Carbon capture and storage (CCS) has been positioned as a critical technology for climate mitigation for over two decades. Billions have been invested in demonstration projects and commercial facilities. Governments have created tax credits and policy frameworks to support deployment. Yet in 2026, CCS remains marginal, expensive, and dependent on subsidies that dwarf the actual value of carbon reduction achieved.

The basic concept is straightforward: capture CO2 from industrial emissions or directly from air, compress it, transport it, and inject it into geological formations for permanent storage. Each of these steps is technically feasible. The challenge is that when you add up the costs across the entire chain, the total expense per tonne of CO2 stored is far higher than alternatives for reducing emissions.

Current capture costs for point-source emissions (power plants, cement factories, steel mills) range from $50 to $120 per tonne of CO2, depending on the concentration of CO2 in the exhaust stream and the capture technology used. Transport and storage add another $10-30 per tonne. So the all-in cost for CCS from industrial sources is typically $60-150 per tonne.

Compare this to the current carbon price in most markets. Australia’s carbon credit price fluctuates around $35-45 per tonne. The EU’s price is higher at around €80-90 ($135-145 AUD), but still at the low end of CCS costs. Without additional subsidies, CCS projects are uneconomic in most jurisdictions.

Direct air capture (DAC)—removing CO2 directly from atmospheric air rather than from concentrated industrial emissions—has even worse economics. Current DAC facilities operate at costs of $600-1,000 per tonne of CO2 captured. This is an order of magnitude higher than point-source capture and nowhere near economically viable even with generous carbon credits.

The technology advocates argue that costs will decline with scale and technological improvement, following the pattern of solar panels and batteries. This is theoretically possible but hasn’t materialized despite decades of development and significant deployment. CCS costs have remained stubbornly high, with only incremental improvements from lessons learned across multiple projects.

Part of the problem is that CCS is fundamentally energy-intensive. Capturing CO2 from exhaust streams requires substantial energy input—typically 15-30% of the power plant’s total energy output for post-combustion capture. This energy needs to come from somewhere. If it’s fossil fuel energy, you’re generating additional CO2 to capture the original CO2, significantly reducing net emissions benefit.

The storage component also faces challenges. Suitable geological formations exist—depleted oil and gas fields, saline aquifers, basalt formations—but they’re not evenly distributed geographically. This means captured CO2 often needs to be transported long distances, adding cost and complexity. Pipeline infrastructure for CO2 transport is limited and expensive to build.

Long-term storage integrity is another concern. While geological storage is believed to be stable over centuries, monitoring requirements to ensure CO2 doesn’t leak extend for decades. Who bears responsibility and cost for this monitoring? What happens if a storage site operator goes bankrupt? These liability questions complicate project finance.

The few large-scale CCS projects in operation globally have struggled with technical and economic performance. Many have operated below designed capacity. Some have required ongoing operational subsidies beyond initial capital support. The track record doesn’t inspire confidence that the technology is approaching commercial viability.

There’s also a moral hazard dimension. CCS is attractive to fossil fuel industries because it promises continued use of fossil fuels with captured emissions. This potentially delays transition to renewable energy sources and maintains fossil fuel infrastructure longer than necessary for climate goals. Critics argue that the same capital invested in renewable energy would achieve greater emissions reduction.

The policy environment has created perverse incentives. Tax credits for CCS (like the US 45Q tax credit) make projects financially viable, but they’re essentially paying companies $50-85 per tonne to implement technology that costs $100-150 per tonne. The public cost per tonne of CO2 actually stored is higher than simply paying for emissions reduction through other methods.

Enhanced oil recovery (EOR) using CO2 has been one of the few commercially successful applications of carbon capture. Captured CO2 is injected into oil fields to increase extraction. This improves project economics but creates the contradiction of using carbon capture technology to extract more fossil fuels, potentially increasing net emissions.

Some industrial processes genuinely need CCS because there aren’t good alternatives for reducing emissions. Cement production, for example, generates CO2 both from fuel use and from the chemical process of converting limestone to clinker. The process emissions can’t be eliminated without CCS or completely different materials. For these applications, CCS might be justified despite high costs.

But deploying CCS on fossil fuel power generation—the largest proposed application—makes less sense when renewable energy can generate power with zero direct emissions at comparable or lower cost. The argument for CCS on power generation assumes continued fossil fuel use rather than transition to alternatives.

The technology development continues, with research into new capture materials, more efficient processes, and alternative storage approaches. Breakthrough innovations might eventually reduce costs significantly. But after 20+ years of research and development, betting on breakthrough cost reductions requires optimism not strongly supported by historical progress.

For organizations evaluating carbon reduction strategies, CCS should be considered in context with alternatives. In most cases, energy efficiency improvements, renewable energy adoption, and process modifications will reduce emissions more cost-effectively than retrofitting CCS. CCS might be appropriate for specific applications where emissions are inherently difficult to eliminate, but it’s not a general solution.

The capital that continues flowing into CCS development reflects policy support and corporate sustainability commitments rather than economic fundamentals. This funding could potentially achieve greater emissions reduction if directed to proven, lower-cost alternatives. But CCS benefits from political support across the fossil fuel industry and governments in fossil fuel-producing regions, ensuring continued investment despite questionable economics.

My assessment is that CCS will remain a niche technology for specific industrial applications where emissions are genuinely difficult to eliminate through other means. The vision of widespread CCS deployment on power generation and industrial facilities is unlikely to materialize unless either carbon prices increase dramatically or CCS costs decrease much more than historical trends suggest.

For climate goals, this means we probably can’t rely on CCS to offset continued fossil fuel use. Emissions reduction needs to come primarily from transition to clean energy sources, improved efficiency, and behavior change. CCS might play a supporting role for residual emissions from necessary industrial processes, but it’s not the primary solution that industry marketing sometimes suggests.

The gap between CCS rhetoric and reality has implications for climate policy and corporate strategy. Plans that assume significant CCS deployment are likely overestimating the technology’s contribution and may underestimate the pace of transition away from fossil fuels that will actually be required to meet climate targets.