The Bottom Line: Why the cost of carbon capture and storage remains persistently high

This policy brief by 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 cost reductions seen in renewable energy technologies, making CCS an inefficient use of public funds for oil and gas, though potentially useful for hard-to-abate industrial sectors like cement.

• CCS costs vary significantly based on the CO2 concentration of the emissions stream; concentrated streams, such as those from natural gas processing, are cheaper (CAD 27–48/tCO2 captured), while diluted streams, such as those from cement production (CAD 50–150/tCO2 captured) and coal-fired power plants (CAD 26–173/tCO2 captured), are more expensive.
• Actual costs of CCS projects in Canada tend to be at the higher end of modelled estimates. For instance, the Quest project reported costs around CAD 200/tCO2 up to 2021, and the Boundary Dam project's lowest estimated capture cost is CAD 100–120/tCO2, though it has faced delays and cost overruns.
• CCS has a low experience rate—the rate at which costs decrease as deployment increases—compared to renewables like solar PV. This is attributed to high design complexity, where interrelated technical components make innovation difficult, and a high need for customization for specific geological and application contexts.
• The financial viability of CCS in the oil and gas sector depends heavily on ongoing government subsidies and tax advantages, unlike renewable technologies which typically only required subsidies during initial development. In Canada, projects in Alberta utilize provincial credits and federal investment tax credits.
• While CCS may be outcompeted by renewables in electricity production, it is identified as a vital mitigation tool for hard-to-abate industrial sectors, specifically the cement industry, where two-thirds of emissions result from chemical reactions during limestone heating.
• The Pathways Alliance, a coalition 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, though the project is contingent on substantial government subsidies.

APA

International Institute for Sustainable Development (n.d.). The Bottom Line: Why the cost of carbon capture and storage remains persistently high. https://www.iisd.org/system/files/2023-09/bottom-line-why-carbon-capture-storage-cost-remains-high.pdf

Chicago

International Institute for Sustainable Development. The Bottom Line: Why the cost of carbon capture and storage remains persistently high. n.d. https://www.iisd.org/system/files/2023-09/bottom-line-why-carbon-capture-storage-cost-remains-high.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=The Bottom Line: Why the cost of carbon capture and storage remains persistently high |url=https://www.iisd.org/system/files/2023-09/bottom-line-why-carbon-capture-storage-cost-remains-high.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndbottom, author = {{International Institute for Sustainable Development}}, title = {{The Bottom Line: Why the cost of carbon capture and storage remains persistently high}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/2023-09/bottom-line-why-carbon-capture-storage-cost-remains-high.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }