According to new analysis from Wood Mackenzie, carbon capture at European power plants can exceed $300 per ton, while China reports costs as low as $30-40 per ton, underscoring a major competitive imbalance in the race to decarbonize electricity generation.
Despite the power sector emitting 13.5 billion tons of CO2 annually (around one-third of global energy emissions) only two commercial-scale CCUS projects operate worldwide.
Over half of all announced capacity for power plants has been delayed or cancelled in the past decade.
Uneven Economics and Emerging Challenges
Chinese state-owned enterprises reportedly complete CCUS projects twice as fast as their Western counterparts, with capital costs up to 70% lower per ton captured.
With five coal-based CCUS projects now under construction, China’s rapid progress could reshape industrial competitiveness as the EU’s Carbon Border Adjustment Mechanism takes effect in 2026.
By contrast, most European projects remain uneconomic without major state intervention. The UK’s Dispatchable Power Agreement (DPA) model, applied to BP’s NZT Power project, is the sole regional exception, offering pre-tax returns of about 20.8% but requiring public support equivalent to $427 per ton of CO2.
AI Power Demand and the Capacity Factor Trap
As AI and data centres drive electricity demand, oil majors like ExxonMobil and Chevron promote CCUS as a “green” power option. Yet costs of US$60-95 per MWh make the economics challenging, even after applying US 45Q tax credits.
Compounding this, as renewables force gas plants into flexible, part-time roles, CCUS efficiency and profitability plummet, especially for gas turbines with low CO2 concentrations.
Relevant: ExxonMobil To Transport & Store CO2 From The AtmosClear BECCS Project In Louisiana
By contrast, bioenergy with carbon capture and storage (BECCS) is emerging as a more viable path. Projects delivering negative emissions and carbon credits priced at $150-200 per ton are attracting growing investor interest from firms like Microsoft.
Wood Mackenzie projects that capture costs could fall 50-60% by 2050, but warns that without faster deployment, current economics will limit CCUS to just 3-4% of global thermal capacity by mid-century.
