The United States Risks Losing Its Carbon Capture Advantage

The United States Risks Losing Its Carbon Capture Advantage

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Understanding the cost components of a capture facility clarifies the challenge of cost reductions. While the primary cost drivers of carbon capture are exogenous-such as the concentration, partial pressure, scale, and desired capture rate of the CO₂ stream-ongoing research is focused on improving capture technologies to mitigate their cost impact on the carbon management value chain. Capital costs are largely attributed to the absorbent towers, which account for about 40 percent of modeled capital expenditures, while nearly all operating costs for solvent-based capture systems are driven by the reboiler and other components requiring process energy. Remarkably, the reboiler alone accounts for 68 percent of total costs when annualizing capital and operating costs, highlighting how improvements in the energy consumption profile of the capture process are a clear pathway to cost reductions. Assessed as a whole, these values illustrate the materials- and energy-intensive nature of incumbent carbon capture methods, reinforcing the need for continued innovation that yields more efficient and optimized capture materials, processes, and equipment designs.

While solvent-based capture is currently the most common and mature carbon capture technology, it is not the only promising carbon capture technology. Novel capture materials and processes are currently in development, each with specific advantages and disadvantages to realizing further cost of capture reductions. Balancing commercialization and deployment of a diverse set of carbon capture solutions will make the sector adaptable to a broad range of end-use characteristics and applications. This fact also highlights the potential for robust domestic value creation in carbon management without facing global supply chain bottlenecks. A DOE Supply Chain Risk Assessment indicates that carbon management would not experience significant supply chain risks even under high growth scenarios. The report found that many of the key inputs, such as chemicals and equipment, are common products with robust and mature domestic industries behind them. This supply chain security stands in contrast with other clean technologies, where geographically concentrated materials and supply chain segments present a sourcing challenge.

While the United States stands to benefit from a diverse technology landscape and low supply chain risk for scaling carbon capture, these conditions alone are not enough to secure long-term leadership. International competitors are steadily making inroads in the carbon management space by accelerating innovation, deployment, and policy alignment.

Progress Abroad and Uncertainty at Home

Perhaps unsurprisingly, China is positioning itself as a challenger to U.S. leadership. The country views carbon capture technologies as a strategic tool to clean up its economy while maintaining energy security and industrial competitiveness in the long term. This is reflected by China's rapidly growing project pipeline of more than 100 CCUS demonstration projects as of September 2023. About half of these projects are already operational and amount to 6 Mtpa of installed capture capacity, with over 10 of them each exceeding 0.5 Mtpa.

This governmental ambition has also spurred advances in innovation. In 2022, Chinese entities filed nearly three-quarters of all global CCUS patents-a total of 298 patents to the 42 filed by U.S. researchers. This surge in intellectual property is in turn fueling improvements at large-scale demonstration projects. For example, the Huaneng Longdong project employs a proprietary solvent that requires about 20 percent less energy for regeneration than traditional solvents at equivalent capture rates, while also acting as the testing ground for other more advanced, energy-efficient solvents. When fully operational, the project will become the world's largest coal-fired CCUS power plant with a 1.5 Mtpa capture capacity. If momentum is sustained, this surge in innovation and deployment could allow Chinese firms to dominate carbon capture markets much as they did with other clean energy technologies-a scenario that should spur the U.S. government to renew its carbon management ambitions.

Meanwhile, Europe has set ambitious deployment targets that could either act as an opportunity or put competitive pressure on U.S. technological leadership. The European Commission adopted the Industrial Carbon Management Strategy in February 2024 with the objective to increase CO₂ storage capacity from 3 Mtpa to 50 Mtpa by 2030, scaling to over 250 Mtpa by 2040. This strategy goes beyond policy targets and is backed by climate legislation, regulatory certainty, carbon pricing, and infrastructure investment across member states. European countries like the United Kingdom, Norway, and the Netherlands have already launched major capture projects, leveraging public funding with private sector deployment to make capture commercially viable at scale while taking advantage of the mandated storage capacity under development. The result is a burgeoning pipeline of over 100 Mtpa in CCUS capacity under construction or development by 2030, which could potentially turn once "lagging" Europe into a competitive carbon management destination within this decade.

In contrast, the United States is sending mixed signals to the over 130 announced facilities under development with a combined capture capacity of over 130 Mtpa and an estimated $77.5 billion in invested capital expenditures. In May 2025, the DOE terminated $3.7 billion in previously awarded grants for industrial decarbonization projects, which primarily included carbon capture projects. Concurrently, firings and resignations at national labs working on carbon capture breakthroughs raise concerns about sustained innovation. On the other hand, the recently passed budget reconciliation package gives a slight boost to the 45Q tax credit for carbon utilization and EOR, while the Environmental Protection Agency is slated to make Texas the sixth state to be granted primacy for Class VI carbon storage wells. Although there are some positive developments, there is still little supportive political rhetoric behind the carbon management sector.

Immediate Policy Opportunities to Maintain the United States' Capture Edge

The United States stands at a critical juncture. It can leverage its current lead in the sector to develop the next generation of capture technologies, scale and anchor their supply chains, and become the prime global provider of carbon management solutions. To seize this opportunity and solidify its leadership, the current administration can act now on low-regret, high-impact initiatives that unlock near-term CCUS deployment while enabling U.S. economic growth, energy security, and global industrial competitiveness.

First, the federal government should support the buildout of enabling infrastructure for carbon capture projects at ethanol plants by streamlining permitting and siting while developing robust oversight and educational programs that enhance public perception and acceptance. With dozens of proposed projects in the pipeline, ethanol facilities are ideal candidates for deploying mature, pre-combustion capture technologies since they emit nearly pure streams of CO₂. Diminishing permitting friction-especially across state lines-and improving public acceptance could unlock billions in private investment and build out shared carbon infrastructure that other emerging industries, such as low-carbon cement and fertilizers, would also benefit from.

Second, the administration should recognize carbon capture as a clean speed-to-power enabler for AI data centers. Energy companies are already moving to deploy post-combustion carbon capture solutions at power plants to exploit this opportunity, while novel technologies like oxy-combustion and cryogenic capture have continued to make headway in recent years. Acknowledging CCS-equipped facilities in executive orders or permitting fast lanes and encouraging the development of "CCS-ready" power plants would help bring more generating capacity online to power the country's AI ambitions while enabling Big Tech's clean procurement goals. The federal government can leverage this vast demand for clean baseload power to deploy and commercialize next-generation energy technologies.

Third, the United States should develop a carbon capture export strategy by mobilizing agencies like the Development Finance Corporation (DFC) and Export-Import Bank (EXIM) to support the international deployment of U.S. carbon capture technologies. While both institutions have historically overlooked the technology, they could now be leveraged alongside energy diplomacy efforts to capture prospective overseas CCUS markets: Brazil and its goal to decarbonize its large industrial base and ethanol sector, the latter being second only to the United States' own in terms of production capacity; Europe and its low-carbon materials ambitions, resulting in a CCUS-enabled, net-zero cement facility's output already being sold out for the year; and Southeast Asian nations like Indonesia and Malaysia, with grand CCUS targets that are enabled by world-class geologic storage conditions. Supporting these agencies and their export instruments through technical partnerships and standard-setting engagement would ensure that U.S. firms-not foreign competitors-set the pace for the formation of global CCUS value chains.

Mathias Zacarias is an associate fellow and energy transitions fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies.

The author is grateful to Leslie Abrahams and Joseph Majkut for providing feedback on this piece.