Carbon capture market seen tripling by 2035 as policy support grows

The carbon capture and storage market is projected to rise from $3.37 billion in 2026 to $9.81 billion by 2035, fueled by tax credits, carbon pricing and industrial decarbonization mandates. Europe is expected to post the fastest regional growth as North Sea storage projects and new EU rules push CCS toward commercial scale.

Why it matters: - Carbon capture and storage is moving from pilot projects to infrastructure tied to industrial decarbonization, net-zero targets and compliance costs. - The market’s growth reflects stronger policy support, rising carbon prices and more demand from hard-to-abate sectors such as cement, steel, chemicals and refining. - The shift could reshape project finance, storage networks and cross-border carbon logistics over the next decade.

What happened: - The carbon capture and storage market was valued at $2.95 billion in 2025. - The market is projected to reach $3.37 billion in 2026 and $9.81 billion by 2035. - The forecast implies a 12.6% compound annual growth rate from 2026 through 2035. - Europe is projected to deliver the fastest regional growth. - North America held about 47% of revenue in 2025.

The details: - The report points to the U.S. Inflation Reduction Act’s 45Q tax credit, now worth up to $85 per tonne for dedicated geological storage, as a major growth driver. - The European Union’s Carbon Border Adjustment Mechanism is adding cost pressure on embedded emissions in imported steel, cement and aluminum. - EU Emissions Trading System Phase IV allowance prices exceeded EUR 90 per tonne by the end of 2024, making capture economics more attractive for heavy industry. - Canada’s federal carbon price reached CAD 80 per tonne in 2024 and is set to rise to CAD 170 by 2030. - The U.S. Department of Energy committed $3.5 billion to Carbon Capture Demonstration Projects Program funding. - The EU Innovation Fund allocated EUR 1.8 billion across 15 large-scale CCS projects in 2024. - The market is shifting from first-generation amine scrubbers to advanced solvent blends, membrane contactors and solid-sorbent systems that promise 30% to 40% lower energy penalties. - Direct air capture systems are advancing toward per-tonne costs below $200 by 2030. - AI-driven operations and real-time solvent management are reducing energy penalties by 10% to 15% at pilot installations. - Hub-and-cluster models are lowering per-tonne storage costs by 40% to 60% versus standalone projects. - The updated EU Industrial Emissions Directive requires best-available-technique assessments to include CCS preparedness for new permits after 2026. - Japan’s GX Transition Bonds allocated JPY 1.1 trillion for industrial decarbonization, including steel carbon capture. - The ISSB S2 standard and the EU’s CSRD are increasing facility-level Scope 1 reporting requirements. - Dedicated geological storage is the fastest-growing application segment. - Enhanced oil recovery remains the dominant application. - Pre-combustion capture accounted for about 76% of the market in 2025. - Post-combustion capture is growing at about 14.5% CAGR. - Oxy-fuel combustion capture is projected to grow at about 19.6% CAGR through 2035. - Oil and gas represented about 64% of market size in 2025. - Coal and biomass power plant applications were valued at $0.44 billion in 2025. - Iron and steel applications are growing at about 18% CAGR. - Cement applications are expanding at about 21% CAGR. - Chemical applications are expected to grow at about 27% CAGR from 2026 to 2035.

Between the lines: - The economics of CCS are increasingly being set by policy rather than voluntary climate spending. - The rise of hub-and-cluster infrastructure suggests the market is consolidating around shared transport and storage networks instead of one-off projects. - Europe’s growth outlook is stronger than North America’s because carbon rules, storage buildout and permitting frameworks are aligning at the same time. - The report also shows CCS is becoming a broader industrial services market, not just an energy-sector technology.

What's next: - North America is expected to remain the largest regional market, helped by U.S. tax credits, Gulf Coast infrastructure and faster Class VI permitting. - Europe’s growth will likely be driven by North Sea storage capacity, the Northern Lights model and national cluster projects in the UK, the Netherlands and Norway. - Asia-Pacific demand is expected to expand on the back of coal-retrofit needs in China and decarbonization plans in India, Japan and South Korea. - The report says future deployment will depend on whether policy momentum can scale CCS to gigaton levels.

The bottom line: - CCS is transitioning from a niche emissions-control tool to a policy-backed infrastructure market with multi-billion-dollar growth potential through 2035. - More information