CARBON PRICING TO SUPPORT CCUS DEPLOYMENT, ICSC/337

Carbon capture, utilisation and storage (CCUS) covers a range of technologies including reducing carbon dioxide (CO₂) emissions from large industrial sources, removing existing CO₂ from the atmosphere and/or its ‘utilisation’ in various products and processes. Most Paris Agreement-aligned scenarios involve significant deployment of CCUS and CO₂ removals (CDR), which are considered necessary in both reducing emissions in hard-to-abate industries and neutralising any remaining emissions so as to meet net zero targets. Although CCUS has been widely considered as a key climate change mitigation technology for at least 20 years, it has yet to achieve the anticipated scale-up and investment flows needed. Alongside other forms of support, carbon pricing can play a crucial role in leveraging private finance into CCUS deployment. Its inclusion within a growing number of carbon pricing schemes such as emission trading schemes (ETSs) and carbon crediting schemes worldwide – for both compliance and voluntary purposes – can work with other policies to offer systematic price support that can help mobilise investment. This report provides an overview of the current state of play for carbon pricing to support CCUS and an outlook on how international, regional and national carbon market developments can further support technology deployment.