Is Europe’s CCS pipeline running out of steam?

The number of new carbon capture and storage (CCS) project announcements in Europe has fallen sharply in the last three years, according to research from the renewables-leaning Institute for Energy Economics and Financial Analysis (IEEFA).

It found 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,” it states.

Europe’s pipeline of potential CCS projects significantly increased between 2018 and 2023, when 317 projects supporting capture, transport and storage were announced.

However 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.

The dip coincides with a significant rise in the price of carbon across Europe at the time, namely through the EU (ETS), which doubled to €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.

EU-UK cross-border in part because the legal recognition of transport and storage of captured CO₂ is lacking, according to European trade body, The Carbon Capture and Storage Association.

Of the 2025 cancelled projects cited by IEEFA, 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 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.

“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,” it concludes.

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