Carbon Capture and Storage (CCS) is no longer a futuristic idea or a climate scientist’s dream, it has become an unavoidable necessity for the sectors that cannot decarbonize through renewables or electrification alone. Cement, steel, refining, chemicals, these industries have one practical path to cutting emissions in the short term: capturing and storing their CO2. Yet while the United States is rapidly turning that vision into reality, Europe continues to wrestle with frameworks, regulations, and price signals that fail to deliver.
The difference is not technical. It is financial. And at its core, it is political.
Momentum in Europe, but not yet a breakthrough
Last week, during t…
Carbon Capture and Storage (CCS) is no longer a futuristic idea or a climate scientist’s dream, it has become an unavoidable necessity for the sectors that cannot decarbonize through renewables or electrification alone. Cement, steel, refining, chemicals, these industries have one practical path to cutting emissions in the short term: capturing and storing their CO2. Yet while the United States is rapidly turning that vision into reality, Europe continues to wrestle with frameworks, regulations, and price signals that fail to deliver.
The difference is not technical. It is financial. And at its core, it is political.
Momentum in Europe, but not yet a breakthrough
Last week, during the Global Energy Transition (GET) conference in Rotterdam, the momentum for CCS was evident. Operators, regulators, and service providers presented an array of projects across Europe, from storage pilots in the North Sea to capture installations at refineries and cement plants. The technology is there, the know-how is there, and the need is unquestionable. Yet a look beneath the enthusiasm reveals a problem that remains stubbornly unresolved: costs.
A recent study by André Nogueira da Silveira at Brazil’s FGV EPGE offers one of the clearest analyses of this issue to date. His comparative assessment of CCS economics in the United States and Europe shows in stark terms how policy design, not technology, is driving deployment on one side of the Atlantic and paralysis on the other.
The U.S. advantage: simple policy, real incentives
In the United States, the 45Q tax credit provides a simple, bankable incentive: $85 for every ton of CO2 captured and permanently stored. The mechanism is clear and predictable. If a project can capture and store CO2, it earns the credit. That level of certainty has unlocked investment at scale. Capture costs for ethanol plants, for instance, range from $22 to $63 per ton—well below the value of the credit. Projects can therefore reach financial viability from day one, with private capital eager to participate.
Europe tells a different story. Capture costs in key industries, cement, refining, steel, are generally higher, often between $80 and $150 per ton. Even the lowest-cost examples, such as cement at around $87 per ton, are already on the edge of the European carbon price, which recently fluctuated between $60 and $110 per ton. That margin leaves little room for uncertainty. And uncertainty, unfortunately, is what Europe excels at.
The limits of carbon pricing
The European Union’s approach to CCS has relied primarily on the Emissions Trading System, which in theory should create a market signal strong enough to make carbon capture worthwhile. But in practice, it hasn’t. The ETS price is volatile, long-term contracts for difference are still emerging, and funding calls remain bureaucratic and slow. There is no consistent, scalable mechanism that rewards the permanent removal of CO2 from the atmosphere or from industrial processes.
The result is that even well-designed projects struggle to make their numbers work. And that’s before adding the significant costs of transport and storage. Once the CO2 leaves the capture site, it must travel, often across borders, through pipelines or shipping to storage locations, each requiring permits, liability frameworks, and commercial agreements. These logistics can add tens of euros per ton to the total cost. When projects already start underwater, transport and storage become the final blow.
America builds while Europe debates
The American system builds momentum through clarity. The 45Q credit can be monetized, traded, and financed. Developers can take a future revenue stream directly to lenders. Investors understand the risk profile. The result is a wave of project development across the U.S. Gulf Coast and Midwest, with industries from ethanol to power generation finding new economic logic in CCS. The policy is not elegant, but it is effective: it rewards performance, not promises.
Europe’s predicament is particularly frustrating because it is not caused by a lack of capability. The continent has world-leading geological formations in the North Sea, some of the best chemical and process engineering expertise in the world, and decades of experience in offshore operations. What it lacks is the political will to treat carbon capture as a critical part of its industrial and climate strategy, rather than as a last resort to be debated endlessly.
Echoes of past energy transitions
The gap between Europe and the United States in CCS economics mirrors earlier transitions in renewables. The U.S. solar and electric vehicle markets surged once incentives were simplified and scaled. Europe, meanwhile, often led in innovation but lagged in deployment, constrained by complex regulatory layers and uneven national support schemes. The same risk now looms over CCS. Europe could again be the laboratory where the ideas are proven, only for the commercial value to be captured elsewhere.
This transatlantic divide has real consequences. If Europe fails to make CCS competitive, its energy-intensive industries will face an impossible choice: absorb the cost and lose competitiveness, relocate to regions with clearer incentives, or simply delay decarbonization altogether. Meanwhile, the United States will continue to build a domestic CO2 value chain, creating jobs, developing storage capacity, and lowering the marginal cost of capture through scale.
Aligning policy with reality
It is easy to dismiss the U.S. model as a case of fiscal brute force, but there is a logic to it. Climate policy succeeds when it aligns environmental outcomes with financial incentives. Europe’s preference for carbon pricing and moral persuasion has limits. Markets respond to certainty, not aspiration. Until Europe can offer a clear and durable reward for every ton of CO2 permanently removed, its CCS ambitions will remain rhetorical.
The path forward is not mysterious. Europe could adapt the lessons of 45Q to its own system—perhaps through a direct payment per ton of CO2 stored, guaranteed by a European-level mechanism. It could streamline permits for shared transport and storage infrastructure, ensuring that captured carbon has somewhere to go. It could recognize that decarbonization is not a cost to minimize, but an industry to build.
The current approach, piecemeal grants, project competitions, and fluctuating carbon prices, creates the illusion of progress while discouraging real investment. The numbers make it plain: where the U.S. has created an investable market, Europe has produced a regulatory puzzle.
A race Europe cannot afford to lose
The irony is that Europe pioneered many of the technologies now being deployed across the Atlantic. It has the expertise, the research base, and the moral imperative. But without the right economics, none of that translates into scale. The difference between promise and progress, in the end, is policy design.
CCS will be a cornerstone of industrial decarbonization, whether Europe embraces it or not. The question is whether Europe wants to lead that transformation or watch it unfold from the sidelines.
For now, the United States is winning the carbon capture race, not because it has better engineers or cheaper geology, but because it decided that ambition without incentive is just talk. Europe would do well to take note.
By Leon Stille for Oilprice.com
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