In July 2025, 47 CCS projects under construction worldwide represented 44 MtCO2/year of capture capacity; global operational capacity stood at 64 MtCO2/year. A portion of projects uses captured CO₂ to extract more oil. This mechanism is encouraged by the federal tax credit 45Q. Large-scale viability and application across all sectors remains to be consolidated, but commercial models for permanent storage without EOR already exist.
The Essentials
- North America accounts for 59% of global carbon capture and storage capacity, with 44 Mt/year captured by end of 2025 (GlobalData Energy Transition 2026).
- The majority of North American projects is economically viable only through enhanced oil recovery (EOR): captured CO₂ is injected into reservoirs to increase oil production.
- The 45Q tax credit, made permanent by Congress, subsidizes this architecture at $85 per ton for geological storage, making EOR even more attractive than permanent storage.
- The European Union is testing an alternative model based on a carbon price of approximately €80/ton, without EOR rent, but at a political cost that the American federal system cannot replicate in the short term.
- The central tension: the pragmatism that enabled building the world’s largest CCUS infrastructure creates path dependency that could delay, rather than accelerate, the exit from fossil fuels.
44 Million Tons of CO₂ Captured, and a Business Model That Troubles
North America’s carbon capture and storage capacity is impressive on paper. The United States and Canada operate dozens of facilities, and large projects are under construction in Texas and the Great Plains. In July 2025, 44 Mt/year designated the global capacity of projects under construction, not a volume captured in North America. The technology works. Engineers know how to do it.
What deserves close examination is what makes these projects financially sound. Historically, several major American projects have benefited from CO₂ demand for EOR; this demand could improve their economics, but it is not demonstrated as the sole source of viability for the majority of North American projects. It is sold or injected into oil reservoirs to increase their recovery rate, a technique called enhanced oil recovery. This injection of pressurized CO₂ pushes residual oil toward production wells. It allows extraction of an additional 10 to 15% of reserves in depleted fields.
It is profitable for the operator, even outside any climate framework.
The 45Q tax credit adds to this profitability. After July 4, 2025, 45Q no longer distinguishes between dedicated storage and EOR regarding the base amount applicable to new equipment, but it continues to distinguish them as eligibility and compliance pathways. Congress expanded and extended 45Q, without making it permanent without conditions or expiration. An EOR project can combine oil revenues and 45Q credit, but the tax credit holder is not necessarily the oil operator, and 45Q no longer, for new equipment after July 4, 2025, provides a specific rate advantage to EOR. The 45Q constitutes an element of the CCUS tax framework, whose effects depend on eligibility conditions and CO₂ uses.
Yergin’s Pragmatism Put to the Test by 45Q
Daniel Yergin, whose work on energy geopolitics is authoritative, formulated in 2025 in Foreign Affairs a thesis that illuminates this debate. The energy transition is “in trouble,” he writes: renewables constitute an addition to fossil fuels, not their replacement. The right strategy is therefore pragmatic, long-term, differentiated by region, working with existing economic realities rather than pretending to erase them by decree.
Applied to North American CCUS, this reading is coherent. An infrastructure of capture financed in part by EOR could, in certain cases, be reoriented toward permanent storage. The CO₂ pipeline, the network of wells, injection capacity: all of this is expensive to build and will be available once constructed. Pragmatism says: build first, reorient later.
The problem that the data poses to this thesis is precise. An infrastructure whose profitability rests on oil production is not neutral with respect to the fossil trajectory. It can create economic interests linked to maintaining oil production. Reservoirs treated by EOR can extend their production. The CO₂ infrastructure then becomes an asset whose value depends on maintaining extraction.
For equipment placed in service after July 4, 2025, reorientation toward dedicated storage does not increase the 45Q rate compared to EOR, but it modifies commercial revenues, contracts, and project risks. The 45Q supports EOR while also covering dedicated geological storage without oil production, which allows gradual transition independent of extraction.
This shift deserves to be named. Yergin’s thesis is necessary lucidity about the slowness of transitions. But lucidity about economic realities becomes an alibi when those realities are precisely what fiscal instruments have constructed. 45Q is not a natural market constraint: it is a political choice. Choosing to finance capture through EOR rent is making the transition dependent on an industry that the transition is supposed to reduce.
Daron Acemoglu, whose work on technological gains being captured by established interests is well documented, would provide here a complementary framework: when an innovation is integrated into the value chain of a dominant industry, it tends to reinforce that industry rather than displace it. A historically significant share of North American CCUS is linked to EOR, but the region is also developing dedicated geological storage without oil production.
The European Model: Scope and Limits
The European Union has committed itself in a different direction. The Emissions Trading System (ETS) places a price on carbon today around €80/ton, and this price creates an incentive to capture and store CO₂ without the storage needing to finance oil extraction. Projects like Northern Lights in Norway or industrial hubs in development in the Netherlands are designed for permanent geological storage, underpinned by carbon price and long-term public contracts, not CO₂ sales to oil companies.
This model has coherence. Sustainable geological storage is the central condition for the climate benefit of CCS; CO₂ uses produce climate benefit only under additional and verifiable conditions. If the carbon price is sufficiently high and stable, it can make this storage economically viable without passing through EOR. Early European projects demonstrate the technical feasibility of permanent storage; their financial viability depends on contracts, subsidies, transport-storage costs, and, depending on the country, the carbon signal.
