collected, CO₂ can be injected deep underground into depleted oil/gas reservoirs or saline aquifers. Alternatively, it can be transformed into fuels, chemicals, or building materials. Although CCUS alone cannot eliminate all emissions, it has drawn considerable interest because it can tackle sources that renewables or electrification alone cannot readily address.

The idea of capturing CO₂ is not new—amine scrubbing and related techniques have been commercially used in industrial gas processing for decades. However, the urgency of cutting emissions in line with the Paris Agreement has led policymakers to reassess CCUS as a potentially critical climate strategy. In recent years, significant policy support and financial incentives have been seen, including updated tax credits in the United States (45Q) and ambitious national targets in Europe and Japan. The International Energy Agency (IEA) has underscored CCUS’s unique role in curbing emissions from “hard-to-decarbonize” industries, where direct electrification is often unfeasible. Nonetheless, CCUS still faces substantial hurdles regarding high costs, regulatory requirements, and societal acceptance.

CCUS projects can be broken down into four stages. First, capture technologies—often using chemical solvents like amines, separate CO₂ from exhaust gases or industrial byproducts. Second, transportation typically uses pipelines or, in some cases, ships or rail to move compressed CO₂ to designated sites. Third, utilization allows industries to convert the captured CO₂ into valuable products, such as synthetic fuels or polymers, or use it in enhanced oil recovery (EOR). Finally, storage injects unused CO₂ into long-term geological formations, where appropriate rock layers and pressure conditions can keep it locked away indefinitely.

Industrial processes like steelmaking and cement production inherently release large amounts of CO₂. Because substituting fossil fuels with clean energy in these processes is not always straightforward, CCUS is vital to mitigate emissions in these sectors. CCUS can also facilitate low-carbon hydrogen generation (capturing the CO₂ generated by fossil-based hydrogen production) and even achieve harmful emissions if paired with bioenergy.

Global Case Studies

In the past few years, several large-scale CCUS projects have been launched or reached essential milestones, underscoring the accelerating progress in the field. Below are a few recent case studies from around the world that highlight carbon capture, utilization, and storage advancements.

Norway: Northern Lights

Norway’s Northern Lights project, part of the broader Longship CCS initiative, is a milestone in cross-border CO₂ transport and storage. The plan is to allow European industries to ship liquefied CO₂ to a terminal on Norway’s coast, injecting it into deep offshore reservoirs under the North Sea. Phase 1 is designed to store around 1.5 million tons of CO₂ annually and began operating in September 2024. The Norwegian government heavily subsidizes the program, reflecting a strong commitment to large-scale CCS. Equinor, Shell, and TotalEnergies are collaborating to build the necessary pipelines and storage facilities while establishing an open-access model that welcomes CO₂ from different emitters. Observers anticipate that Northern Lights will reduce costs per ton by consolidating infrastructure and encouraging multiple users to share transport and injection systems. The initiative highlights how government support and well-structured policy frameworks can ensure CCS becomes commercially and logistically feasible. Norway’s experience may also pave the way for replication across Europe, where countries lacking suitable storage on their territories can partner with areas offering geological sequestration potential.

While Northern Lights demonstrates the success of government-led offshore storage, Iceland’s Mammoth project illustrates another approach: capturing CO₂ directly from ambient air.

Iceland “Mammoth”

The Mammoth Plan in Iceland is the world’s largest operational direct air capture facility, opening in 2024. It is designed to capture up to 36,000 tons of CO₂ annually from ambient air, making it nearly ten times larger than the previous record-holder, the Orca DAC plant. Mammoth employs large fans and chemical filters to extract CO₂ from the atmosphere, utilizing Iceland’s renewable geothermal energy. The captured CO₂ is subsequently injected underground into basalt rock formations, which mineralizes into solid carbonate minerals within a few years. This project represents a significant advancement in DAC methodology, demonstrating the potential to scale atmospheric CO₂ removal. Climeworks aims to continually increase capacity, establishing Mammoth as a crucial proof-of-concept for gigaton-scale CO₂ removal in the future. While DAC is energy-intensive and costly, Mammoth’s operations provide essential data on performance and cost improvements at scale. It signifies that engineered carbon removal is transitioning from pilot projects to commercial reality.

