CCUS applications had gained considerable momentum before the Covid‑19 crisis hit. Numerous new projects have been announced since 2018, concentrated in the United States and Europe where new incentives are available.

In the United States, at least 15 large-scale facilities are in development, covering a range of applications including natural gas processing; biofuels and cement production; direct air capture (DAC); and gas- and coal-fired power generation. The expanded 45Q tax credit and complementary policies such as the California Low Carbon Fuel Standard have prompted these new investment plans.

In Europe, stronger climate-related ambitions and new funding programmes, including the Innovation Fund, have sparked renewed interest in CCUS. Many of the projects being developed in Europe involve industrial CCUS hubs with shared CO₂ transport and storage infrastructure, and several aim to produce low-carbon hydrogen. CCUS facilities are also under development elsewhere, including in Australia, China and the Middle East. Industry interest and commitment is growing, including for net-zero-emissions targets.

Renewed momentum for CCUS is very encouraging, but it is critical that plans and announcements translate into real projects.

Whether planned CCUS investments can withstand the current economic slump will depend on several factors, including:

• The resilience of government climate policies and ambitions, and the extent to which CCUS is included in sustainable economic recovery plans.
• Whether CCUS is included in capital expenditure cuts announced by major oil and gas companies.
• The attractiveness of 45Q tax credits in the context of declining profits and corporate tax liability. Despite new guidance issued by the IRS in May 2020 providing important clarity for project developers, a key issue will be the requirement that projects be in construction by the end of 2023, as any delay due to current economic conditions could cause projects to miss this deadline.

Another important consideration for planned investments is the impact of low oil prices on CO₂ demand and price (typically indexed to the oil price) for the CO₂ used in enhanced oil recovery (EOR). EOR can enable lower-carbon oil production and has been a key driver of CCUS investment, with 16 of the 21 operational facilities selling or using CO₂ for EOR. Of the recently announced project plans, around half are linked to EOR and almost all are in the United States.

Short-term uncertainty regarding CCUS progress has been tempered by recent project and funding announcements. In March 2020, the United Kingdom confirmed its pledge to invest GBP 800 million (USD 995 million) in CCUS infrastructure, including to establish CCUS in at least two locations. In Europe, the EUR 10‑billion Innovation Fund will begin to support CCUS projects (and other clean energy technologies) in 2020, while in May the Australian government announced plans to make CCUS eligible for existing funding programmes. In June 2020, the two Alberta Carbon Trunk Line projects in Canada became operational, raising the number of large operating facilities to 21.

Recent industry commitments to CCUS include an April announcement by the Oil and Gas Climate Initiative to invest in a natural gas CCUS plant in the United States, and in May 2020, Equinor, Shell and Total committed to invest more than USD 700 million in the Northern Lights offshore CO₂ storage project.