Why Carbon Capture Remains a Tough Investment Bet
For years, Carbon Capture, Utilisation and Storage (CCUS) has been sold as a technological trump card in the fight against climate change. It promises to clean up emissions from fossil fuels, mop up carbon from the atmosphere, and enable hard-to-abate industries to operate sustainably. But for all the hype, the investment reality remains stubbornly disappointing – particularly in Australia.
Big Hype, Thin Returns
According to the International Energy Agency’s (IEA) latest update (1), there are now over 700 CCUS projects globally in various stages of development. Current global capture and storage capacity sits at around 50 million tonnes per year, with modest gains since. (2) By 2030, the aim is 430 million tonnes. The gap between ambition and delivery is vast, and so far, it’s investors who have had to bear the brunt of that underperformance.
Australia is a prime example. Apart from Santos’s Moomba gas project, which has sequestered just under 700,000 tonnes of CO₂ in its first six months, nearly all local CCUS activity is still in the planning phase. (3) Pilot projects like the government-backed venture between Pilot Energy and Capture6 are yet to show progress. Meanwhile, the broader market for Direct Air Capture (DAC) – once touted as a breakthrough in negative emissions – has seen investment interest stall globally as competition for clean electricity from data centres drives up costs.
Technical Headaches, Commercial Headwinds
From an investment standpoint, CCUS is complex and capital intensive. Capture technology must be custom-fitted to individual industrial facilities. Storage relies on rare and geologically suitable sites that must be thoroughly mapped and assessed – often at significant cost. Site characterisation alone can be a logistical nightmare, involving 3D modelling, seismic analysis and chemical simulations that are both data-hungry and incomplete.
Transport is no less daunting. Large-scale deployment hinges on pipeline infrastructure that barely exists in most regions. The corrosive nature of CO₂, combined with impurities like hydrogen sulphide, increases material costs and maintenance burdens. Pumping CO₂ over long distances also requires keeping it in a dense, supercritical phase – a process that is extremely sensitive to temperature, elevation and pressure variations.
Monitoring brings another layer of cost. Tracking injected CO₂ to ensure containment and prevent leakage requires high-tech surveillance tools such as 4D seismic imaging and satellite-based systems. These technologies are still developing, expensive to run, and often lack precision at depth. Investors don’t just face commercial risk – they face liability risk, too.
Regulatory Ambiguity and Policy Drift
In Australia, bipartisan political support has not translated into predictable returns. While both major parties have historically committed public money to CCUS, the Albanese government walked back several grants in its first budget, betting instead on private investment to lead the charge. This creates uncertainty – especially when the policy landscape shifts depending on which party is in power or how public sentiment tilts.
Globally, a lack of consistent regulatory standards and sluggish permitting processes compound the problem. Carbon pricing remains too low in most markets to make CCUS financially viable on its own, and voluntary carbon credit markets – particularly those underpinning DAC – are still in their infancy. Investment-grade certainty simply isn’t there.
Who’s Still Investing?
There are some bright spots. Projects in Europe, the US, China and the Middle East are progressing – many backed by generous public subsidies and favourable regulatory environments. The IEA notes that 80% of all expected CCUS capacity by 2030 will be in North America or Europe. These markets have built dedicated carbon management hubs with integrated capture, transport and storage systems.
Australia, by contrast, lacks this ecosystem. The Moomba project remains an outlier rather than a model. And while Santos has shown it can move the needle with strong government and industry backing, few others are following. Without a coordinated national strategy or scalable infrastructure, the country risks falling further behind.
The Bottom Line
For now, CCUS remains a tough investment proposition. The technology is proven in principle but hamstrung by economics, infrastructure gaps, and regulatory ambiguity. Projects are bespoke, expensive and fraught with operational and reputational risks.
Until there’s a stable policy environment, a carbon price that justifies the economics, and public-private partnerships that reduce the risk burden, investors are right to be cautious. The promise of CCUS is still alive – but it’s not an investment bet for the faint-hearted.
References
International Energy Agency, Farjardy, Greenfield, Koduah “CCUS projects around the world are reaching new milestones“ 30 April 2025 https://www.iea.org/commentaries/ccus-projects-around-the-world-are-reaching-new-milestones
ScienceDirect. Roi, Zhen, Dindoruk “Challenges in the Large-Scale Deployment of CCUS” Engineering Volume 44, January 2025, Pages 17-20 https://www.sciencedirect.com/science/article/pii/S2095809924007203
The Energy. “Carbon capture gap getting wider” 14 May 2025 https://newsletters.theenergy.co/posts/carbon-capture-gap-getting-wider
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