Public Sector Finance Mechanisms

There is robust policy support for CCUS deployment around the world. Below are brief descriptions of some of the marquee policies various jurisdictions have implemented.

United States

The U.S. federal government recognizes that carbon capture, utilization, and storage (CCUS) can simultaneously reduce carbon dioxide emissions from industrial activity while supporting U.S. energy security and global competitiveness. Federal law currently includes tax incentives to support eligible CCUS projects. The U.S. government provides a production tax credit under Section 45Q for each metric ton (1,000 kg) of qualified CO₂ that is captured and either securely stored or put to qualifying use, subject to statutory and IRS requirements.

Section 45Q1

	Point Source	Direct Air Capture (DAC)
Sequestration	$85/ton	$180/ton
Utilization	$85/ton	$180/ton

The Section 45Q tax credit is available for 12 years after a qualifying project is placed in service, subject to applicable requirements.

Section 45Q has been updated through federal legislation over time, including changes to credit values and eligibility criteria. These updates have affected how a range of industries evaluate CCUS projects and financing options based on their operational needs, compliance requirements, and project economics.

Since its inception in 2008, Section 45Q has been one of the primary federal policies influencing CCUS project development, particularly for hard-to-abate industries such as cement, steel, oil and gas refineries, and power generation, where emissions reductions can be challenging using other approaches alone. In many cases, CCUS may also help maintain the viability of energy-producing assets and support U.S. energy security and global competitiveness.

Canada

Canada provides its Investment Tax Credit for CCUS, which applies from 2022-2030 before phasing down and expiring in 2040. The credit covers 60% of DAC equipment, 50% for other carbon capture equipment, and 37.5% for carbon transportation, storage, and utilization infrastructure. This significantly reduces capital expenditure for new projects.

Alberta’s government supplements the Canadian federal incentives through its Technology, Innovation and Emissions Reduction (TIER) program, which generates emissions‑reduction credits and supports sequestration‑related offsets. Grants from the Alberta Carbon Capture Incentive Program (ACCIP) can also cover 12% of eligible capital costs for new CCUS projects – in addition to the federal investment tax credit.

Additionally, a key pillar of Saskatchewan’s comprehensive approach to climate change is the Output-Based Performance Standards (OBPS) Program, which requires regulated facilities to meet emission reduction performance standards. Updated in 2023, the OBPS Program incentivizes use of CCUS by providing credits for emitters deploying CCUS at their facilities.

European Union

The European Innovation Fund, financed by revenues from the EU Emissions Trading System (ETS), provides risk-sharing support of up to 60% of additional capital and operating costs for flagship CCUS and related decarbonization projects across member states, making it one of the largest public clean‑technology funds globally.

The EU also supports CCUS infrastructure through the Projects of Common Interest (PCI) framework, which accelerates permitting and provides access to Connecting Europe Facility (CEF) funding for cross‑border CO₂ transport and storage networks.

United Kingdom

The U.K.’s CCUS Cluster Sequencing Programme supports the development of geographically concentrated industrial hubs that pair emitters with shared transport and storage (T&S) infrastructure. The government has committed up to £20 billion to early CCUS deployment, including the £1 billion CCUS Infrastructure Fund, established to provide capital support for T&S networks and industrial capture projects, and has already selected the first two clusters for long‑term financial support.

Public funding is complemented by bespoke business models, such as regulated asset base (RAB)-style models for T&S and Contracts for Difference (CfD)‑like revenue support for capture projects, designed to de‑risk private investment and address first‑mover disadvantages.

Altogether, the U.K. aims to deploy four CCUS clusters by 2030 capable of capturing 20-30 MtCO₂ per year, making CCUS a central pillar of its net‑zero strategy and industrial decarbonization agenda.

Australia

Australia supports CCUS through a combination of carbon crediting and direct grant mechanisms.

Under the Emissions Reduction Fund CCS Method, the Clean Energy Regulator issues Australian Carbon Credit Units (ACCUs) for registered capture-and-permanent-storage projects over a 25-year period, which project developers may sell either to the government or on secondary markets, providing a recurring revenue stream for verified CO₂ abatement.

In addition, Western Australia’s Carbon Innovation Grants Program can cover up to 50% of eligible costs for feasibility studies and up to 25% of costs for pilot and capital projects. These funds are constrained by funding ceilings of A$500,000 and A$1.5 million respectively.

Denmark

Denmark offers 20‑year contracts awarded via tenders, which allows the government to subsidize companies that capture and permanently store at least 400,000 tonnes of CO₂ per year, beginning in 2026. Aid is capped at €55 million annually per project. This policy is designed to cover the gap between total project costs and expected returns, ensuring that developers can recover investments despite volatile carbon prices or uncertain offtake markets. Funded by Denmark’s green carbon tax, this mechanism illustrates a robust operating‑expenditure support structure designed to anchor industrial-scale CCUS in the national energy system.

1 These figures assume compliance with the prevailing wage and apprenticeship requirements that enable the section 45Q “bonus credit.” Credit values, eligibility, and compliance requirements may vary based on project-specific factors and evolving federal guidance.