Explainer: What is Carbon Capture and Utilization?

This article has been updated.

Industrial production, while critical to economies, drives a large share of emissions. As countries and industrial sectors pursue net zero commitments, leaders are focused not on whether carbon management is necessary, but how it can best be done effectively.

Carbon Capture and Utilization (CCU) can play a key role in these efforts. If given strong public sector support, clear demand signals and innovative finance models, it could contribute to emissions abatement while also opening up new markets and strengthening industrial resilience.

Here’s more on CCU - what it is, how it can be scaled and what’s needed for impact.

CCU involves a variety of methods for capturing carbon dioxide (CO2) and using it either directly, without chemical alteration, or indirectly, through transformation into different products.

Emerging applications such as the production of sustainable fuels, chemicals and construction materials are rapidly gaining traction, while innovative start-ups are developing technologies for the conversion of CO2 into carbon-based materials such as carbon nanotubes and graphite.

CCU follows the 3 Rs of the Circular Carbon Economy (CCE) framework, with an emphasis on the latter two of reusing and recycling captured CO2:

1. Remove: This step aims to remove the amount of carbon entering the atmosphere in the first place through innovative ‘point-of-source’ carbon capture technologies.

2. Reuse: This involves capturing carbon dioxide (CO2) emissions and using them directly without chemically altering the carbon molecules. Examples include using CO2 for industrial processes like the carbonation of drinks.

3. Recycle: This is when captured CO2 is converted into value-added products or alternative energy sources through chemical processes. This includes the production of synthetic fuels, chemicals and materials from CO2. For instance, CO2 can be combined with hydrogen to create synthetic hydrocarbons for use in transportation or as feedstock for the chemical industry.

Some technologies may also effectively incorporate a fourth R: Reduce.

Research suggests that if fully deployed, approaches to reuse and recycle carbon could convert 27 gigatonnes of CO2 into products each year by 2050, unlocking a $4.4 trillion opportunity for sustainable economic practices

Forecasting utilization volumes is challenging, however, with projections varying based on different scenarios and assumptions, according to a new report from the World Economic Forum in partnership with Wood Mackenzie: Defossilizing Industry: Considerations for Scaling up Carbon Capture and Utilization Pathways The latest forecast from the Oil and Gas Climate Initiative says between 430 and 840 million tonnes per annum (Mtpa) of CO2 could be utilized by 2040.

Meanwhile, the pipeline of investments in CCU is very low, due to systemic market barriers currently facing the sector, with only around 21 Mtpa in development to 2040, according to the report.

The report identifies three main barriers faced by nascent CCU technologies:

1. Fragmented, inconsistent policy frameworks: This makes it challenging for first movers to see a reliable and significant market to support future scaling-up, deterring investment. Existing policies heavily favour carbon sequestration over utilization and can even create disincentives to invest in CCU.

2. CCU companies face “valleys of death”: These are characterized by long development timelines, high capital requirements and immature business models lacking well-defined routes to revenue. These factors create barriers to conventional early-stage investment forms, such as traditional venture capital.

3. Lack of cross-sectoral collaboration between CCU companies and incumbent industries: Partnerships can offer access to infrastructure, expertise and market channels to support the scaling-up of nascent CCU technologies. But the inherent complexity of testing small-scale, first-of-a-kind technical solutions within large, mature, industrial complexes can limit collaboration.

The report highlights recommendations for overcoming these barriers, including that policymakers take a "twin-track" approach to incentivizing CCU:

1. De-risking innovation and R&D to help drive performance improvements while enabling financiers and projects developers to become more familiar with CCU approaches.

2. Creating supportive and predictable market environments to enable promising CCU approaches to become competitive against incumbent production routes.

Partnership is key to change, and one recent initiative demonstrates what it can make possible. To accelerate decarbonization efforts globally, the Forum’s UpLink platform and Saudi Arabia’s Ministry of Energy and Ministry of Economy and Planning collaborated on the Carbon Capture and Utilization Challenge, part of the Saudi G20-endorsed Circular Carbon Economy framework.

In December 2024, 11 winners were selected from 315 entries – all early-stage start-ups utilizing CO2 to positively impact sectors ranging from construction to chemical manufacturing and transportation. The winners shared a prize of CHF300,000 to help scale their business ideas.

They include the US-based Carbon To Stone, which combines CO2 emissions from the air or factories with industrial waste such as cement dust to lock down carbon dioxide as carbonate rock. It's on track to remove more than 1 million tonnes of CO2 from the atmosphere every year by 2030.

Here are three more of the winners:

By engaging and investing in CCU solutions, policymakers and companies can not only contribute to climate change mitigation efforts but also position themselves as leaders in the transition towards a sustainable and low-carbon future.

UpLink, the World Economic Forum’s early-stage innovation initiative, is enabling and accelerating the purpose-driven entrepreneurs that are essential for a net-zero, nature-positive, and equitable future. To find out more and join the UpLink community, click here.