But capacities must be compared according to the same scope and reference date. The figure of 44 Mt/year designated in July 2025 the global capacity of projects under construction, not a volume captured in North America. These two logics are not directly transposable: the American federal structure and the absence of a federal carbon price could complicate in the short term the adoption of an ETS comparable to the European one.
The debate on renewable expansion policies moreover illustrates that even technologies without equivocal climate benefits struggle to gain traction in a fragmented regulatory landscape.
Path Dependency Taking Hold Right Now
The question of tax incentives would be secondary if the infrastructure constructed remained neutral. It is not, and the timeline is tight.
Projects can be designed for multiple decades, but injection durations are specific to each project; in European law, post-transfer liability must cover at least thirty years of monitoring, with no general rule imposing fifty years. Investment decisions made under the current 45Q regime can influence the geography of American CCUS for several decades. If these assets are optimized for EOR, their conversion to permanent storage may require additional incentives and contractual modifications. The notion of path dependency is not a rhetorical figure: it is the precise description of what happens when a large capital investment creates its own logic of continuation.
The signal from certain American states is instructive here, even if it is not yet decisive. California has begun discussions to link CCUS credits to minimum permanent storage requirements. Wyoming, an oil state, for its part adopted legislation to facilitate access to geological storage sites outside hydrocarbon reservoirs. These are weak signals, but they indicate that part of the American political world perceives the tension and seeks to correct it without abandoning the sector.
CCUS Viability Without EOR Before 2040
The construction, at industrial scale, of an economically viable American CCUS without attachment to EOR and without a federal carbon price constitutes the central prospective challenge for the sector.
Several trajectories are plausible, though none is certain at this stage. The first would be a gradual increase in the 45Q credit for permanent storage, to the point where geological storage without EOR becomes competitive even without associated oil production. This option assumes a Congress favorable to tax spending and an administration ready to reform an instrument that oil states defend fiercely. The second trajectory passes through voluntary carbon markets: if industrial buyers, cement makers, steel producers, airlines subject to net zero commitments, agree to pay for geological storage at a sufficient price, private demand could partly substitute for EOR rent. This path depends on the credibility and rigor of certification standards, a project still largely underway.
The third trajectory is sectoral: certain industries like blue hydrogen production, ammonia, or certain heavy industrial facilities have a capture need that does not involve EOR. If these industries develop and if captured CO₂ finds outlets for permanent storage, CCUS can gradually emancipate itself from petroleum logic through addition of segments, not abrupt substitution.
None of these scenarios unfolds without political conditions and coordinated markets. Large-scale permanent storage assumes regulation of long-term liability. The United States has a detailed federal framework for operational and financial responsibility for geological storage; very long-term liability transfer regimes can vary by state. The question of the reliability of heavy energy infrastructure also arises for CO₂ transport networks, whose development remains fragmented and undercapitalized compared to the needs of a permanent storage sector at continental scale.
Permanent storage projects without EOR exist, and their development pace must be evaluated based on comparable data. If 45Q does not evolve before 2028, the dominant architecture in 2035 could largely reflect what is being built today. The window to alter the trajectory is real, and it closes with each new pipeline buried.
Cross-Cutting Lessons Between Europe and North America
The promise of data against climate catastrophism invites looking at facts without simplification. The facts here are two-sided.
North America has brought a CCUS sector to industrial scale. Skills, engineers, suppliers, and permitting procedures exist and can be mobilized for other applications. A CCUS underpinned by EOR thus constituted a real infrastructure of expertise. Europe, whose capacities remain much more modest, does not yet have this base.
Europe has shown that a stable price signal can orient CCUS toward permanent storage without passing through EOR rent. The ETS has its limits: since 2005, the price of allowances has experienced significant variations, falling to zero in 2007 and reaching levels close to €100/ton in recent years. ETS revenues and national public mechanisms can finance permanent storage without EOR; the ETS is not in itself a direct public subsidy.
The intellectually honest synthesis is that neither the North American model nor the European model is fully satisfactory. The first has scale and a trajectory problem. The second has a good trajectory and a scale problem. The practical question for decision-makers on both sides of the Atlantic is whether hybrid mechanisms—a limited American sectoral carbon price for heavy industries, or long-term public storage contracts denominated in dollars rather than tax credits—could combine the advantages of both without their respective defects.
A few American states and several European industrial basins are experimenting precisely with these hybrids. Their results by 2028-2030 will probably constitute the most useful empirical answer to a question that theoretical models cannot settle alone.
Sources
- GlobalData Energy Transition 2026, global CCUS capacity, North America data
- Daniel Yergin, The Troubled Energy Transition: How to Find a Pragmatic Path Forward, Foreign Affairs, 2025, https://www.foreignaffairs.com/energy/troubled-energy-transition
- NRDC, analysis of regulatory barriers to CCUS, 2026
- Energy Monitor, North America Energy Transition Analysis, 2026, https://www.energymonitor.ai/analysis/north-america-energy-transition/
- Daron Acemoglu & Simon Johnson, Power and Progress, 2023, on the capture of technological gains by dominant industries
