Carbon Capture Costs Keep Deployment Narrow as Google Backs CCS Power

A sector moving forward in a few places

Carbon capture is growing in a few specific places, not across the whole economy. The projects going ahead in the United States and Europe are the ones that already have something working in their favor: rising electricity demand from data centers, cheap concentrated CO2 streams, or generous public funding. Everywhere else, the cost math still blocks investment.2122

The best-known recent example is Google's agreement to buy power from Broadwing, a planned 400 MW natural gas plant with carbon capture and storage (CCS) in Illinois. Developer Low Carbon Infrastructure is building it as the first project in a longer partnership meant to show CCS working at commercial scale.21 In December, NextEra and ExxonMobil also announced a partnership to build gas-fired plants with carbon capture to supply data centers.21

Those two announcements do not mean the market has turned. Wood Mackenzie's Peter Findlay says most large tech companies have "put CCS on the back seat" because it costs more and takes longer than other power options.21 Adding capture to a U.S. gas plant is estimated to cost $20 to $30 per megawatt-hour, which could roughly double the cost of producing the power.21 Microsoft shows the pattern: it backs many carbon removal projects around the world but has not committed to U.S. gas generation with CCS.21

The clearest takeaway from the 2026 coverage is that CCS is no longer a single market. It is splitting into segments that pay for themselves under current policy and segments that stall without new money. Which side a project lands on depends on chemistry and subsidies more than on any improvement in the capture equipment itself.

Chemistry decides the economics

The main reason for the split is how concentrated the CO2 is. Ethanol plants give off waste gas that is more than 90% carbon dioxide. Power plant exhaust usually contains less than 10% CO2, mixed with nitrogen and other gases that make it harder to separate.21 As a result, capture at ethanol plants typically costs $15 to $35 per metric ton, while capture at gas-fired plants can exceed $100 per ton.21

The Energy Institute's summary of a separate Wood Mackenzie report goes further on gas. It notes that combined-cycle turbine exhaust is only 3–4% CO2, compared with 9–12% for coal. It puts the added cost of capture on gas power at $35 to $200 per megawatt-hour, with Europe at the high end.29 That range is far wider than the U.S. figure above, but both sources reach the same conclusion: carbon capture on gas power is expensive.

ING's analysts look across the whole value chain and find costs above early expectations. They estimate €50 to €300 per ton for capture, transport and storage combined. Most projects fall between $100 and $250, with ethanol and ammonia at the cheap end and cement and steel at the expensive end.25 ING concludes that cost, not technology, is now the main obstacle to wider adoption.25

Policy is uneven on both sides of the Atlantic

U.S. policy is now mixed. The Trump administration cancelled about $1 billion in grants that had been awarded to as many as 95 carbon capture projects under the Biden administration, according to a Clean Air Task Force report.21 But the One Big Beautiful Bill kept the $85-per-ton 45Q tax credit for projects that start construction before 2033. It also raised the credit for turning captured carbon into products such as urea and synthetic fuels from $130 to $180 per ton.21

Those credits are not enough for steel and cement. Findlay notes that few such projects are proceeding on their own economics.21 Ethanol is different: Frontier Infrastructure's Robby Rockey says the tax credit alone makes capture viable at those plants.22 Frontier operates the Sweetwater Carbon Storage Hub in Wyoming, which has 500 million tons of storage capacity, and is building a rail terminal there to receive captured CO2. Moving CO2 by rail avoids the local opposition that has stalled pipeline proposals in the Midwest.22

Europe is in the opposite position. It has more public support but not enough infrastructure. Industrial emitters pay roughly €70 to €100 per ton for carbon allowances under the EU Emissions Trading System, and that revenue funds the Innovation Fund. The fund can cover up to 60% of a CCS project's capital and operating costs.21 The 2024 Net Zero Industry Act also requires oil and gas producers to build 50 million tons a year of storage capacity by 2030.21 Even so, limited access to CO2 transport and storage has held deployment back.22