United States: Petra Nova

Petra Nova in Texas, launched in 2017, was once the largest post-combustion carbon capture facility installed on a coal power plant. Its capture system targeted 1.4 million tons of CO₂ per year, then transported by pipeline for enhanced oil recovery. Petra Nova successfully captured and increased oil production during its first three years. In 2020, however, a global oil price slump, exacerbated by the COVID-19 pandemic, made the project uneconomical, prompting a shutdown. More recent policy incentives in the United States, including enhanced tax credits for stored CO₂, have now supported the project’s restart under new ownership. The Petra Nova experience underscores the significance of stable revenue streams. Linking CCUS to oil prices can backfire when markets drop. As a result, many stakeholders argue for robust policy or carbon pricing mechanisms to avoid vulnerability to fossil fuel volatility. On the technical side, the project’s system largely met performance targets, indicating that the capture technology worked effectively.

Collectively, these examples highlight CCUS’s potential—and its complexities. Generous policy frameworks, grants, and tax credits often spur capital-intensive early deployment phases. Operational histories also reveal cost overruns, variable downtime, and economic vulnerabilities. Despite these constraints, a surge of new CCUS projects worldwide reflects a growing recognition that, with lessons from early ventures, subsequent initiatives may see improved performance, lower costs, and broader acceptance.

Advantages and disadvantages of CCUS

CCUS can significantly reduce CO₂ emissions at significant sources, often capturing around 90% of the CO₂ that would otherwise be released. By focusing on processes that are difficult to electrify—such as cement, steel, and chemical production, CCUS enables substantial reductions in sectors with limited alternatives. It can also support low-carbon power and hydrogen generation, making it an attractive transitional option for existing infrastructure. Furthermore, CCUS has the potential to achieve net-zero emissions when combined with bioenergy or direct air capture, which can help eliminate legacy carbon from the atmosphere. Lastly, the “U” in CCUS—Utilization—creates economic opportunities by converting captured CO₂ into fuels, chemicals, and materials, potentially fostering new industries and revenue streams.

Nonetheless, CCUS is expensive and energy-intensive, leading to high capital and operating costs. Widespread implementation relies on developing extensive transport and storage networks—no small feat for areas without ideal geology or strong public backing. The risks of CO₂ leakage and seismic issues necessitate careful site selection and monitoring, and if not appropriately managed, CCUS could undermine trust in the technology. Critics also highlight real-world instances of CO₂ pipeline leaks. In Mississippi (2020) and Louisiana (2024), residents had to evacuate temporarily.

Additionally, critics argue that CCUS might prolong fossil fuel dependence by offering a partial fix rather than prompting a complete transition to renewables. Moreover, CCUS currently covers a mere fraction of global emissions; skeptics question how quickly it can expand to the gigatons scale. The next decade will be critical for proving its potential to deliver deep emissions cuts reliably.

Japan’s CCUS Landscape

In Japan’s pursuit of carbon neutrality by 2050, CCUS (Carbon Capture, Utilization, and Storage) is recognized as a means to reconcile industrial activity with greenhouse gas reductions. In March 2023, the Ministry of Economy, Trade and Industry (METI) formulated the “CCS Long-Term Roadmap,” setting a goal of commencing domestic CCS projects by 2030 to store 6 to 12 million tons of CO₂ annually while envisioning the establishment of a system capable of storing 120 to 240 million tons of CO₂ per year by 2050. In July 2023, the government also approved the “GX (Green Transformation) Promotion Strategy,” which presented policies for supporting pioneering projects and enacting the necessary legislation to facilitate CCS commercialization by 2030. Furthermore, the “Act on Carbon Dioxide Storage Business” was passed in May 2024, establishing a licensing system for CO₂ storage and transportation businesses. These developments are expected to provide greater regulatory clarity and accelerate the practical application of CCUS within Japan.

On the policy front, METI allocated approximately 8 billion yen in its FY2023 initial budget for CCUS-related R&D and demonstration, supporting the “Advanced CCS Projects” through JOGMEC (Japan Organization for Metals and Energy Security) to build scalable business models to launch CCS by 2030. By 2024, nine projects spanning industries such as power generation, oil refining, steelmaking, chemicals, pulp and paper, and cement will be selected from around the country, aiming to store several million tons of CO₂ annually.

