Analyst Insight: Emerging Carbon Capture Business Models

This Guidehouse Insights Analyst Insight reviews and analyzes current carbon capture business models and provides an overview of some of the main market mechanisms, incentive schemes, and policy frameworks that help monetize the carbon capture and utilization (CCU) or carbon capture and storage (CCS) business. Many of the business models cited are well known, such as the US 45Q federal tax incentive, which today constitutes the primary incentive for carbon capture, utilization, and storage (CCUS) in the US. Other models, such as the European Union’s Emissions Trading Schemes (EU ETS), may be less familiar. Also included in this Insight are other business models, incentive schemes, and policy frameworks beyond the 45Q and ETS.

This Analyst Insight also summarizes the latest data drawn from the recently published Guidehouse Insights Carbon Capture, Utilization, and Storage Tracker 2Q23. The data in that Tracker shows around 488 CCUS projects of all types, stages, and regions, representing more than a gigaton's worth of project capacity. Only a fraction of the projects are commercially operational at present, and the viability of many projects, as well as the momentum of the entire industry, depends on the strength of the monetization that, over time, will render CCUS and CO₂ removal (CDR) projects profitable and investment worthy.

After business models, infrastructure and workforce readiness are two issues to watch closely, because they are critical components for the CCUS industry’s long-term success.