CO2 Capture and Utilisation

Countries and regions making notable progress to advance CO₂ utilisation include: 

• The United States’ 2022 Inflation Reduction Act included major increases to the 45Q tax credit for CCUS, which supports CO₂ utilisation by providing tax credits now valued at USD 60 per tonne of CO₂ used. In May 2023, the US government also launched the Clean Fuels & Products Shot, which aims to support alternative routes that can reduce the emissions intensity of fuels and chemicals by 85% by 2035, including CO₂ utilisation. In addition, nearly USD 120 million was made available to CO₂ utilisation projects in 2023.
• In April 2023, the European Union approved the ReFuelEU Aviation proposal which imposes blending mandates on synthetic fuels for aviation, increasing from 0.7% in 2030 to 28% in 2050, and five large-scale CCU projects targeting synthetic fuel were selected in the EU Innovation Fund’s 2022 large-scale call.
• In Canada, the 2022 federal budget proposed details for an investment tax credit for CCUS projects between 2022 and 2030, valued at 37.5% for utilisation equipment. The 2023 budget reaffirmed the proposal, which has yet to be legislated.
  

CO₂ use does not necessarily lead to emissions reduction. Climate benefits associated with a given CO₂ use depend on the source of the CO₂ (natural, fossil, biogenic or air-captured), the product or service the CO₂-based product is displacing, the carbon intensity of the energy used for the conversion process, how long the CO₂ is retained in the product, and the scale of the market for this particular use. The use of low-carbon energy is particularly critical for CO₂ use in fuels and chemical intermediates, as these processes are highly energy-intensive.

In the NZE Scenario, as fossil fuel use declines, the value of CO₂ displacement ultimately decreases and all of the CO₂ used needs to be sourced from biomass or the air to achieve climate benefits.

While some CO₂ use could bring substantial climate benefits, the relatively limited market size for these applications means dedicated storage should remain the primary focus of carbon capture, utilisation and storage (CCUS) deployment.  

In the NZE Scenario, over 95% of the CO₂ captured in 2030 is geologically stored, and less than 5% is used. With a retention time in the order of millions of years, building aggregates are the only CO₂ use application that could qualify as permanent sequestration, in contrast to fuels and chemicals, which typically retain the CO₂ for one year and up to ten years, respectively. 

Only a handful of large-scale (>100 000 t CO₂ per year) capture plants using CO₂ for the production of fuels and chemicals and yield enhancement are in operation today, with the most recent commissioned at a chemical plant in the United States to produce e-methanol in January 2024. Plans are underway for around 15 additional large-scale capture facilities targeting CO₂ utilisation for synthetic hydrocarbon fuels, through Fischer-Tropsch (FT) synthesis, direct conversion to methanol, or fermentation to ethanol. Together, these large-scale plants could be capturing and using around 8 Mt CO₂ by 2030.

An increasing share of the synthetic fuel project pipeline is targeting sources of CO₂ which are compatible with a net zero trajectory, including air and bioenergy or waste plants:

• Construction started for the flagshipOne e-methanol plant in Sweden, with plans to start capturing CO₂ from a biomass-fired combined heat and power plant in 2025. The project developer also announced two other e-methanol plants sourcing CO₂ from waste-to-energy plants.
• Highly Innovative Fuels (HIF) global are studying the feasibility of large-scale air-sourced synthetic fuel production facilities, with plants in development in Chile, Uruguay, the United States and Australia.
• Project Air in Sweden aims to start producing 200 000 tonnes per annum of methanol in 2027, using CO₂ captured from a biogas plant and electrolytic hydrogen.
• In Switzerland, Synhelion started construction of their first synthetic fuel plant using solar-based thermochemical conversion technology and sourcing CO₂ from a nearby pulp and paper mill.

Of the circa 8 Mt CO₂ in planning, around 4 Mt CO₂ would be captured from the air or biogenic sources. This would need to increase to around 12 Mt CO₂ to meet the level of low-emission synthetic fuel production in 2030 in the NZE Scenario. 

The deployment of other utilisation routes remains limited at large scale (>100 000 t CO₂ per year). Only a handful of large-scale capture projects are targeting the use of CO₂ for the production of  building materials or yield enhancement. 

A number of facilities exist on a smaller scale for the production of CO₂-based chemicals and polymers: 

• Around 75 000 t CO₂ per year has been captured from Capitol Aggregates Cement plant in Texas and used for chemicals production by the company Skyonic since 2015. 
• US company Twelve announced in 2022 the scale-up of their technology for electrochemical reduction of CO₂ into various products, ranging from plastics to fuels.  
• Econic Technologies announed partnerships with chemical companies in China and India to scale up their CO₂ to polymers technology. 

And in the field of mineral carbonation for the production of building materials, aggregates and specialty carbonates: 

• Several North American companies, including CarbonCure, CarbonBuilt and Solidia Technologies, lead the development and commercialisation of carbonated concrete production through CO₂-curing. 
• In Europe, Carbon8 systems deployed its first commercial integrated CO₂ capture and recarbonation technology of waste residues (‘’CO₂ntainer’’) at Vicat cement plant in France in 2020 for the production of construction aggregates. 
• In China, several pilots are converting point-source CO₂ into high-purity carbonates, including a 50 000 tonnes per annum barium carbonates demonstrator commissioned by China National Building Material in 2016, and a 2 300 tonnes precipated calcium carbonate plant commissioned by Guodian Electric Power Datong company in 2022. 
  

While there are only a handful of pilot-scale low-emission synthetic fuel production operating today, much larger fossil-based synthetic fuel plants have been operated for decades by large engineering and oil and gas companies such as Sasol, Shell and Synfuels China. Many components and competences are therefore easily transferrable from adjacent industries.

The extensive use of hydrogen and CO₂ for conversion into fuels and chemicals would require the deployment of large-scale transport infrastructure, including pipelines and, in some places, terminals, ships and trucks. Given the low capture capacity of most CCU projects, benefits could be achieved by combining CO₂ transport for use in products and for geological storage, especially as part of future CCUS hubs in areas with emissions-intensive industries.

One of the main innovation priorities for CCU is reducing the energy needed to convert CO₂ to fuels and chemicals. Large-scale demonstration of the reverse water-gas shift process is needed, as well as the development of advanced conversion routes such as CO₂ electrolysis and plasmosis, and solar-based thermochemical conversion. In building materials there is also a need for long-term trials of CO₂-cured concrete in structural applications to demonstrate its performance and reliability.

Smaller-scale CO₂ use opportunities can also support the demonstration of novel CO₂ capture routes, such as membranes and direct air capture, by providing a revenue stream. These early demonstrations can contribute to refining and reducing the cost of technologies for carbon capture and storage and CO₂ use and support the future deployment of both.

For more information, please visit the IEA Clean Technology Guide.

Mandates and public procurement for low-emission products, low-emission standards and tax credits are supporting the development of CCU projects:  

• In the European Union, the ReFuelEU Aviation proposal which was voted as part of the ‘’Fit for 55’’ legislation package in April 2023, imposes blending mandates for synthetic aviation fuels, increasing from 0.7% in 2030 to 28% in 2050.  
• In the United States, CO₂ utilisation routes can benefit from the 45Q tax credit, now valued at USD 60 per tonne of CO₂ used under the 2022 Inflation Reduction Act, providing emission reductions are verified. CO₂ utilisation in synthetic fuels could receive further support through the Clean Fuels & Products Shot announced in May 2023, which aims to support alternative routes that can reduce the emissions intensity of fuels and chemicals by 85% by 2035. 
• In Canada, the Standard on Embodied Carbon in Construction, which took effect in December 2022, requires that new construction projects report their emissions and use concrete which is 10% less emissions intensive than the regional average
  

The increasing interest in CO₂ conversion technologies is reflected in the growing amount of private and public funding that has been channelled to companies in this field. Corporate goals and quotas for low-emission fuels and materials are boosting CO₂ use for sustainable aviation fuels and building materials.

In 2023, global venture capital (VC) investment in utilisation companies reached nearly USD 500 million, making up close to half of total VC investment in CCUS. North American companies dominate investment, totalling around 80% of the cumulative total in the 2015-2023 period. Even though fuel production is the leading utilisation application for large-scale capture facilities, investment is well distributed among utilisation routes, with fuels making up around a third of the total, chemicals 40% and building materials around 25%.

Public funding is targeting the RD&D of various CCU applications, as well as specific commercial projects: 

• In the European Union, five large-scale CCU projects were selected for funding under the EU’s Innovation Fund 2022 funding call: the IRIS project at the Agioi Theodoroi refinery in Greece (EUR 127 million), eM-Rhone with CO₂ sourced from the Le Teil Blanc cement plant in France (EUR 115 million), GREEN MEIGA (EUR 123 million) and Triskelion (EUR 49 million) in Spain (EUR 49 million), and Colombus in Belgium (EUR 69 million).
• In Denmark, two projects received a total of nearly USD 3 million in June and December under the Energy Technology Development and Demonstration Program.
• In 2023, the United States announced up to USD 100 million in funding for CO₂ utilisation projects under the 2021 Infrastructure Investment and Jobs Act, and an additional USD 17.5 million to advanced CO₂ utilisation projects. In April 2024, a further USD 8 million was announced for 14 CO₂ utilisation R&D projects.
• Governments around the world are providing grants supporting R&D development and engineering studies for CO₂ mineralisation projects, including in the United States, Australia and Canada.