Active Carbon Management: Critical Tools in the Climate Toolbox

Stefan Koester David M. Hart April 18, 2022
April 18, 2022
Technologies to capture and store carbon must be part of the arsenal to fight climate change. To deploy them at scale, policymakers should expand federal incentives, increase RD&D for traditional and novel technologies, and expedite permitting and siting of requisite infrastructure.
Active Carbon Management: Critical Tools in the Climate Toolbox


Active Carbon Management: Technology Overview and Scope

Modeling the Global Need for Active Carbon Management

Federal Policy for Active Carbon Management

Rebutting Misleading Claims about Active Carbon Management





Global greenhouse gas (GHG) emissions continue to rise. To alter this menacing trajectory, emissions-reducing technologies, such as wind, solar, hydro, and nuclear power, must be deployed rapidly around the world. However, the continued improvement and deployment of these and related technologies are not likely to be enough to bend the global emissions curve within a meaningful timeframe. Key sectors will continue to find it very hard, if not impossible, to abate their emissions without active carbon management technologies, such as carbon capture and sequestration (CCS) and direct air capture (DAC).

Some voices in the global climate debate insist, largely on ideological grounds, that fossil fuel use must be eliminated entirely. That reasoning is foolhardy and counterproductive to the goal of reducing the risks from climate change. Emissions, rather than the fuels themselves, are what cause global warming, and the development of active carbon management technologies is not a distraction from the fight against climate change, but essential to it. If active carbon management technologies are taken off the table or even slowed in their deployment and development, global emissions-reduction strategies will only become more difficult and expensive, limiting our chances at successfully keeping emissions within the bounds of global carbon budgets.

The critics are right that most active carbon management technologies are not yet ready to meet the challenge of averting billions of tons (gigatons) of carbon dioxide (CO2) emissions per year. The technical, financial, policy, and regulatory hurdles these technologies face remain steep. Far from abandoning these technologies, policymakers and societal leaders should intensify the push to develop and deploy them, broadening the range of potential pathways toward a low-carbon future. Active carbon management technologies must both be deployed this decade to tackle emission-point sources while the groundwork is being laid for future drawdowns of atmospheric CO2 concentrations from the ambient air and used to offset emissions from hard-to-abate sectors. But these outcomes will only be achieved with robust public, private, and international support.

Far from abandoning active carbon management technologies, policymakers and societal leaders should intensify the push to develop and deploy them, broadening the range of potential decarbonization pathways.

Active carbon management technologies can enable the continued use of fossil fuels, which provide 80 percent of primary energy demand today.[1] This report investigates the critical role active carbon management technologies, specifically CCS and DAC, could play over the next three decades, and describes innovation policies that could turn that promise into reality. The report begins with an overview of the technologies and their potential contributions. The subsequent section shows that global climate and energy models converge in showing that active carbon management is vital to achieve global climate goals and failing to invest in these technologies today will lead to costlier and more-polluting outcomes by mid-century. The next section traces the history and outlook of U.S. active carbon management policy, which has developed in fits and starts over the last two decades but is experiencing a resurgence of interest and support. The report then addresses misleading claims made by those opposed to these technologies, and concludes with policy recommendations that would enable active carbon management to mature and achieve the scale necessary to fight climate change.

Active Carbon Management: Technology Overview and Scope

Carbon is a relatively abundant element on Earth. It is present in the Earth’s crust, oceans, and atmosphere; it is the foundation of all life. Flows of carbon within and between the land, sea, sky, and biota comprise the global carbon cycle. Human activity since the Industrial Revolution, especially fossil fuel combustion and deforestation, has altered this cycle, most notably by raising the concentration of CO2 in the atmosphere.[2] Carbon management seeks to intentionally influence the carbon cycle to halt and eventually reverse the dangerous rise of heat-trapping CO2. Carbon management reduces the flow of CO2 emissions into the atmospheric carbon reservoir and draws down the stock of CO2 already present.

Figure 1 divides carbon management techniques into two broad categories: natural and active carbon management. Natural carbon management seeks to add to the estimated 65,000 gigatons (GT) of carbon that are stored in a semipermanent state in natural sinks.[3] Well-established biological techniques include afforestation and reforestation, soil and agricultural sequestration, biochar, and ocean fertilization, while geological techniques under development include enhanced mineralization, which combines natural carbon sequestration capacity of certain minerals with human intervention and engineering to process and crush reactive minerals.

Active carbon management applies engineering techniques to capture CO2 from emissions at point sources such as factories and power plants, or by removing it from the atmosphere, and then sequestering it deep underground or in products.

