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CCUS for thermal power 2026: cost reality, retrofits, and what works

Carbon Capture, Utilisation and Storage (CCUS) for thermal power has 40+ Mt CO2/year operational capacity globally by Q1 2026 — mostly natural gas. Coal plant CCUS retrofits remain economically marginal at $80-150/tonne CO2 captured. Hub-and-cluster models in US Gulf Coast + UK + Norway making industrial CCUS viable. India CCUS pilots emerging.

By Meera Iyer··3 min read

In 50 words: Carbon Capture, Utilisation and Storage (CCUS) for thermal power has 40+ Mt CO2/year operational capacity globally by Q1 2026 — mostly natural gas. Coal plant CCUS retrofits remain economically marginal at $80-150/tonne. Hub-and-cluster models in US Gulf Coast + UK + Norway making industrial CCUS viable. India CCUS pilots emerging.

What CCUS does

Carbon Capture, Utilisation and Storage (CCUS) captures CO2 from industrial flue gas or directly from air, then either:

  • Uses the CO2 industrially (e.g., synthetic fuels, building materials)
  • Permanently stores it underground (saline aquifers, depleted oil/gas fields)

For thermal power generation (coal + gas), CCUS is technically feasible but economically challenging.

Current operational CCUS

Global operational CCUS facilities (Q1 2026):

| Sector | Operational capacity | |---|---| | Natural gas processing | ~25 Mt CO2/year | | Power generation | ~5 Mt CO2/year | | Industry (cement, steel, refining) | ~8 Mt CO2/year | | Direct Air Capture | ~0.5 Mt CO2/year | | Total | ~40 Mt CO2/year |

For context: global anthropogenic CO2 emissions are ~37 billion tonnes/year. CCUS captures less than 0.1%.

Power sector CCUS — limited deployment

Operational power-sector CCUS plants:

  • Boundary Dam Unit 3 (Saskatchewan, Canada): 110 MW coal + 1 Mt/year capture, operational since 2014
  • Petra Nova (Texas, US): 240 MW slipstream coal capture, paused 2020, restarted 2024
  • Sinopec Qilu (China): industrial CO2 reused for EOR

That's essentially it for operational power-sector CCUS at scale globally.

Under construction:

  • Project Aspen (UK): integrated with power generation
  • Drax BECCS (UK): bioenergy with CCS — pilot stage
  • Multiple Chinese coal-CCUS demonstrators

Why power-sector CCUS struggles economically

Coal-plant CCUS retrofit economics:

  • Capex: $1,500-2,500/kW additional
  • Operating energy penalty: 20-30% (CCUS consumes power)
  • Operating cost: $40-80/MWh additional
  • All-in cost per tonne CO2 captured: $80-150 (sometimes higher)

Vs alternatives:

  • Replace coal with renewable + BESS: cheaper per tonne CO2 avoided
  • Buy carbon credits: cheaper currently
  • Switch to gas: cheaper transition

Result: power-sector CCUS gets built only where:

  • Strong policy mandate (UK)
  • Local CO2 utilisation opportunity (oil recovery)
  • Hub model amortises infrastructure (multiple emitters share storage)

Hub-and-cluster model success

Where CCUS is working well, it's industrial CCUS with shared CO2 transport + storage infrastructure:

UK East Coast Cluster (Teesside)

  • Multiple industrial emitters connected to shared pipeline
  • North Sea storage in depleted gas fields
  • Operational mid-decade target
  • Multiple FID decisions in 2025-2026

Northern Lights (Norway)

  • Pan-European CO2 storage service
  • Onshore liquefaction + ship transport to North Sea
  • Operational 2024-2025

US Gulf Coast clusters

  • Massive cluster opportunity (Houston ship channel emitters + Gulf storage)
  • ExxonMobil, Chevron, BP, others investing
  • 45Q tax credit ($85/tonne for stored CO2) makes economics work

Australia: multiple cluster initiatives

Japan: nascent

Direct Air Capture (DAC)

Separate category from power-sector CCUS:

  • Climeworks (Switzerland): Orca (4,000 tonnes/year, 2021) + Mammoth (36,000 tonnes/year, 2024)
  • Carbon Engineering (now Occidental subsidiary): 1 Mt/year facility under construction in Texas
  • 1PointFive (Occidental subsidiary): multiple DAC facilities

DAC cost currently $400-800/tonne CO2. Long-term target $100-200/tonne.

Indian context

India CCUS development emerging:

  • Tata Steel (Kalinganagar): pilot for steel CCUS
  • ONGC: enhanced oil recovery using captured CO2
  • IOCL: refining hydrogen via CCUS
  • NTPC: coal-CCUS demonstrators
  • Strategic interest in industrial CCUS for green hydrogen production

India CCUS policy framework still developing. No commercial-scale projects yet.

What developers should know

For CCUS + renewable energy project developers:

  • Power-sector CCUS remains marginal vs replacement-with-renewable
  • Industrial CCUS (cement, steel, chemicals) more economic where hub infrastructure available
  • DAC for premium voluntary carbon market increasingly viable
  • Blue hydrogen + CCUS competes with green hydrogen in some markets

What to watch next

Industrial cluster CCUS FIDs in UK East Coast + US Gulf Coast through 2026-2027 will determine whether hub-and-cluster CCUS becomes mainstream. If successful at announced economics, similar models replicate in Europe + Asia. If not, CCUS remains niche.

Researched and drafted with AI assistance; reviewed and edited by the named author within 24 hours of draft.

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