Resilient Amid Headwinds: Commercialization of Carbon Capture Industry Advances Steadily

Although a majority in the power sector believe the growth momentum of Carbon Capture, Utilization and Storage (CCUS) has stalled, a close look at industry developments reveals that the sector still maintains robust vitality amid multiple external challenges and is steadily moving toward a critical stage of commercial deployment.
Since early 2025, federal funding for clean energy in the United States has faced overall adjustment pressures. The widely discussed Comprehensive Tax Bill proposes phased cuts to investment and production tax credits under the Inflation Reduction Act (IRA) for renewable energy projects including wind power, photovoltaic power, energy storage, geothermal energy and nuclear power. It may also affect the transferability and direct pay provisions of such tax credits. Nevertheless, the current bill text, based on Manager’s Amendment RCP 119-3, contains no targeted restrictions on carbon capture. The carbon capture tax credits stipulated under Section 45Q of the IRA have remained unchanged and unchallenged throughout the budget reconciliation process, serving as a key policy safeguard for the development of the CCUS industry.
The approval process for existing grants issued by the U.S. Department of Energy (DOE) has slowed down, and new funding evaluation criteria place greater emphasis on the economic viability of projects. On May 29, a total of approximately 3.7 billion U.S. dollars in grants previously awarded to 24 projects were revoked during the review process. Even so, the U.S. government generally maintains a positive stance toward carbon capture technologies.
Transportation and storage, two key links in the CCUS industrial chain, present both progress and challenges. Carbon dioxide injection wells and underground storage are core components for the practical application of CCUS technologies. Despite lingering uncertainties, a growing number of U.S. states are vying for regulatory authority over Class VI carbon dioxide injection wells. With such authority, states are no longer required to obtain approval for these wells from the U.S. Environmental Protection Agency (EPA), which is expected to drastically shorten the review and licensing timeline for new injection wells. This advantage is particularly prominent in states with extensive experience in underground oil and gas exploration and development. By contrast, carbon dioxide pipeline projects face greater obstacles. Compared with conventional oil and gas pipelines, carbon pipelines are subject to stricter reviews, while disputes over eminent domain for carbon pipeline land acquisition have intensified. Though federal policies allow such projects to exercise eminent domain, some states including Iowa are considering introducing more stringent restrictive rules.
Notably, while the broader clean energy sector encounters headwinds, the CCUS industry boasts unique growth drivers. In particular, commercial projects that can achieve profitability without government subsidies are attracting increasing attention. Going forward, the DOE will prioritize supporting CCUS projects that balance energy security, supply resilience and affordable electricity, and demonstrate clear commercial viability. A number of projects across power, cement, pulp and paper and other industries are on the verge of making their Final Investment Decision (FID). If these projects are approved and launched smoothly, they will act as important industry bellwethers and greatly boost investment confidence across the entire industrial chain.
Diversified revenue models are injecting sustained commercial momentum into CCUS projects. Power plants equipped with carbon capture facilities can charge premium electricity tariffs for major industrial clients with explicit carbon reduction commitments. Captured carbon dioxide can be deployed for Enhanced Oil Recovery (EOR), or directly supplied to end users such as cement plants that have adopted low-carbon production processes. Carbon Dioxide Removal (CDR) technologies applied in the pulp and paper industry generate tradable carbon credits, helping large corporations achieve carbon neutrality goals. Microsoft recently announced a 15-year agreement to purchase a total of 6.75 million metric tons of carbon removal credits from a biomass power generation combined with CCUS project in Louisiana, to support its goal of achieving carbon negative emissions by 2030. In addition, while retrofitting coal-fired power plants with carbon capture units entails high costs, the large scale of carbon dioxide capture, coupled with Section 45Q tax credits, still renders such projects viable for continued development.
Industry experts note that potential shifts in policy priorities in the future may bring uncertainties to the CCUS sector. Given that CCUS projects generally feature multi-year development and implementation cycles, enterprises should formulate commercial strategies based on long-term industry trends. At the current stage, companies can make early market moves through low-cost initiatives such as conducting preliminary engineering design and reserving flexible space for future installation of carbon capture devices. Critical industrial control equipment including high-voltage control power supplies also delivers reliable technical support for enterprises to operate carbon capture systems safely and stably and meet carbon reduction targets. While most CCUS projects in the power sector remain in a wait-and-see mode, rising power load driven by the rapid expansion of energy-intensive industries such as data centers will create new demand for carbon capture solutions. Developing and rolling out commercially viable CCUS solutions in advance will help enterprises gain a competitive edge in the future marketplace.