Natural carbon management is a valuable and important component of a climate strategy, but alone it is unlikely to be sufficient to stop the rise in atmospheric CO2. For one thing, it is slow. Forests take years to reach maturity. Young forests sequester carbon faster than older ones but hold less carbon overall, requiring increasing afforestation rates. Forests also have significant land-use and water requirements, such that a new forest the size of Texas would have to be planted every year and grown to maturity in order to fully sequester annual global emissions.[4] Natural carbon sinks are not necessarily permanent, either. Wildfires, for instance, re-release captured carbon. An estimated 153,000 acres of forests grown to offset carbon emissions went up in smoke in the western United States in 2021.[5]

Active carbon management, by contrast, applies engineering techniques to capture CO2 from emissions at point sources such as factories and power plants, or by removing it from the atmosphere, and then sequestering it deep underground or in products. Underground reservoirs are far less likely to re-release carbon than are forests, grasslands, and soils. Active carbon management also takes much less land, water, and other resources than does natural carbon management, thereby avoiding competition with urban development and agricultural needs. Moreover, active carbon management can be developed and deployed faster than planting forests and protecting them until they mature. Figure 1 highlights the two active carbon management techniques we expect will play the most significant roles between now and 2050: CCS and DAC. Carbon capture and sequestration (or storage) prevents emissions from entering the atmosphere in the first place, reducing the flow of carbon. DAC of CO2, by contrast, directly reduces the stock of carbon in the atmosphere. CCS and DAC can both be coupled with carbon capture and utilization (CCU), in which captured carbon is used for industrial and commercial purposes.

Figure 1 also includes hybrid active/natural carbon management techniques worthy of further exploration. Bioenergy with carbon capture and storage (BECCS), for instance, uses the natural process of capturing carbon by growing fuel crops while at the same time capturing emissions when the fuel is consumed to generate electricity and heat.[6] Biomass pyrolysis relies on natural photosynthetic capture, but then treats biomass with high heat and pressure in an oxygen-poor environment, creating a carbon-rich tar-like substance that can be sequestered underground or used.[7] These hybrid carbon management techniques share both the strengths and weaknesses of natural carbon management techniques, notably relatively low energy requirements to capture ambient CO2, along with extensive land-use and resource requirements and vulnerability to risks such as wildfire and drought. 

Figure 1: Carbon management framework (click for expanded PDF)

Carbon Capture and Sequestration

CCS can be applied to concentrated or diluted streams of emissions from power plants and industrial facilities. In power plants, these streams flow through smokestacks from the generating units, whereas in industrial facilities they may arise from multiple, diffuse on-site sources. CCS systems can be retrofitted onto existing plants or built into new facilities.

There are three major types of CCS for power plants: post-, pre-, and oxy-combustion. Post-combustion CCS uses scrubbers and chemical systems to separate CO2 from other gases, such as nitrous oxides, sulfur oxides, and particulate matter in the waste stream after the fossil fuel has been burned. Once other gases are scrubbed, amine-based (ammonia-derived) liquid solvents or solid sorbents chemically react and bind with the CO2 in large vertical reaction chambers. The CO2 is released in a pure stream when the materials that capture it are exposed to high temperatures and pressure. The solvents or sorbents are then recycled and returned to the capture stage for reuse. Post-combustion CCS increases the overall energy load of a fossil fuel power plant by as much as 20 percent. It is more energy intensive than pre-combustion CCS because the CO2 is more dilute (roughly 4 percent of waste gases by volume in advanced natural gas combined-cycle power plants and 12 to 15 percent in coal power plants) and is mixed with a number of other gases.[8]

CCS can be applied to concentrated or diluted streams of emissions from power plants and industrial facilities. In power plants, these streams flow through smokestacks from the generating units, whereas in industrial facilities they may arise from multiple, diffuse on-site sources.

Pre-combustion CCS, also referred to as gasification, begins when coal or natural gas is placed in a high heat and pressure environment and partially oxidized to form a synthetic gas composed of hydrogen, carbon monoxide, and CO2. These components are then separated, with the hydrogen burned to generate electricity or heat. The CO2 stream resulting from this separation is highly concentrated, which means less energy is required to capture it.[9]

Oxy-combustion CCS involves the combustion of fossil fuels in a pure oxygen environment, rather than with air. This method leaves a waste stream with a high concentration of CO2.[10] Because no other gases are present during combustion, oxy-combustion eliminates almost all other non-CO2 co-pollutants, such as nitrogen oxides and sulfur dioxides. Oxy-combustion requires the extra step of pure oxygen production. But even with that addition, oxy-combustion is more efficient and imposes a lower energy burden than the other two methods do.

CCS can be applied to a wide array of industrial applications, as many industrial processes require combustion to generate heat and use the same types of CCS systems that are applied to power plants. Some industrial facilities also emit CO2 that arises from chemical processes. For example, “blue” hydrogen relies on CCS in its production and is expected to make up roughly 20 to 40 percent of global hydrogen demand by 2050.[11] (Low-carbon hydrogen, whatever its “color,” is likely to play a central role in the future economy, due to its versatility across sectors ranging from steel to long-haul transportation to energy storage.)[12] Blue hydrogen production begins with a fossil fuel feedstock and applies high heat and pressure to crack off the hydrocarbon molecules. CO2 is a byproduct of this method. While it is simply released into the atmosphere by hydrogen producers today, it can be captured relatively easily due to its high concentration.[13]

The capture stage is the most capital-intensive, technologically complex, and energy-intensive stage of the CCS process, representing up to 70 to 90 percent of total project costs for retrofits.[14] Variation in CO2 concentrations during capture make an enormous difference in the cost of CCS. Applied to ethanol plants, where CO2 is emitted in a nearly pure stream during fermentation, the cost is estimated to range from $26–$36 per ton, whereas the cost for post-combustion CCS on a power plant is more than $100 per ton.[15] In addition, CCS projects benefit from economies of scale whereby costs decline per ton of captured CO2 as the size of the projects increases.

