Why the Cost of Carbon Capture and Storage Remains Persistently High

This policy brief from the International Institute for Sustainable Development (IISD) examines why the costs of carbon capture and storage (CCS) remain high, particularly within Canada's oil and gas sector. It argues that high design complexity and the need for customization prevent the technology from achieving the cost reductions seen in renewable energy. While the brief suggests CCS may be necessary for hard-to-abate industrial sectors like cement, it concludes that CCS in oil and gas is an inefficient use of public funds compared to other mitigation strategies.

• The cost of CCS varies significantly based on the CO2 concentration of the gas stream. Processes with concentrated CO2 streams, such as natural gas processing, are estimated to cost between CAD 27 and 48/tCO2 captured, while diluted streams like cement production are estimated at CAD 50–150/tCO2 captured (or CAD 45–205/tCO2 avoided).
• Actual costs for CCS projects in Canada tend to be at the higher end of theoretical model predictions. For instance, the Quest project's cost was approximately CAD 200/tCO2 up to 2021, and the Boundary Dam project's lowest estimated capture cost is CAD 100–120/tCO2, though it has experienced delays and cost overruns.
• CCS has a low experience rate—the rate at which costs decrease as deployment increases—compared to renewable technologies. For example, the median experience rate for solar PV since 1976 is 23%, whereas the reported experience rate for CCS used with a natural gas combined-cycle plant is only between 2% and 7%.
• The failure of CCS to achieve significant cost reductions is attributed to high design complexity and a high need for customization. The large number of interrelated technical components makes innovation iterative and risky, while the need to tailor components to specific geological conditions and local supply chains hinders large-scale deployment.
• In Canada, the oil and gas sector's use of CCS relies heavily on government financial support, such as provincial credits in Alberta and federal investment tax credits. This differs from renewable technologies, which typically only required subsidies during initial development phases.
• The Pathways Alliance, a group of Canada's six largest oil sands producers, proposes a CAD 16.5 billion CCS network in Alberta to reduce 22 MT of CO2 by 2030. The coalition has stated that this project depends on substantial government subsidies to be competitive with countries like Norway.
• CCS is identified as a potentially vital tool for hard-to-decarbonize industrial sectors, specifically the cement industry, because two-thirds of its emissions result from chemical reactions during limestone heating. However, for other sectors like steel, alternatives such as green hydrogen or scrap recycling may be more cost-effective.

APA

Sievert,, L. C. C. (2023). Why the Cost of Carbon Capture and Storage Remains Persistently High. International Institute for Sustainable Development. https://www.iisd.org/articles/deep-dive/why-carbon-capture-storage-cost-remains-high

Chicago

Sievert,, Laura Cameron,Angela Carter,Katrin. Why the Cost of Carbon Capture and Storage Remains Persistently High. International Institute for Sustainable Development, 2023. https://www.iisd.org/articles/deep-dive/why-carbon-capture-storage-cost-remains-high.

Wikipedia

{{cite report |last1=Sievert, |first1=Laura Cameron,Angela Carter,Katrin |title=Why the Cost of Carbon Capture and Storage Remains Persistently High |publisher=International Institute for Sustainable Development |date=7 September 2023 |url=https://www.iisd.org/articles/deep-dive/why-carbon-capture-storage-cost-remains-high |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sievert2023why, author = {Sievert,, Laura Cameron,Angela Carter,Katrin}, title = {{Why the Cost of Carbon Capture and Storage Remains Persistently High}}, institution = {International Institute for Sustainable Development}, year = {2023}, month = sep, url = {https://www.iisd.org/articles/deep-dive/why-carbon-capture-storage-cost-remains-high}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }