Carbon capture has a 50-year record of failure. Why are governments throwing billions of dollars at it?

Despite 50 years of development and an estimated USD 83 billion in investments since the 1990s, carbon capture has failed to make a dent in carbon emissions. Carbon capture projects consistently fail, overspend, or underperform. 

In the United States, where most carbon capture projects operate with the help of major federal subsidies, 80% of projects fail due to technical issues, over-expenditure, and a lack of financial investment returns. Even if carbon capture functioned as planned, the projects currently operating globally would only capture 0.1% of global emissions. However, many of these projects not only consistently operate below capacity but are predominantly used to boost oil and gas production through enhanced oil recovery (EOR).

Despite this, a tsunami of new carbon capture projects are underway, undermining the imperative to justly and urgently phase out fossil fuels. This new wave is only made possible with hundreds of billions of dollars of public money offered by governments through policies announced since 2020. Last week we released a briefing that exposes how governments, primarily in North America and Europe, are continuing to throw away taxpayer dollars to support the fossil fuel industry’s pursuit of the most expensive and least effective so-called solution to carbon pollution.

In the past 40 years, nearly USD 30 billion of public money has been spent on carbon capture and fossil hydrogen globally. Five governments spent 95% of that. In descending order, these are the United States (USD 12 billion), Norway (USD 6 billion), Canada (USD 3.8 billion), the European Union (USD 3.6 billion), and the Netherlands (USD 2.6 billion).

The United States and Canada have spent over USD 4 billion subsidizing carbon capture for enhanced oil recovery (EOR). This uses public money to pay oil companies to produce more oil. When including an estimate of forgone revenue from the 45Q tax credit, the United States has likely spent at least USD 3 billion subsidizing EOR.

Globally, governments have spent USD 4.2 billion on projects that plan to produce hydrogen from fossil fuels using carbon capture. Much more has been committed in announced policies. This is a significant subsidy for a fossil fuel product that is replaceable with renewable energy.

This historical public spending on carbon capture and hydrogen from fossil fuels pales in comparison to the amount of public money recently made available to spend in the coming decade. Our policy tracker estimates that between USD 114 billion and USD 237 billion in available public money has been announced since 2020 to support carbon capture or hydrogen. This surge in financial support from governments worldwide threatens to further entrench fossil fuels in our energy system at precisely the time that they should be phased out. 

Carbon capture subsidies are breaking promises to end fossil fuel subsidies. These subsidies will prolong fossil fuel extraction and enhance the industry’s profits, setting back progress made in recent years to eliminate public finance for a highly profitable sector that is primarily responsible for the climate crisis we are in.

If you would like to read more, check out our briefing: Funding Failure: Carbon Capture and Fossil Hydrogen Subsidies Exposed.