Carbon dioxide can be sequestered permanently underground or sold and used in industrial applications. Unless it is used at the same site where it is produced, the purified CO2 must be compressed and transported, usually via pipeline or rail. If being sequestered, it is injected in a supercritical, liquid-like state into deep saline reservoirs or coal seams. Although the volume of suitable CO2 sequestration sites is equivalent to many hundreds of years of global emissions, they are not dispersed equally across geographic areas. In the United States, for example, most are located off the coasts and in the interior of the country. CCS facilities are likely be located close to sequestration sites because it is costly to transport compressed CO2 over long distances. Once pumped underground, the CO2 must be monitored to verify that it is not leaking into the atmosphere or surrounding water tables. Geological research suggests that once it is properly injected, CO2 will remain sequestered for thousands of years.[16] The transportation, sequestration, and monitoring adds roughly $3–$23 per ton to the cost of CCS, depending on the location, size, and depth of the sequestration sites.[17]

Utilization of captured CO2 is an alternative to sequestration. To date, the most common uses of captured CO2 are to increase oilfield production through enhanced oil recovery (EOR) and in food processing.[18] EOR sequesters the CO2 underground while providing a revenue stream that can make such projects economical, but it also increases oil production, reducing the overall climate benefits of CCS. Research into new uses of CO2 as an input in other sectors such as plastics, fertilizer, synthetic aviation fuels, and building materials is ongoing with a hope that commercializing these products will increase demand for active carbon management.

Only one large-scale power-sector CCS project is operating at present, a post-combustion CCS system at the 115 megawatt (MW) SaskPower Boundary Dam plant near Estevan, Saskatchewan, Canada, which opened in 2014.[19] However, over 100 CCS power plant projects, both post- and oxy-combustion facilities, are in either early or advanced project development globally, with a potential capture capacity of 100 million tons of CO2 per year.[20] The frustrating track record of CCS in the power sector is counterbalanced by industrial applications, with as many as 25 CCS systems globally capturing 40 million tons of CO2 annually. In 2021, industrial projects capable of sequestering an additional 70 million tons were announced, including several large-scale blue hydrogen projects, such as a $4.5 billion Air Products project in Louisiana.[21]

A handful of large, established industrial and oil and gas companies, including Mitsubishi Heavy Industries, Fluor, Equinor, ExxonMobil, Chevron, and Shell, dominate the CCS business. Many of these companies recently announced a plan to establish a CCS Innovation Zone in the Gulf of Mexico to scale capture technologies to 50 million tons annually by 2030.[22] Net Power, a young company with an innovative design that uses captured CO2 rather than steam to move a turbine and generate electricity is piloting a 50 MW oxy-combustion facility. Other firms are working on blue hydrogen production, new uses for captured carbon, and modular CCS design and applications across various end uses.

Direct Air Capture

Whereas CCS captures CO2 from waste streams, DAC captures emissions from the ambient air, with the goal of reducing the concentration of atmospheric CO2. Rising concentrations of atmospheric CO2 are large enough to drive climate change; however, they are small in absolute terms at just over 400 parts per million or 0.04 percent. DAC has long been in use on a small scale in specialized industrial applications and to make the air breathable in submarines and spacecraft.

DAC systems use giant arrays of industrial fans to move ambient air through a honeycomb PVC material coated in a liquid or solid sorbent, similar to that used in CCS. As the air passes over the surface, CO2 binds with the sorbent and is then exposed to high heat and pressure to split off the pure CO2 as the sorbents are recycled. The process is energy intensive because the very low concentration of CO2 in the ambient air means large volumes of air must be moved through the system.

In addition to thermal and electric energy needs, DAC requires water and land. Liquid solvent technology uses roughly one to seven tons of water per ton of CO2 captured, while solid sorbents need somewhat less. DAC land-use requirements range between 100 and 420 acres of land per million tons of CO2 captured, depending on the source of electricity.[23] Modular DAC designs help minimize land use through unit stacking.

While DAC costs about $250–$600 per ton of CO2 captured today, a group of engineering and technology experts have estimated that, with strong policy support and rapid growth in deployment, the cost could decline to $100 per ton by 2030.

The critical factor in determining the overall climate benefit of DAC is the energy sources it uses. DAC facilities must be sited near low-cost and plentiful low-carbon electricity and heat if it is to have a chance of drawing down atmospheric CO2.[24] However, unlike CCS, where siting must consider the market for power or industrial products, DAC can be deliberately sited atop sequestration reservoirs as long as the location has ample electricity, heat, water, and land.

