The Institute for Energy Economics and Financial Analysis (IEEFA) has noted that the International Energy Agency’s recently-published World Energy Outlook 2025 assigns a limited role to carbon capture, utilisation, and storage (CCUS) in its decarbonisation projections.
As the IEEFA’s Grant Hauber said in a recent briefing note, CCUS is projected to contribute less than 5% to offsetting emissions by 2050, according to the IEA, with this forecast representing a “multi-year downgrading of the technology”, compared to other net zero solutions.
‘No clear conclusion’
“At first glance, this downgrading may seem surprising,” Hauber noted. “For years, media coverage, academic literature, and industry reporting on decarbonisation have claimed that CCUS will play a critical role in achieving material carbon emissions reductions, particularly in hard-to-abate sectors. Even as recently as 2020, the IEA itself was touting CCUS as a key component of decarbonisation.
“However, based on the World Energy Outlook 2025, there is no clear conclusion that CCUS is essential to decarbonisation. While CCUS is referenced in the text assessing future energy mixes, it is barely visible in the most important metric — the percentage contribution to reduced CO2 emissions.”
As he added, while solutions such as renewable energy, electrification, fuel switching, and energy efficiency are likely to deliver more than 82% of the required emissions reductions, CCUS will account for a maximum of 4.9%, with 1.2% attributed to power generation and 3.7% to industry.
Associated costs
The IEEFA links this prognosis to both the rapid expansion and declining costs of renewable energy – with renewable capacity growing by around 793 GW in 2025, driven by expansion in China – and the high investment and operating costs associated with carbon capture, transport, and storage.
“CCUS proponents claim that the technology requires a consistent and robust policy environment, supported by subsidies or tax credits, to offset the high investment and operating costs,” said Hauber. “These expenses must cover the capture equipment, CO2 transportation, and its final, permanent subsurface storage, and vary widely depending on the source of emissions, distance to disposal, geological complexity, as well as country-specific material, labour, and operating costs. When aggregated across the CO2 disposal chain, these costs are substantial.”
According to recent EU estimates, total disposal costs per tonne of carbon dioxide was between €105 and €280 last year. As a result, the IEEFA notes, widespread CCUS deployment will depend on sustained subsidies or high carbon taxes in the future with projects having been “delayed, canceled, or failed to materialise, often due to unfavourable economics”. Read more here.
