Regulation and Policy Support for Carbon Dioxide Utilization

 

 

CCUS stands for carbon capture, utilization, and storage. It is one of many solutions being scaled up to reach global net-zero targets, deployed in tandem with electrification/renewable power. Most new CCUS capacity under construction focuses on permanent geological storage of CO₂, but emerging carbon dioxide utilization pathways can provide alternative economics. IDTechEx's "Carbon Dioxide Utilization 2026-2036" report analyses many CO₂U products and business models, including the role played by regulation and policy in scaling up carbon dioxide utilization.

 

 

Most governments focus more on geological storage from carbon capture instead of carbon dioxide utilization. This is because permanent geological storage can currently address much larger volumes of captured CO₂. However, not all countries overlook the potential of CO₂ as a valuable raw material that can build a circular economy. The United States' 45Q tax credit is a key example. For CO₂ captured from point sources or direct air capture, CO₂U credits (typically worth $85/tonne of CO₂) can be obtained for each tonne of CO₂ reduced compared to the baseline fossil fuel scenario. In 2025, the Trump administration's "One Big Beautiful Bill" made CO₂U credits of equal in value to those for dedicated geological storage.

 

 

Across all CO₂U products, CO₂-derived concrete can uniquely benefit from further government policies. This is because it is both a form of carbon dioxide utilization AND permanent geological storage. The CO₂ mineralization reaction to form CO₂-derived concrete produces extremely stable metal carbonates that can lock CO₂ away for thousands of years. For example, under the EU ETS, carbon pricing does not have to be paid if the CO₂ is permanently stored. Likewise, for Canada's CCUS ITC (investment tax credit), the only eligible form of CO₂U is the use of captured carbon in producing concrete.

 

 

 

Any decarbonization policy can indirectly stimulate CO₂U. This is because one of the key value propositions for carbon dioxide utilization is a reduced carbon footprint compared to the fossil fuel status quo. CO₂U products can even be net-negative if they are long-lived and the CO₂ is sourced biogenically or directly from the atmosphere. Therefore, the EU ETS and CBAM, which covers both cement and chemicals, does indirectly support the business case for CO₂-derived chemicals and CO₂U concrete.

 

 

 

An e-fuel (also referred to as an RFNBO - Renewable Fuels of Non-Biological Origin) is made from green hydrogen. By combining this green hydrogen with captured CO₂, e-fuels such as kerosene (jet fuel) and diesel can be made. As explored in IDTechEx's "Sustainable Biofuels & E-Fuels Market 2026-2036" report, while e-fuels are far more expensive than HEFA or other biofuel pathways, they will be needed in large volumes to reach global net-zero by 2050 targets in the transportation sector. Therefore, regulatory support to enable e-fuels to scale up is already solidifying.

 

In the European Union, the ReFuelEU Aviation Regulation has set a minimum supply mandate for Sustainable Aviation Fuels (SAF) in Europe, starting with 2% in 2025 and increasing to 70% in 2050. Crucially, there is a sub-mandate for RFNBO, that starts in 2030. It is estimated this could create an initial demand for ~1 million tonnes of e-kerosene (made from captured CO₂ and green hydrogen) in the EU alone. The picture is similar in the maritime sector, with the EU's FuelEU Maritime regulation also having a dedicated RFNBO sub-mandate that incentives CO₂-derived methanol.

 

But it's not just the EU betting big on e-fuels. China is already a global juggernaut for green hydrogen, with continued focus on electrolyzers and demand-side industrial applications (such as green ammonia and e-methanol) reaffirmed in China's recent 15^th 5-year plan. Many large-scale e-methanol plants are currently being constructed in China. The build out of China's green hydrogen economy will support many CO₂-derived chemical and fuel applications.

 

 

 

According to IDTechEx's "Carbon Dioxide Utilization 2026-2036" report, global carbon dioxide utilization market revenue will increase from US$14 billion in 2025 to US$69 billion in 2036 for applications including enhanced oil recovery, fuels, chemicals and concrete. However, this growth is not being driven by policy alone. Already, some CO₂U applications offer improved economics or properties, meaning environmental benefits are just an extra bonus. Other CO₂U applications are profiting from voluntary willingness to pay the green premium through carbon credits. Therefore, while policy has a crucial role to play in accelerating the long-term growth of CO₂U globally, it is far from the only business case for carbon dioxide utilization.

 

For more information on this report, including downloadable sample pages, please visit www.IDTechEx.com/CO2U, or for the full portfolio of decarbonization-related research available from IDTechEx, see www.IDTechEx.com/Research/Decarbonization.