Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways

The report identifies carbon capture and utilization (CCU) as a key lever for 'defossilizing' industry by converting CO2 into fuels, chemicals, and building materials. However, it finds that CCU is currently hampered by fragmented policy frameworks that favor sequestration over utilization, significant funding gaps known as 'valleys of death' for deep-tech start-ups, and the complexity of integrating new technologies into mature industrial complexes. The document argues that scaling CCU requires stable, technology-agnostic incentives, patient capital, and cross-sectoral partnerships to create credible market signals and reduce the 'green premium' of CCU-derived products.

• CCU can reduce industrial emissions by converting captured CO2 into products, but its effectiveness depends on the carbon source and product end-use. While utilizing fossil point source emissions for short-term products like fuels only avoids new fossil emissions, using biogenic or atmospheric sources can result in carbon-neutral or carbon-negative outcomes.
• There is a significant gap between theoretical projections and actual investment in CCU. While the IEA projected up to 877 Mtpa of CO2 utilization by 2070 in its Sustainable Development Scenario, the current project pipeline to 2040 is very low, with only around 21 Mtpa in development.
• Global policy frameworks for CCU are fragmented and often create disincentives for utilization compared to sequestration. In the EU, the Emissions Trading System (EU ETS) generally levies costs on CCU unless it results in permanent sequestration, which discourages investment in short-to-medium duration carbon products.
• The US is a primary driver of CCU investment due to the Inflation Reduction Act (IRA) and specifically section 45Q, which provides tax credits for captured CO2. However, political and regulatory volatility, including the withdrawal of some federal funding, has increased perceived risk for investors.
• CCU start-ups face multiple 'valleys of death'—funding gaps during the transition from research to pilot, pilot to demonstration, and demonstration to full-scale deployment—due to high capital intensity and long development timelines.
• An 'early equity trap' occurs during the pilot stage, where high capital demands and lack of short-term returns lead investors to demand disproportionately large equity stakes (potentially 50% or more), which can undermine the long-term viability of the company.
• Building materials, specifically CO2-treated aggregates and CO2-cured concrete, are currently near cost-competitive and offer significant growth potential, with the possibility of acting as long-duration carbon sinks.
• Successful CCU deployment requires unprecedented cross-sectoral collaboration between start-ups and industrial incumbents to access infrastructure and market channels, though the slow decision-making processes of legacy industries often clash with the fast timelines of venture-backed start-ups.

APA

World Economic Forum (2025). Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways. https://reports.weforum.org/docs/WEF_Defossilizing_Industry_Scaling-up_CCU_2025.pdf

Chicago

World Economic Forum. Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways. 2025. https://reports.weforum.org/docs/WEF_Defossilizing_Industry_Scaling-up_CCU_2025.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways |date=September 2025 |url=https://reports.weforum.org/docs/WEF_Defossilizing_Industry_Scaling-up_CCU_2025.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2025defossilizing, author = {{World Economic Forum}}, title = {{Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways}}, institution = {World Economic Forum}, year = {2025}, month = sep, url = {https://reports.weforum.org/docs/WEF_Defossilizing_Industry_Scaling-up_CCU_2025.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }