Europe’s potential carbon capture and storage project pipeline is losing steam

The number of new carbon capture and storage (CCS) project announcements in Europe has fallen sharply in the last three years. A string of cancellations in 2025 underscores the economic and technical hurdles that CCS projects face in reaching final investment decision.

IEEFA expects to see continued weakness in new project announcements and more cancellations. This raises questions about whether CCS can deliver at the scale European decarbonisation targets require.

Europe’s pipeline of potential CCS projects significantly increased between 2018 and 2023, when 317 projects supporting capture, transport and storage were announced. EU policies such as the European Climate Law — which makes climate neutrality by 2050 legally binding — and Fit for 55 supported this boom in activity. The policies advocate for increased use of CCS to support EU climate neutrality. 

This was coupled with a significant rise in the price of carbon across Europe at the time, namely through the EU Emissions Trading System (ETS), which moved from €5–10 in 2017 to peaks above €100 in 2023. This made purchasing ETS emission allowances increasingly expensive and provided a clear economic incentive for polluters to avoid these rising costs with CCS. 

In addition, a series of CCS public funding and state support mechanisms were announced from 2018, including the EU Innovation Fund, Important Projects of Common European Interest and Carbon Contracts for Difference, as well as national subsidy schemes in the UK, Norway, the Netherlands and Denmark. 

The introduction of hub-and-spoke industrial clusters from early 2020 removed early CCS project barriers by enabling carbon capture projects to share pipelines and storage hubs. Around this time, CCS became central to blue hydrogen production strategies, and regulatory clarity started to improve. 

The penny drops

More recently there has been a marked decline in new European CCS project announcements, which peaked at 100 in 2021 and fell to 24 in 2025. While project numbers are a gauge of market activity, the proposed capture volumes are the most important indicator as they highlight the potential carbon reduction across Europe. Proposed capture volumes from newly announced projects fell from a peak of 52 million tonnes of carbon dioxide (MtCO₂) in 2021 to 7MtCO₂ in 2025. Cumulative proposed capture volumes were 201MtCO₂ from more than 400 potential projects as of 2025.

Combined EU and UK capture and storage targets are 80MtCO₂ by 2030 and 522MtCO₂ by 2050. While there are theoretically sufficient projects in the pipeline to meet the 2030 target, the reality is that projects take many years to progress from announcement to operation given the economic, technical and legislative hurdles. 

The volume of carbon capture capacity cancelled in Europe in 2025 exceeded that reaching final investment decision: 5.4MtCO₂ of capture-related projects were cancelled, while only 4.2MtCO₂ of projects received investment approval.

Of the 2025 cancelled projects, blue hydrogen represented the largest share of capture volume at 71%, followed by a refining project at 20%. The balance was from a waste-to-energy plant. 

Four hydrogen projects were cancelled, most notably the BP-owned H2Teesside Phase 1 & 2 in the UK, which accounted for 2MtCO₂, and the Equinor-backed H2M Eemshaven project in the Netherlands, with 1.8MtCO₂. The companies behind these projects put the cancellations down to weak hydrogen demand, site planning challenges and funding uncertainties. 

Plans for carbon capture at the UK’s Prax Lindsey refining project collapsed as the parent company went into administration. Similar plans at Denmark’s Amager Resource Centre energy-from-waste project were also cancelled due to the withdrawal of E.ON, the project’s key build, own and operate partner. 

While the official statements on the 2025 project cancellations do not reference economic and technical difficulties, IEEFA suspects that these fundamental challenges of CCS projects formed part of the decision-making process. 

The technology readiness level of capture processes and operation across the European CCS project pipeline ranges from five (large prototype) to nine (early adoption) out of 11 (mature) across different industry sectors. As such, all projects remain technically challenging and at risk of delays, partial capture rates relative to 90–95% benchmarks, or outright capture failure. 

Any deviation from project schedule or capture rates will increase costs, which are already high. CO₂ capture, transport and storage costs can range from $133 per tonne for biofuel projects to $244 per tonne for chemical plant operations. This is considerably higher than current EU and UK ETS prices of $91 and $52y respectively. 

The gap in the cost of installing and operating CCS relative to ETS prices means polluters have little incentive to deploy CCS. Bridging this gap will require state subsidy, burdening governments at a time of increased fiscal tightening. 

Given the technical and economic challenges facing CCS as a decarbonisation option, a recovery in Europe’s CCS pipeline looks unlikely any time soon.