Pairing DAC with low-carbon nuclear electricity would reduce land-use and energy requirements relative to renewable resources. Nuclear power would also provide continuous energy as well as heat, unlike renewables, which are intermittent and less well suited to supplying heat. Natural gas systems equipped with CCS have similar characteristics, which led Carbon Engineering, a DAC company established in 2009, to adopt this approach.

While DAC costs about $250–$600 per ton of CO2 captured today, a group of engineering and technology experts estimated that, with strong policy support and rapid growth in deployment, the cost could decline to $100 per ton by 2030.[25] At $100 per ton, DAC would be at the upper end of the carbon technology abatement cost curve, but might still be affordable for those required to or interested in offsetting hard-to-abate emissions.

Over the last few years, following decades of public and private investment in early-stage technologies, DAC finally seems ready for takeoff. The first large-scale DAC facility opened in 2021 in Iceland with an annual capture capacity of 4,000 metric tons, followed by a handful of project announcements in the United States. The industry is attracting increasing interest from climate-tech venture capitalists and other investors. Climeworks (Switzerland), Carbon Engineering (Canada), and Global Thermostat (United States) have been developing DAC systems for more than a decade. Numerous start-ups have more recently followed on their heels, seeking to improve existing technology and lower costs or exploring novel approaches to DAC.[26] One company, for example, is working on DAC systems that can be retrofitted onto existing commercial HVAC cooling towers, while another is working on mechanical trees that harness natural breezes to move air over the CO2 sorbent.[27]

Modeling the Global Need for Active Carbon Management

Fossil fuels have supported global economic growth since the Industrial Revolution.[28] They remain dominant today due to their high energy density, low cost, wide availability, and ease of transportation. These qualities make it likely that much of the world, notably developing regions where total energy use is growing, such as China, India, southeast Asia, and Africa, will continue to rely on them long into the future. As this section shows, many major climate and energy models conclude that it will be impossible to eliminate fossil fuels globally by 2050. Yet, even with a significant amount of fossil fuel use, the world need not necessarily suffer the negative consequences of emissions. If active carbon management technologies are fully developed and deployed, ambitious 2050 climate goals will still be achievable.

Global Climate and Energy Modeling

Modeling is an essential analytical tool for climate and energy policymakers. Climate modeling looks at the climatic consequences of total CO2 and other GHG emissions. It links emission levels to the probability of heat waves, flooding, and other catastrophic outcomes. Energy modeling details the degree to which emissions can be reduced across economic sectors, bounded by cost, technology, and other constraints.

Climate and energy models have been used for decades, refined as greater computing power and more data became available. The main models converge on a shared finding: The world will need to remove or sequester billions of tons of CO2 through 2050 and beyond.

These models begin with baseline or business-as-usual scenarios, detailing current climate and energy systems, and rely on historical trends. Given a range of assumptions, variables, and emissions or technology pathways, modelers then assess how to achieve a specific scenario (such as keeping global average temperature rise to below 1.5° Celsius or reducing emissions to net-zero). Such models are not meant to predict the future, but rather provide probable outcomes given specific parameters.

Climate and energy models have been used for decades, refined as greater computing power and more data became available. The main models converge on a shared finding: The world will need to remove or sequester billions of tons of CO2 through 2050 and beyond if the world is to have a shot at averting the climate crisis. Table 1 highlights key takeaways regarding the need for carbon removal to achieve climate targets from some prominent models. All were published in the last four years and indicate a broad consensus about the need for carbon removal. Some also reveal a larger role for DAC compared with models just a few years earlier, due to DAC’s rapid progress in that time.

Table 1: Summary of climate and energy models



Carbon Removal Required


IPCC 1.5° Celsius Report

Limiting global warming to 1.5°C above pre-industrial levels

100–1,000 GT total through 2100

  • Allows for carbon emissions overshoot (emissions exceed 2050 budget, but come down in subsequent decades through carbon removal)
  • Relies on BECCS, industrial and power sector CCS, and natural carbon removal

IEA Net-Zero by 2050 (2021)

Net-zero global emissions by 2050

1.7 GT annually by 2030, and 7.6 GT annually by 2050

1 GT of DAC by 2050

  • Relies on CCS, BECCS, and DAC to achieve a low-carbon emission pathway

BP Net-Zero report (2020)

Net-zero global emissions by 2050

5.5 GT annually by 2050

  • BECCS 1.5 GT of carbon management
  • CCS/CCUS for industry, power, and hydrogen make up the remainder
  • Little to no DAC modeled

Shell Sky Scenario (2018)

Hold global average temperatures “well below 2°C” and net-zero global emissions by 2070

3.3 GT annually by 2050 and 9.5 GT annually by 2070

  • Projects large increase in global energy demand
  • Little to no DAC modeled

Princeton Net-Zero America Report (2020)

Net-zero economy-wide U.S. by 2050

0.44–0.94 GT annually of CCS by 2040, 0.93–1.65 GT by 2050.

