Driving Carbon Capture Deployment

By Will Sommer, Jeff Bennett, Kendyl Partridge, and Anna Cororaton

In its recently published Annual Energy Outlook 2025 (AEO2025), the US Energy Information Administration (EIA) introduced its new carbon capture, allocation, transportation, and sequestration module (CCATS), which models carbon capture in the coming decades. The CCATS module allocates projected supply of captured carbon dioxide (CO₂) across the energy system for either enhanced oil recovery (EOR) or geologic storage using a network representation of capture facilities, transshipment points, and sequestration sites.

 

In AEO2025, the EIA projected that CO₂ capture at electric power and industrial facilities will increase through the 2030s, primarily due to increased tax credit values. Captured emissions are forecasted to peak at 1.5% to 3.5% of energy emissions in the late 2030s.

The EIA considered laws and regulations in place as of December 2024 in most of its cases, which meant including tax credit values implemented under the 2022 Inflation Reduction Act (IRA). It’s important to note that the EIA did not include changes in the recent One Big Beautiful Bill Act (OBBBA), which essentially preserved tax credits for carbon capture but made them more generous in the case of utilization.

Under the IRA, developers could claim the tax credits, known as 45Q, for projects that begin construction before January 1, 2033, for up to 12 years once placed in service. The 12-year period will end between the late 2030s through the mid-2040s. The EIA projects that CO₂ capture will decrease as the tax credits expire through 2050 across all AEO2025 cases.

 

CO₂ Capture Rates Through 2050

Projected peak CO₂ capture amounts vary by AEO2025 case. In the Reference Case, CO₂ capture peaks at just under 71 MMmt in 2039, or about 2% of overall energy emissions. Projected peak captured emissions are lowest in the Alternative Electricity Case, at 56 MMmt in 2037, and highest in the High Oil Price Case, at 122 MMmt in 2039.

The Alternative Electricity Case has less carbon capture activity because it does not model Clean Air Act 111 regulations implemented in 2024, which effectively require carbon capture for coal and natural gas power plants. The EIA recently proposed to repeal this rule.

 

Historically, most CO₂ capture has occurred at ethanol and natural gas processing plants. The EIA forecasts that CO₂ capture at coal power plants, natural gas power plants, and hydrogen facilities will surpass these industries across many of the AEO2025 cases. In addition, the EIA projects that no bioenergy with carbon capture and storage is deployed in any of its cases, and CO₂ capture at cement facilities remains relatively small at just 1 MMmt to 2.5 MMmt in 2035.

 

CO₂ Sequestration

The EIA modeled CO₂ sequestered in saline storage. Saline storage involves deep underground formations containing saltwater. CO₂ can be injected into oil fields to increase output through EOR. The 45Q tax credit under the IRA was US$60 per tonne of CO₂ for EOR and US$85 per tonne for saline storage. The recently passed OBBBA increased the value of the credit for EOR to US$85 per metric ton, but the EIA did not include the new value in its analysis.

In all cases, EIA forecasts that captured CO₂ sent to saline storage will increase through the mid- to late-2030s. In the Reference Case, EIA projects CO₂ sequestered in saline storage will increase from essentially none in 2024 to 52 MMmt in 2040. Less CO₂ is sequestered in saline formations after 2041 as the 45Q tax credits expire because we do not model other sources of revenue.

EIA forecasts CO₂ sequestered for EOR sites will increase in the Reference Case from 12 MMmt of CO₂ in 2024 to 26 MMmt of CO₂ in 2044. The amount of CO₂ sequestered at EOR sites through the projection period stays relatively steady because revenue from increased oil production supports the projects even after 45Q tax credits expire.

 

Impact Of CO₂ Capture

CO₂ capture remains small relative to overall energy emissions across AEO2025 cases. EIA forecasts that for the electric power sector, gross emissions decline in all cases while CO₂ capture increases. Peak CO₂ capture in the electric power sector ranges from 2.8% to 15.6% of sector emissions, depending on the AEO2025 case. In the industrial sector, EIA projects that gross CO₂ emissions increase in most cases and captured CO₂ emissions remain low. Peak CO₂ capture ranges from 2.6% to 3.9% of industrial sector emissions in the EIA’s projections.

 

 

About The Authors

Will Sommer is a senior director analyst at Gartner. Jeff Bennett is an energy systems engineer at the Argonne National Laboratory. Kendyl Partridge is a systems planning engineer for Southern Company. Anna Cororaton is an economist and team lead at the EIA.