Carbon capture and storage (CCS) is costly, complex, and capital-intensive. While public incentives like tax credits and grants, along with funding from major energy firms, are driving its deployment, questions remain about whether these sources can sustain large-scale rollout and whether they truly advance decarbonization or quietly support fossil fuel use. Ultimately, the answer depends on who pays, under what conditions, and who bears the financial risk.
CCS is the process of capturing CO2 emissions from industrial facilities, power plants, and other sources and storing them permanently underground in suitable geological structures. It is a critical tool for meeting global climate targets, especially in sectors where emissions are hard to eliminate.
But CCS is not a simple process. It involves expensive infrastructure for capture, transport, storage, and continuous monitoring to ensure permanence and long-term liability for any leaks. These factors make it a highly capital-intensive and technically demanding solution.
Funding for recent CCS projects comes from a mix of public incentives—tax credits, grants, state-backed infrastructure, and private investment from major energy corporations. These have helped kickstart projects, but also raise important questions: Can these sources sustain full-scale deployment? Are they truly accelerating decarbonization, or are they, in some cases, enabling continued fossil fuel extraction under a green banner?
Who pays for CCS matters because it shapes incentives, the pace of adoption, and the fairness of cost distribution. For example, if governments shoulder most of the bill, they can speed up deployment and build shared infrastructure, but taxpayers may bear undue risks or end up subsidizing private profits. If corporations cover full cost, it aligns with the "polluter pays" principle but could face economic and political resistance without transitional support. Additionally, public funding of CCS will result in equity concerns, especially if low-income communities bear costs for projects that mainly benefit large emitters.
This article examines three main funding options—governments, corporations, and the taxpaying public—assessing how each works, their pros and cons, factors influencing payment structures, and why a shared-responsibility model may offer the most effective and equitable path forward.
Factors That Influence Funding Source Choices
Deciding who pays for CCS is not straightforward. Funding choices are shaped by a mix of technical, economic, political, and ethical factors.
Cost and Maturity of Technology
According to the International Energy Agency (IEA), the cost of capturing CO2 can range from $15 to $25 per tonne for some industrial processes to over $120 per tonne. Cement, steel, and chemical production often have higher costs because capture systems must be integrated into complex, high-temperature processes. Early-stage CCS projects are particularly expensive and risky, which is why governments often step in to provide funding or guarantees incipiently.
Scale and Type of Infrastructure
Transport pipelines, offshore storage wells, and onshore CO2 hubs cost a significant amount of money, and shared public or public-private investment is needed to build this level of infrastructure, as seen in Norway’s Longship project, where government will cover a substantial share of CCS project costs—about 84% for Heidelberg Materials, 73% for Northern Lights, and 40% for Fortum Oslo Varme.
Availability of Alternative Mitigation Options
CCS is most useful and unavoidable in hard-to-abate sectors like cement, steel, and some chemical industries, where few cost-effective alternatives exist. When cheaper, proven zero-carbon solutions (e.g., renewables in power generation) are available, public funds may be better directed there.
Political Economy and Lobbying
Industrial lobbying heavily influences CCS policy design, sometimes leading to overly generous credits and weak accountability.
Equity Considerations
How costs are distributed between income groups, regions, and generations also affects public legitimacy and perception. Funding approaches that shift costs to low-income households can face strong political and mass resistance.
Exploring CCS Funding Options
Governments
National or regional governments can finance CCS projects directly through grants, capital injections, low-interest loans, loan guarantees, and tax incentives. Governments may also invest in shared CCS infrastructure, such as CO2-transport pipelines, shipping facilities, and large-scale geological storage hubs, or establish long-term contracts that provide revenue certainty for private operators.
Similar to Norway’s Longship project, the UK government announced in October 2024 it will fund more than $29 billion toward three CCUS projects under its Track 1 industrial decarbonization program.