0.01–0.850 GT annually of DAC by 2050

  • Fossil fuel demand expected to still make up 24–44% of U.S. energy demand through 2050
  • CCS necessary for hard-to-abate industrials, particularly steel, cement, as well as hydrogen for storage
  • Cheapest total system costs scenario includes highest level of carbon management compared with 100% renewables only

U.S. State Department Pathways to Net-Zero GHG Emissions by 2050 (2021)

Net-zero economy-wide U.S. by 2050

1.0–1.8 GT annually of net carbon removal by 2050

  • Model includes both nature-based carbon removal through increased afforestation and restoration and active carbon management, including CCS and DAC
  • All fossil power plants without CCS phasedown by 2040, with 20–35% of electricity generated from fossil with CCS by 2050

The next sections focus on three of these models in more detail: the Intergovernmental Panel on Climate Change’s (IPCC’s) Global Warming of 1.5°C report, the International Energy Agency’s (IEA’s) Net-Zero by 2050 analysis, and the energy giant BP’s Global Energy Outlook. We chose these studies to provide a range of perspectives on the level of active carbon management necessary to stave off the worst consequences of climate change.

IPCC 1.5° Celsius Report

IPCC is a United Nations body created in 1988 that provides regular assessments of the scientific basis of climate change, its impacts and future risks, and options for adaptation and mitigation. When released in 2018, IPCC’s 1.5°C report was groundbreaking. It projects the possible impacts of global warming of 1.5°C above pre-industrial levels and advanced several emissions-reduction pathways through 2050 and beyond.[29] The report is a dire warning of climate instability if emission increases are not mitigated.

The report estimates that total emissions between now and 2050 must stay between 420 GT and 770 GT CO2 equivalent to achieve the 1.5°C target. Current net annual global emissions average around 40 GT. Four of the five primary emissions-reduction pathways that would remain within this “carbon budget” depend on active carbon management, largely BECCS and CCS for industrial processes and power plants. The cumulative total of emissions averted or removed would range from 100 to 1,000 GT by 2100.[30]

IPCC’s modeling provides two roles for active carbon management. First, it allows emissions to decline more rapidly than otherwise, so the world can stay within or closer to the budget constraint. Second, it provides the means to draw down CO2 from the atmosphere in scenarios in which emissions overshoot the carbon budget. IPCC finds that overshooting is likely, given the expected growth in the global economy through 2030 and beyond.

A key finding of the report is the “longer the delay in reducing CO2 emissions toward zero, the larger the likelihood of exceeding 1.5°C, and the heavier the implied reliance on net negative emission after mid-century to return warming to 1.5°C.”[31] Ultimately, the IPCC report finds that the global carbon budget can only be achieved in such scenarios if DAC and other carbon removal are deployed on a massive scale.

For example, as seen in the solid line in figure 2, IPCC’s analysis shows that in a scenario in which the world overshoots the carbon budget substantially due to sustained and robust economic growth, as much as 8 GT of carbon removal would be needed annually by 2050, and even more through 2100. Removal of CO2 would be necessary through 2100 to offset both non-CO2 GHG emissions that remain and to account for insufficient decline in global emissions through mid-century.

Figure 2: IPCC 1.5° Celsius pathways[32]


International Energy Agency World Energy Outlook

IEA is an intergovernmental organization of the world’s largest energy-using nations. It houses a large energy modeling unit centered on the annual World Energy Outlook, which combines supply, demand, and transformation modules to build a detailed overview of global energy and emission trajectories. IEA’s 2021 Net-Zero by 2050 special report builds on this framework. It imposes a net-zero-emissions-by-2050 constraint while simultaneously achieving the UN’s Sustainable Development Goals for global economic and human development.

IEA’s net-zero emissions (NZE) scenario finds that active carbon management is critical to reduce emissions and remove CO2 from the atmosphere. Despite enormous growth in low-carbon resources, fossil fuels will still account for one-fifth of global primary energy in 2050. The emissions from these sources must be captured and sequestered or removed from the atmosphere.

IEA projects a total of 7.6 GT of annual CO2 sequestration and removal from a diverse array of sectors in 2050 (see table 2), the equivalent of more than 20 percent of global energy-related emissions today. In the report’s main scenario, CO2 captured from fossil fuel will total 5.25 GT by 2050, with the industrial applications making up the largest CCS sector (2.6 GT), followed by blue hydrogen production (1.4 GT). IEA projects remaining fossil fuel CCS demand to come from the power sector (0.9 GT) and non-biofuel production such as EOR (0.4 GT). IEA projects a smaller but still significant role for bioenergy CCS applications, largely split between the power (0.6 GT) and biofuels production (0.6 GT) sectors, with only a small role for bioenergy CCS in industrial applications (0.2 GT). Finally, IEA expects almost 1 GT of CO2 removal through DAC by 2050.