In the Tomakomai CCS Demonstration Project in Hokkaido, about 300,000 tons of CO₂ captured from a hydrogen unit at an oil refinery have been injected beneath the seabed without any significant leakage detected to date. Based on such achievements, the Japanese government has laid a roadmap to store 6 to 12 million tons of CO₂ annually by 2030 and increase the number of supported projects to 20–25 by 2050, ultimately storing 120 to 240 million tons of CO₂ per year. To realize this, options such as injecting CO₂ offshore and transporting it overseas are being explored, with further infrastructure development through public-private partnerships and institutional backing likely required.

Nevertheless, challenges remain: Japan has numerous active faults that make large-scale onshore storage difficult, and offshore injection would require exhaustive geological surveys and substantial costs. Estimates suggest that capture costs range from 12,800 to 20,200 yen per ton (approximately US$90–150), posing hurdles for widespread adoption without carbon pricing or subsidies. Despite this, major companies such as ENEOS, INPEX, and J-POWER regard CCUS as a key strategic priority and are considering international collaboration through the Asia CCUS Network. In addition, several major Japanese insurers have recently introduced CCUS-specific insurance products that help mitigate initial development risks by covering potential CO₂ leakage or equipment failures, which may explain why Japanese companies remain so positive about investing in CCUS. If Japan achieves its 2030 and 2050 targets, it could emerge as a leading example, combining innovative capture technologies, offshore storage expertise, and robust policy support.

METI-selected CCS projects (2024)

Is CCUS Worth Betting On?

Viewed through a balanced lens, CCUS is neither a silver bullet nor a misguided distraction. Its ability to capture large amounts of CO₂ at industrial sources or power plants makes it invaluable for hard-to-abate sectors. (For example, high temperatures exceeding 1,400°C in cement production are required, making direct electrification challenging without massive infrastructure overhauls.) At the same time, negative-emissions pathways (BECCS, DAC) offer potent climate benefits if scaled effectively. Yet CCUS remains expensive, complex, and reliant on policy support for infrastructure and stable revenue—particularly in regions without well-developed CO₂ pipelines or straightforward geology. Some worry it could prolong fossil fuel use if not paired with aggressive renewables and efficiency.

For Japan, whose industrial base and constrained energy resources pose unique challenges, CCUS holds strategic appeal. The government’s multi-decade roadmap and demonstration successes, such as Tomakomai, illustrate that combining offshore storage with innovative capture and utilization technologies could enable decarbonization without undermining economic competitiveness. Still, the high costs, seismic risks, and regulatory hurdles must be addressed, and Japan must move beyond pilot scales to meaningfully contribute to net-zero goals by 2050. Ultimately, CCUS remains a calculated gamble that, if properly managed, can complement renewables, hydrogen, and other measures in bridging the gap to a low-carbon future.

Conclusion

CCUS is an essential but challenging part of the climate puzzle. Global projects from Norway to Iceland and the United States have shown that they can operate at scale and significantly reduce emissions. However, each example highlights the capital intensity and reliance on policy backing. Japan’s experience further underscores that CCUS requires long-term vision, rigorous site assessments, public-private collaboration, and supportive legislation. The country’s ambitions—and the growing Asia CCUS Network—suggest that successful scale-up could have far-reaching benefits across the region.

Ultimately, CCUS will not solve climate change alone. It must be deployed where it genuinely complements other low-carbon pathways rather than delaying a broader energy transition. CCUS offers a viable, albeit expensive, hedge against uncertainty for governments and industries navigating net-zero pledges. Notably, during the Trump presidency in the United States, CCUS saw a boost thanks to enhanced 45Q tax credits, which reflect how consistent policy incentives can make or break significant projects. As evidenced by the U.S. experience with Petra Nova, policy and market conditions can determine whether CCUS projects remain financially viable, highlighting the crucial role that consistent government incentives play in scaling up CCUS. As new CCUS facilities emerge and existing ones retool for commercial viability, the coming decade will test whether this technology can fulfill its promise of deep emissions cuts while staying economically viable and publicly accepted. If it can, CCUS could become a cornerstone of the global clean-energy transition that Japan and other nations will rely on to balance growth, security, and the urgent need for decarbonization.