While CCS helps the climate by cutting emissions, those benefits aren’t profitable for companies, so they have little incentive to invest on their own. Governments can also borrow and raise money less expensively than private firms, which makes it easier for them to fund big, expensive, and long-term projects that companies might avoid because of the cost and risk.
Pros of Government Funding
● Large-scale public capital fast-tracks CCS deployment and infrastructure that private firms would not build alone.
● Grants, guarantees, and R&D support from governments reduce project risks, encouraging private sector participation.
● Funding can be directed to priority sectors and regions to meet national climate goals.
● Governments borrow at lower interest rates than private companies, reducing overall financing costs.
Cons of Government Funding
● Without strict rules, public funds may go to projects that mainly benefit fossil fuel operations.
● Taxpayers bear the risk if projects fail or underperform.
● Long-term reliance on subsidies may prevent CCS from becoming financially self-sustaining.
● Industry lobbying can lead to overly generous funding terms and weak accountability measures.
Corporations (Major Emitters)
Here, major carbon emitters are financially responsible for CCS costs via direct regulation (e.g., capture mandates for large industrial point sources), carbon taxes, cap-and-trade systems, or legal liability frameworks that require companies to fund capture or pay into a CCS fund.
According to the EPA, the largest source of global greenhouse gas emissions (GHG) come from energy production and use, including electricity and heat generation from coal and gas, oil and gas extraction and refining, and industrial fuel consumption.
The Carbon Majors Database (CDP, 2023) shows that just 20 fossil fuel producers were responsible for over one-third of global energy-related CO2 and methane emissions between 1965 and 2020.
Because these sectors and companies account for such a large share of emissions, they are sentimentally considered the most appropriate and most capable candidates to bear the cost of CCS.
In jurisdictions or regions with strong carbon markets or where regulators can credibly enforce capture mandates, this model may be the fairest long-term solution. But in practice, it may require public or government support to avoid throwing entire industrial sectors into crisis.
Pros of Corporate Funding
● Costs are aligned with the responsibility for emissions, reinforcing accountability.
● Companies have a financial reason to cut emissions or adopt cleaner processes to reduce CCS expenses.
● Financial pressure can drive the development of cheaper and more efficient capture technologies.
● Private sector competition can help lower costs over time.
Cons of Corporate Funding
● High compliance costs could lead to higher prices, job losses, or plant closures.
● Companies may relocate to countries with weaker CCS requirements, causing carbon leakage.
● Smaller firms lack the financial resources to comply without support.
● Domestic industries may face competitiveness issues in global markets without coordinated policies.
Taxpaying Public (Broad Taxpayer Financing or Subsidization)
In this model, governments use money collected from the public to fund CCS projects. This can come from general taxation (like income taxes, sales taxes) or dedicated revenue streams like fossil fuel royalties, carbon pricing revenues, or auction proceeds from emissions trading systems. The funds are then channeled into CCS through large program pledges, direct grants, or infrastructure investments.
A key advantage of this approach is that it spreads the cost across society, allowing governments to quickly mobilize significant capital needed for CCS deployment and large-scale infrastructure. It can also help fund projects that may not be commercially attractive to private investors but are important for national climate targets.
For example, in the US, federal tax credits under Section 45Q and funding from the Infrastructure Investment and Jobs Act (IIJA) are ultimately financed through taxpayer funds, enabling billions in CCS-related investments.
However, this model comes with equity and political concerns. If the funding comes from general taxation, there’s a risk that low-income households, who contribute least to GHG, may end up paying for technology that primarily benefits large industrial polluters.
Pros of Taxpayer Funding
● Costs are spread across society, making large investments politically feasible.
● Public financing can quicken construction of CCS transport pipelines and storage hubs.
● Funding can support projects that are important for climate goals but unattractive to private investors.
● Public budgets can provide stable, predictable long-term financing for CCS.
Cons of Taxpayer Funding
● Flat or consumption-based taxes can place a heavier burden on low-income households.