Table 2: Metric tons of carbon captured annually under IEA’s net-zero emissions scenario

Active Carbon Removal Process




CO2 Captured From Fossil Fuel












   Hydrogen Production




   Non-Biofuel Productions




CO2 Captured From Bioenergy
















Direct Air Capture









Like IPCC, IEA includes net-zero scenarios that avoid active carbon management. These scenarios are much more expensive, less feasible, and require more land and other resources than those that employ active carbon management do. Around $15 trillion in additional investments for wind, solar, and hydrogen electrolyzer capacity would be needed from an NZE scenario. “[Active carbon management] is the only scalable low-emissions option to remove CO2 from the atmosphere and to almost eliminate emissions from cement production,” the report states. “A failure to develop CCUS for fossil fuels could delay or prevent the development of CCUS for process emissions from cement production and carbon removal technologies.”[33]

BP’s Global Energy Outlook

BP is one of the world’s largest oil and gas companies. Its annual Statistical Review of World Energy is widely referenced, and BP was a pioneer in scenario planning decades ago. BP’s 2020 Global Energy Outlook includes a “Net-Zero” (by 2050) emissions scenario and a less-ambitious “Rapid” scenario in which emissions fall by roughly two-thirds from 2020.[34] Although these scenarios project rapid declines in demand for fossil fuels, carbon-based energy still makes up more than 20 percent of final energy demand in the Net-Zero scenario and as much as 40 percent in the Rapid scenario. Active carbon management is essential to accommodate this continued use of fossil fuels while keeping a low-emissions pathway possible.

Demand for fossil fuels is driven mainly by natural gas demand in the power and industrial sectors, accounting for a sixth or more of total energy demand by mid-century. The Net-Zero scenario projects roughly 5.5 GT per year of carbon sequestration in total. (See figure 3.) “[T]echnologies which capture carbon emissions or extract them from the atmosphere,” the report concludes, “are likely to play a material role in a net-zero environment.”[35]

Figure 3: CCUS’s annual impacts by emissions sector in 2050 in BP’s net-zero scenario

Chart, waterfall chart

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Notably, BP’s analysis projects that gas with CCS will be a cost-effective and significant resource for electricity generation that will meet demand when renewable resources make up a significant portion of supply, balancing renewables’ variability across days, weeks, and seasons. CCS is applied to 90 percent of global gas capacity in the Net-Zero scenario. Blue hydrogen production and industrial applications also rely heavily on CCS. While the scenario does not model DAC, the report notes that it “may play an increasingly important role … offsetting any continuing emission from hard-to-abate sources in the energy system and the wider economy, such as agriculture, as well as any overshoots in the carbon budget.”[36]

If the world is to support continued economic and population growth, particularly in the developing world, and meet its emissions-reduction targets through 2050 to ensure a stable climate, then active carbon management must become a viable and affordable suite of solutions for gigatons of emissions.

These three models were developed by different organizations and represent a broad array of models created by other researchers. They yield clear and consistent results. If the world is to support continued economic and population growth, particularly in the developing world, and meet its emissions-reduction targets through 2050, then active carbon management must become a viable and affordable suite of solutions for gigatons of emissions. Fossil fuels will continue to make up a large portion of primary energy demand through 2050. Achieving NZE will be much costlier and perhaps technically impossible without active carbon management solutions.

Federal Policy for Active Carbon Management

Governments must act now to ensure that active carbon management solutions can achieve their potential in the decades ahead. As the largest historical source of emissions and the world’s preeminent nation for science and technology, the United States should take the lead.[37] Federal policy has provided some support for active carbon management through research, development, and demonstration (RD&D) spending and tax credits, policies Congress recently strengthened. However, additional measures must be taken to scale up efforts between now and 2030 and beyond. A comprehensive strategy would include a regulatory framework for expanding the CO2 pipeline networks, strengthening public confidence in sequestration, and finding new ways to use (rather than store) captured CO2. This strategy could drive CCS and DAC innovation while simultaneously accelerating deployment in the power, industrial, and commercial sectors and building markets for captured carbon.

Federal Support Through the Trump Administration

Federal support for active carbon management, primarily CCS, has experienced false starts and swings in public interest over the last two decades. The Bush administration initiated programs to retrofit CCS onto existing coal-fired power and industrial plants. The Energy Policy Act of 2005 gave congressional backing to its Clean Coal Power Initiative (CCPI), a public-private cost-sharing collaboration for technology development and demonstration. The Bush administration sought to turn this authorization into expanded funding for CCS RD&D, requesting $650 million for this purpose in its final budget.[38]

However, significantly more funding arrived during the Obama administration with the 2009 American Recovery and Reinvestment Act (ARRA). ARRA allowed DOE to invest roughly $684 million into eight coal-based projects between 2009 and 2017.[39] Only one of these projects proved to be a success, the Petra Nova facility in Texas, and even it was ultimately mothballed when oil prices crashed in 2020. ARRA’s $438 million investment in three industrial CCS projects yielded better results. Two of these were ultimately completed and are still in operation. The Obama administration also established an interagency task force to further CCS innovation and deployment by reducing financial and regulatory hurdles and improving coordination.[40] In 2015, the administration sought to add a major regulatory pull to spur investment in CCS with the promulgation of the Clean Power Plan (CPP). The CPP would have required CCS to be applied to all new coal-fired power plants and capture at least 40 percent of CO2 emissions.[41] But it stalled in the wake of legal challenges and was withdrawn by the Trump administration. Even though the Trump administration touted CCS as “a realistic approach to promote energy innovation,” the president’s budget attempted to cut appropriations for CCS RD&D by as much as 75 percent.[42] Congress rejected these proposals and increased federal support for DOE’s CCS programs throughout the late 2010s.[43]

