Financial mechanisms to accelerate large-scale carbon capture and storage project deployment
Abstract
Carbon Capture and Storage (CCS) technology plays a pivotal role in achieving Net-Zero emissions by 2050, particularly for hard-to-abate industrial sectors. However, economic barriers arising from massive Capital Expenditures (CAPEX) and Operating Expenses (OPEX) remain the most significant challenges to large-scale deployment. This paper analyzes financial mechanisms and policy frameworks supporting CCS, drawing on international experiences from the United States, the European Union, Norway, and the ASEAN region. The research indicates that to ensure economic viability, it is essential to establish “revenue stacking” models that combine capital subsidies, tax credits (such as the U.S. 45Q), and market de-risking instruments like Carbon Contracts for Difference. Furthermore, transitioning to shared infrastructure models (Hubs & Clusters) and integrating into international carbon markets under Article 6 of the Paris Agreement are inevitable trends to optimize costs and unlock investment flows. The findings provide lessons for building a sustainable CCS ecosystem through close coordination between government support and market-based mechanisms.
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