● The public may object to paying for technology that benefits large corporations.
● Money spent on CCS may reduce funding available for other climate solutions.
● Lack of transparency in spending could reduce public trust and lead to political backlash.
A Working Model: Shared Responsibility
CCS involves costs and benefits that are unevenly distributed. No single payer, whether government, industry, or taxpayers, can fairly or effectively shoulder the entire burden. Given the trade-offs above, the most pragmatic approach is shared responsibility, a structured cost-sharing system that aligns costs with benefits, causation, and the capacity to pay.
This approach is not just theoretical. Successful CCS frameworks, such as Norway’s Longship project and the Netherlands' Porthos project already combine government-backed infrastructure with industry-funded capture systems, ensuring both public and private stakeholders invest in the outcome.
Core Principles of the Model
Public Role for Shared Infrastructure and De-Risking
Governments should finance or underwrite the construction of common-use transport and storage infrastructure with high upfront costs but broad public benefit, such as CO2 pipelines, offshore injection wells, and monitoring systems. Government involvement reduces market risk, encourages multiple companies to participate, and ensures strategic planning.
Progressive Financing and Ring-Fencing
Public contributions should be drawn from revenue sources that do not disproportionately impact low-income households, for example, carbon pricing revenues, fossil fuel windfall taxes, or climate-focused levies on high-emitting sectors. These funds should be used exclusively for decarbonization and not be diverted to unrelated spending.
Conditionality and Transparency Any public support should come with clear rules and reporting requirements:
● Only projects with proven additional climate benefit should qualify.
● Annual public reporting on costs, emissions reductions, and performance should be mandatory.
● “Clawback” mechanisms should be set in place to reclaim public money if promised results are not achieved.
Sunset and Scalability
Subsidies and guarantees should not last indefinitely. Instead, they should include phase-out provisions linked to declining technology costs, industry maturity, and wider adoption. As economies of scale are reached and capture costs fall, the private sector should bear a greater share of the total costs.
Why This Model Is Better Than Single-Payer Approaches
● It protects taxpayers by ring-fencing funds, using progressive revenue sources, and imposing strict performance conditions.
● It promotes scalability by leveraging public investment to create infrastructure economies of scale, lowering costs for all participants.
● It enforces transparency, independent oversight, and public reporting, which are key safeguards.
Implementation Checklist for the Shared Responsibility Model
● Establish clear MRV and permanence standards, to be managed by independent agencies.
● Regular auditing and progressive financing to avoid regressive impacts on low-income households.
● Require transparent procurement and publish annual public reports on costs, beneficiaries, and outcomes.
● Include sunset clauses for subsidies and phase-down triggers tied to falling technology costs and growing market maturity.
CCS can play a vital role in cutting emissions from the world’s most challenging sectors, but its success will depend as much on how it is funded as on the technology itself. The choice of who pays shapes incentives and determines the pace of deployment.
A shared responsibility model where governments invest in shared infrastructure and early-stage risk reduction, and public funds are raised progressively and spent transparently offers the best path forward. This approach protects taxpayers and promotes long-term scalability.
Without strict conditions, consistent monitoring, and clear phase-out plans for subsidies, CCS funding can easily become a costly public subsidy with little net climate benefit. With the right governance, however, it can be a strategic tool to decarbonize hard-to-abate sectors, safeguard jobs, and help meet net-zero goals.
In the end, the debate over who should pay for carbon storage is about more than just money. It is about accountability, fairness, and the kind of global future we choose to build. If governments, industry, and the public can share both the costs and the responsibility, CCS can be a significant part of a credible, just, and effective climate-saving and decarbonization strategy.
For Further Reading
Global Greenhouse Gas Overview
The Carbon Majors Database Launch Report 2024
UK Government To Make Massive $28.5 Billion Carbon Capture Investment
Taxpayer Views on Carbon Capture and Storage
IPCC Sixth Assessment Report