Tax credits to support CCS for coal-fired power plants date back to 2008, but the Bipartisan Budget Act of 2018 was the first time such support was put in place for the broader CCS and DAC portfolio. Congress increased the credit under section 45Q of the U.S. tax code to $50 per ton of CO2 permanently sequestered and broadened eligibility considerably for DAC and industrial facilities.[44]

All told, the federal government invested about $7.3 billion in CCS RD&D and projects through annual appropriations from fiscal year 2010 to fiscal year 2021, and ARRA provided an additional $3.4 billion.[45] This policy has yielded modest results so far. Many federally funded CCS projects (especially power plant retrofits) were canceled, including the biggest one, FutureGen. Uptake of 45Q was hampered by unrealistic requirements and a six-year delay in issuing IRS guidance, resulting in only an estimated $600 million in tax credits between fiscal years 2019 and 2023.[46] DAC has been mired in the prototype stage until very recently, with no commercial development.

2020–2021: A Turning Point for RD&D

Over the last three years, the weaknesses of past federal policies and the growing urgency of climate innovation have combined to excite bipartisan interest in active carbon management. More than 50 bills that would advance a national strategy have been introduced into Congress during that time.[47] The ferment culminated in the passage of the Energy Act of 2020 (EA 2020) and the Infrastructure Investment and Jobs Act of 2021 (IIJA), which supercharged federal investment in this field. The enhanced public support has been met with increased commercial interest, with over 50 CCS and a handful of small-scale DAC projects announced in the United States in 2021.[48]

EA 2020 set the tone by expanding the authorization of DOE’s Office of Fossil Energy to include carbon management, prompting the Biden administration to rename it the Office of Fossil Energy and Carbon Management (FECM). The IIJA followed through by appropriating an estimated $12.5 billion over five years for CCS, DAC, and pipelines.[49] (See table 3.) The overall investment substantially exceeds prior federal support for these technologies to date.[50]

Table 3: Active carbon management programs funded by the Industrial Investment and Jobs Act of 2021




Carbon Capture Technology Program (§40303)

$100 million

Funding for front-end engineering and design studies to support CO2 transport infrastructure

Carbon Capture Transportation Infrastructure Program (§40304)

$2.1 billion

Based largely on language found in the bipartisan SCALE Act, provides support for CO2 transportation and pipeline infrastructure through grants, loan guarantees, and speedy permitting

Carbon Storage Validation and Testing (§40305)

$2.5 billion

Authorizes funds for the Large-Scale Carbon Storage Commercialization Project by the DOE, providing funding for the development of new or expanded commercial carbon sequestration projects and CO2 transport infrastructure

Secure Geologic Storage Permitting (§40306)

$75 million

Provides $25 million in funding to speed EPA permitting of CO2 wells, alongside $50 million for state CO2 well permitting and monitoring

Direct Air Capture Hubs (§40308)

$3.5 billion

Funding to support up to four regional DAC hubs with the capacity to sequester or utilize up to 1 million metric tons of CO2 annually

Carbon Capture Pilot and Demonstration Program (§41004)

$3.47 billion

Funding for large pilot projects that scale technology for commercial applications

Direct Air Capture Technologies Prize Competition (§41005)

$115 million

Provides $15 million in funding for precommercial and $100 million for commercial DAC technologies

Industrial Emissions Demonstration Projects (§41008)

$500 million

Funding to support CCS projects that reduce non-power sector emissions from industrial applications

The industrial sector is the source of about 30 percent of United States’ emissions. The IIJA renewed federal support for industrial CCS applications, including in the cement, steel, and fertilizer industries. Industrial decarbonization is an extremely complex challenge, given the diverse uses of fossil fuels and process emissions resulting from chemical reactions in this sector. DOE has already begun to respond to this congressional imperative, such as the October 2021 announcement of $45 million in funding for 12 pilot-stage industrial CCS projects. The White House announced additional measures in February 2022.[51]

The industrial sector is the source of about 30 percent of United States emissions. The IIJA renewed federal support for industrial CCS applications, including in the cement, steel, and fertilizer industries.

The IIJA created a new program to establish four DAC demonstration hubs. Public-private partnerships will build these hubs across diverse sectors and regional environments. The hub approach allows for economies of scale that lower costs by utilizing shared infrastructure.[52] A DAC hub in the Gulf of Mexico, for example, could take advantage of existing CO2 pipelines, oil and gas workforce expertise, and easy access to geological sequestration sites. The hubs should drive domestic DAC manufacturing as well. The program could lay the foundation for the United States to become a DAC technology exporter to both developing and developed nations alike.

