Global | Carbon Capture and Storage: Costs, Opportunity Costs, and Profitability

Summary

Carbon capture and storage (CCS) encompasses various technologies, making it difficult to estimate an average cost that should decline with proper incentives and scale. Moreover, as carbon emissions become more expensive, the economic breakeven point approaches and social returns increase.

Key points

• Key points:
• Cost variability: CCS costs vary by technology, sector, and location. Capture is the most significant cost component, especially for dilute sources such as power and cement, while transport and storage costs depend on volume, distance, and geological conditions.
• Slow cost declines: Unlike renewable energy, CCS costs have decreased very slowly due to limited deployment and the need for project customization, though recent projects show meaningful reductions thanks to technological learning.
• Economic viability: Overall, CCS remains unprofitable under current EU-ETS carbon prices, but the gradual increase in prices (and phase-out of free allowances) will help improve its relative profitability until it turns positive.
• Social return: Accounting for the full societal cost of emitted carbon — higher than what market pricing mechanisms capture — underscores CCS’s crucial role in decarbonizing hard-to-abate sectors.

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