Europe's Declining Carbon Capture Sector

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

Europe's carbon capture and storage (CCS) sector is in decline due to ongoing technical and economic issues.

Decline of New CCS Projects

The number of new carbon capture and storage (CCS) projects in Europe has fallen noticeably in the past three years due to ongoing financial and technical difficulties.

In 2025, the volume of carbon capture capacity cancelled in Europe exceeded that reaching final investment decision (FID), according to research from the Institute for Energy Economics and Financial Analysis (IEEFA). According to Industrial Info Resources data, there are almost 650 carbon-related projects in Europe worth more than US$45 billion in investment. By industry, the investment spread is led by Power (US$13.7 billion), followed closely by Metals & Minerals (US$12.6 billion) and Chemical (US$5.9 billion). 

State of the Sector

IEEFA expects "continued weakness in new project announcements and final investment decisions, and increased project cancellations." It stated that the volume of carbon capture capacity cancelled in Europe in 2025 exceeded that reaching FID: 5.4 million tonnes of carbon dioxide (MtCO2) of capture-related projects were cancelled, while only 4.2 MtCO2 of projects received investment approval. Of the 2025 cancelled projects, blue hydrogen represented the largest share of capture volume at 71%, followed by a refining project at 20%. The balance was from a waste-to-energy plant. The largest project cancelled was oil and gas major BP ditching plans to build one of the U.K.'s largest blue hydrogen projects, H2Teesside, last December. It was targeting 1.2 gigawatts (GW) of hydrogen production - more than 10% of the U.K.'s 2030 hydrogen production target - while capturing and sending for secure long-term storage approximately 2 million tonnes of CO2 per year. For additional information, see December 08, 2025, article - BP Drops One of U.K.'s Largest Hydrogen Projects.

IEEFA noted that while there are "theoretically sufficient" CCS projects in the pipeline to meet Europe's 2030 targets, getting from project announcement to project completion takes "many years" due to economic, technical and legislative hurdles. Using research data from the International Energy Agency's CCUS database, IEEFA stated that there has been a marked decline in new European CCS project announcements, which peaked at 100 in 2021 and fell to 24 in 2025. It added that a big decline in proposed capture volumes was the most important indicator as they highlighted the potential carbon reduction across Europe. Proposed capture volumes from newly announced projects fell from a peak of 52 MtCO2 in 2021 to 7 MtCO2 in 2025. Cumulative proposed capture volumes were 201MtCO2 from more than 400 potential projects as of 2025. Combined European Union (EU) and U.K. capture and storage targets are 80MtCO2 by 2030 and 522MtCO2 by 2050. 

The Rise & Fall

There was a significant jump in Europe's pipeline of potential CCS projects between 2018 and 2023, when 317 projects supporting capture, transport and storage were announced. This was down to a number of reasons, including EU policies such as the European Climate Law - which makes climate neutrality by 2050 legally binding - and Fit for 55, all including greater use of CCS. The marketplace was also buoyed by a big rise in the price of carbon across Europe at the time, namely through the EU Emissions Trading System (ETS), which moved from 5-10 euro (US$5.80-$11.61) in 2017 to peaks above 100 euro (US$116) in 2023. "This made purchasing ETS emission allowances increasingly expensive and provided a clear economic incentive for polluters to avoid these rising costs with CCS," IEEFA stated. A series of support mechanisms were also introduced, including the EU Innovation Fund, Important Projects of Common European Interest and Carbon Contracts for Difference (CfD), as well as national subsidy schemes in the U.K., Norway, the Netherlands and Denmark. The creation of carbon clusters in heavily industrialized regions enabled carbon capture projects to share pipelines and storage hubs. 

Shrinking Incentive

Carbon capture projects remain technically challenging. IEEFA rated the technology readiness level of capture processes and operation across the European CCS project pipeline from 5 (large prototype) to 9 (early adoption) out of 11 (mature) across different industry sectors. "Any deviation from project schedule or capture rates will increase costs, which are already high. CO2 capture, transport and storage costs can range from US$133 per tonne for biofuel projects to US$244 per tonne for chemical plant operations. This is considerably higher than the current EU and U.K. ETS prices of US$91 and US$52 respectively.

Key Takeaways

• Europe's carbon capture and storage (CCS) sector is in decline due to ongoing technical and economic issues. 
• New projeKey Takeawayscts announced have fallen from a peak of 100 in 2021 to 24 in 2025.
• Industrial Info Resources is tracking almost 650 carbon-related projects in Europe worth more than US$45 billion in investment.

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).