DOE is taking on the numerous technical and financial challenges of large-scale carbon storage through its Carbon Storage Assurance Facility Enterprise (CarbonSAFE) Initiative, which aims to scope, permit, build, and operate several multimillion-ton sites located at industrial facilities by 2026. CarbonSAFE is working to identify RD&D knowledge gaps and develop necessary technologies at scale while building expertise in commercial-scale project selection, development, modeling, and monitoring. It has funded several front-end feasibility studies to date.[53]

The IIJA updated financing and payment criteria used by DOE’s Loan Programs Office (LPO) to make it easier for CCS and DAC projects to benefit from LPO’s lower-cost capital, flexible financing, and technical expertise. Under the 2005 Energy Policy Act, LPO already had the authority to distribute up to $8.5 billion in loan guarantees to eligible advanced fossil energy projects but had not used much of it.[54] LPO revamped its processes, inducing a surge in applications topping $53 billion in total, and began to expand into new areas, making its first conditional commitment during the Biden administration to a methane pyrolysis plant to be built by Monolith.[55]

Building on EA 2020 and the IIJA, DOE announced a Carbon Negative Shot Initiative in November 2021 to lower the cost of carbon removal to $100 per ton and sequester one billion tons of emissions by 2050. This initiative is being led by FECM and includes efforts to scale technology, reduce costs, improve sectoral knowledge sharing, and spur innovation through project development and deployment.[56]

The Next Frontier of CO2 Storage: Under the Sea

The next frontier of CO2 storage will be under the world’s oceans, where gigatons of cheap and accessible storage space can be found. One study estimates that meeting a 2° Celsius target would require more than 10,000 offshore CO2 injection wells globally by 2050.[57] The United States’ outer continental shelf represents a particularly appealing location, as its geology affords ample opportunity for CO2 storage. IEA reports that the United States’ theoretical offshore CO2 storage potential is over 250 GT.[58]

Offshore CO2 storage has important advantages over onshore storage from a regulatory perspective. Most federal and state drilling regulations are in place to ensure safe access to drinking water. These concerns are not present for offshore injection wells, as no freshwater aquifers would be impacted. Whereas a driller may need a half dozen permits from state and federal agencies to drill a Class VI well onshore, the only regulator of drilling beneath federal waters is the United States Department of Interior’s Bureau of Ocean Energy Management (BOEM).

While these procedural advantages may speed the development of offshore CO2 storage, it is still a relatively new area for both industry and government. Only a handful of offshore storage sites are operating globally, mostly in the North Sea.[59] The federal government has yet to issue much guidance for this kind of development, and it does not yet run an offshore leasing program for this purpose. Once large-scale project proposals come forth, the federal government will need to vet and approve them quickly to help the industry scale. The IIJA did amend the Outer Continental Shelf Lands Act, authorizing the U.S. Department of the Interior (DOI) to promulgate offshore storage guidance and regulation within the coming year.

If economically and safely developed, offshore CO2 storage offers opportunities to utilize existing human and infrastructure capital invested in carbon-intensive production. The Gulf of Mexico is home to one of the world’s most advanced offshore oil and gas industries, which could be reoriented to negate the emissions it has contributed to over many years.

Carbon Utilization, Accounting, Pricing, and Regulation

Federal RD&D, tax, procurement, and regulatory policies for active carbon management are moving forward, albeit at different rates. They have the potential to jump-start the industry and dramatically lower the costs of CCS and DAC. However, the industry’s ultimate success in reaching gigaton scale will require the development of a carbon market that does not depend on large federal subsidies.

CO2 is sold today for uses such as EOR and food processing. These sources of demand are nowhere near large enough to accommodate the plentiful supply that a robust active carbon management industry would generate. In addition, EOR is a highly volatile financing mechanism, as its value fluctuates with oil and natural gas prices. The largest power-sector CCS project in the United States, Petra Nova in Texas, was mothballed in 2020 when gasoline prices fell due to the COVID-19 pandemic, and the cost of capturing CO2 was greater than the marginal economic benefit of selling it for EOR.[60] To date, even with crude oil prices over $100 per barrel, this facility remains inoperative.

New technologies and applications would further grow the market for CO2 as a valuable industrial input. Figure 4 shows two major pathways for carbon utilization. Today, most uses are direct; CO2 is simply recycled as is. The direct pathway can be expanded to include building materials. CarbonCure Technologies, which won $7.5 million from the XPrize Foundation in April 2021, for example, injects captured CO2 into cement during the mixing process. This process not only finds useful commercial applications for captured CO2 in concrete, but also provides a long-term and low-cost sequestration solution.[61]

Indirect CO2 utilization pathways split the carbon from oxygen and recombine it with hydrogen and other elements to make fuels, chemicals, and materials. (See figure 4.) One future pathway would use carbon from captured CO2 with blue or green hydrogen to form carbon-neutral jet fuel. Alternatively, captured CO2 could be used to spur rapid algae growth, which could then be refined into biofuels. Structural materials made from advanced carbon fibers and carbon nanotubes could be substitutes for steel.[62]

Figure 4: Uses of carbon dioxide[63]