Heidelberg Materials' cement plant in Brevik, Norway, built with Norwegian government funding, shows what is possible when that infrastructure exists. It is the first industrial-scale carbon capture facility at a cement plant anywhere. It sends its CO2 to Northern Lights, a cross-border North Sea storage project run by Equinor, Shell and TotalEnergies.21 Northern Lights is expanding from 1.5 to 5 million tons a year by 2028, and Rotterdam's Porthos project is due to start operating this year.21

ING raises a concern the other coverage underplays. Europe is building storage faster than industry is committing to capture CO2, and by 2030 it is set to have much more transport and storage capacity than captured carbon to fill it.25 The Clean Air Task Force's Toby Lockwood describes a related problem: governments want to require low-carbon materials in public purchasing, but it is hard to buy a material that does not exist yet.22 Taken together, the main constraint in Europe now looks like weak demand for low-carbon products rather than a lack of pipes and storage sites.

The wider competitive picture adds pressure. Wood Mackenzie reports that Chinese developers say they can build carbon capture for $30 to $40 per ton, compared with more than $300 per ton for European utilities. They also report building projects in about 18 months.29 These are developers' own claims, but the firm compares their potential impact to China's dominance in solar manufacturing.29

Startups face a funding drought

The outlook for venture-backed carbon removal is worse than for industrial CCS. ING reports that venture investment in direct air capture (DAC) fell 76% in 2025, as U.S. policy changes put $3.5 billion in DAC hub funding at risk.25 Tracxn's data shows DAC startups raised only about $7.78 million in 2026 so far, compared with more than $732 million in the peak year of 2022.11

The money that remains is highly concentrated. One analysis estimates $3.6 billion has gone into carbon removal startups since 2021, with Climeworks alone raising more than $1 billion.12 Another finds the top ten companies account for about 65% of disclosed funding.18 Most recent deals are still Series A rounds, and the lack of later-stage rounds is a warning sign.20 Some rounds are still closing, including Aircapture's $50 million Series A and Avnos's backing from Shell and Mitsubishi for its first commercial-scale plant.1619 Japan's Carbon Xtract is also raising a Pre-Series A round to start mass production of its membrane DAC units.13

Published DAC cost figures vary widely, so they should be treated with caution. One analysis puts current operating costs at first-of-a-kind plants at $400 to $600 per ton. It says the much-cited $100 target is out of reach with today's methods and that $200 to $250 is a more realistic floor by the early 2030s.1 Other trackers put Microsoft's multi-year deals with Occidental's 1PointFive at roughly $200 to $300 per ton, and Climeworks' costs at $600 to $1,000.2 Heirloom and other startups say they can get below $100 per ton, but those remain targets, not results.4 Given the spread, the safest reading is that DAC still costs several hundred dollars per ton in practice, and the lower figures are aspirations.

The link to clean power and grid storage

Carbon capture now depends heavily on the clean power transition. DAC plants use roughly 1.5 to 2.5 megawatt-hours of energy per ton of CO2 captured. That means a plant removing one million tons a year needs about as much energy as a small city.1

Renewables also undercut the case for capture at power plants. Wood Mackenzie finds that as more wind and solar comes online, gas plants run less often and serve mainly to balance the grid. Capture equipment only pays off when a plant runs steadily at high output, so CCS economics get worse as plants run less.29 Grid-scale battery storage adds to this pressure because it takes over more of the balancing work.

That explains why the data-center deals matter. A data center needs power around the clock, which is the steady demand capture equipment requires. Broadwing and the NextEra–Exxon plants are built around that kind of continuous load.21

Outlook

Carbon capture will probably keep expanding in a limited set of uses: ethanol plants with rail links to storage, cement plants in subsidized European clusters, a few gas plants serving data centers, and bioenergy with carbon capture (BECCS), which creates sellable carbon removal credits. Wood Mackenzie reports BECCS returns of 16–23%, compared with negative returns for many fossil-fuel CCS projects.29

Forecasts for falling costs exist but are slow. DNV expects capital costs to drop 14% by 2030 and up to 40% by 2050, and Wood Mackenzie projects real cost declines of 50–60% by 2050.2529 Neither timeline arrives soon enough to save projects that are struggling today.

The overall picture is of an industry still dependent on subsidies, with its growth shaped by where the CO2 is concentrated and which buyers will pay. Big Tech's need for steady power is creating some opportunities, but they are limited.