By Breanne O’Reilly, Chief Operating Officer, International CCS Knowledge Centre
Carbon capture, utilization and storage (CCUS) is often framed as uneconomic: a necessary yet costly tool for decarbonization depending heavily on incentives and policy support. But that doesn’t have to be the case…
Today, there are operational projects demonstrating the economic viability of CCUS. So, the more interesting question isn’t whether CCUS can work, it’s why it works in some cases and struggles in others. CCUS is economically viable under specific conditions and the projects that succeed share a common characteristic: they are not standalone assets. They are part of integrated, optimized systems.
WHAT THE SUCCESSFUL PROJECTS HAVE IN COMMON
In Canada, CCUS Projects like the North West Redwater Partnership (NWR) and the Quest CCS Project are often cited as leading examples. Importantly, both are economically viable within their operating context.
Both Quest and NWR succeed in part because they capture CO2 from high-purity hydrogen streams, which is lower in cost compared to capturing from flue gas. Also contributing to their success are conditions around the technology being favourable despite the overall cost of CCUS infrastructure. This, combined with integration into broader industrial systems and supportive policy frameworks, creates a set of conditions where carbon capture is economically viable.
At NWR, carbon capture was incorporated into the design of the facility from the outset, meaning capture was not an add-on; it was embedded in the system. The project benefits from strong refining margins, integration with upgrading operations, and a regulatory environment that recognizes emissions reductions. Meanwhile, policies such as Canada’s Clean Fuel Regulations (CFR), which reward lower-carbon fuel production, further benefit the project.
In contrast, Quest is not a fuel-producing asset, however it plays a critical role in reducing the carbon intensity of the hydrogen used in downstream upgrading processes. This contributes to lower-carbon fuels entering the market, a value that is increasingly recognized through policies like the CFR. The economics of the project extend beyond the capture facility and into the system in which it operates.
In both cases, the lesson is the same: CCUS succeeds when purpose-built for a specific system. Retrofitting older facilities is possible, but much more difficult.
WHY MANY PROJECTS STRUGGLE
In sectors such as power generation, cement, or steel, CO2 streams are more dilute and costly to capture. Facilities are often retrofitted rather than designed with capture in mind. Transport and storage infrastructure may be unavailable or uncertain. And whether through carbon pricing or credits, the revenue side of the equation often does not fully cover costs.
This creates a gap:
- Capture costs can exceed $100–$200 per tonne
- Carbon pricing or credit revenues are often lower or uncertain
- Infrastructure is fragmented or missing
The result is not a failure of technology, but a misalignment between project design and system conditions.
A CHANGING DEMAND SIGNAL
Recent signals from companies like Microsoft, which has been one of the largest purchasers of carbon removal credits, suggests a shift toward greater selectivity and cost discipline. Buyers are increasingly focused on durability, quality, and price.
This matters because it highlights a broader reality. Voluntary demand alone is unlikely to sustain large-scale deployment of highcost carbon solutions.
Projects that rely on premium-priced credits without structural support may face increasing pressure. This reinforces the need to focus on cost competitiveness and system efficiency, not just technology deployment.
FROM PROJECTS TO SYSTEMS
If the first wave of CCUS was about proving the technology, the next phase will be about designing systems that make it economic at scale.
That means coordinating across four key components:
- Capture: Selecting the right sources, starting with the lowest cost opportunities
- Power: Ensuring access to reliable, cost-effective energy
- Transport: Developing shared infrastructure such as pipelines and hubs
- Subsurface: Enabling access to scalable, well-characterized storage resources
These elements are often developed independently. But the economics of CCUS improve significantly when they are planned and optimized together.
THE ROLE OF MODULARIZATION
One of the most important levers for improving CCUS economics going forward is modularization. Historically, many projects have been engineered as bespoke, first of a kind developments. While this can optimize performance for a specific site, it limits scalability and is subject to high costs.
A shift toward modular systems, standardized capture units, repeatable compression and dehydration systems, and scalable transport connections, can:
- Reduce engineering and construction costs
- Shorten deployment timelines
- Lower execution risk
Modularization allows developers to move from custom builds to repeatable solutions, which is essential for scaling deployment across multiple facilities.
OPTIMIZATION AS A SYSTEM DISCIPLINE
Equally important is optimization across the system. Not all tonnes of CO2 are equal. Some can be captured at low cost from high purity streams, while others require significantly more energy and capital. Similarly, not all storage resources are equally accessible or suitable for every project.
Rather than treating each project in isolation, there is an opportunity to:
- Sequence deployment by cost and complexity
- Match emitters to the most appropriate storage resources
- Align capture with available power and infrastructure
This is where subsurface expertise becomes particularly important. Storage is not just a passive endpoint; it is an active part of the system that can be optimized.
The subsurface should function as a shared resource, enabling multiple emitters to connect to a common solution. This type of coordination reduces duplication, improves utilization of infrastructure, and lowers overall system costs.
POWER AND LOCATION MATTER
Another critical factor is the integration of power and location decisions. Carbon capture is energy-intensive, the availability and cost of power can significantly influence project economics. Co-locating capture with low-cost electricity, waste heat sources and existing industrial clusters can materially improve performance. This shifts the thinking from not just about whether to deploy CCUS, but where and how it is deployed within a broader system.
DESIGNING FOR THE NEXT PHASE
As CCUS moves into its next phase, the focus will need to shift from individual projects to coordinated systems that are modular, optimized, and scalable.
To do so, three priorities stand out:
- Design for integration: Projects should be planned as part of broader networks, not as isolated developments.
- Enable shared infrastructure: To improve efficiency and reduce costs, transport and storage systems should be accessible to multiple users.
- Align policy with system outcomes: Carbon pricing and incentives need to support not just individual tonnes reduced, but the development of systems that enable long-term decarbonization.
The question is no longer whether CCUS can work. It already does, in the right conditions. The challenge now is to replicate and scale those conditions across multiple areas. The next phase of CCUS won’t be built project-by-project, it will be built system-by-system.
And in the shift towards modularization, optimization, and integration is the path to making carbon management both effective and economically sustainable.
Originally published in IGNITE V12
