Carbon Capture and Trading: CCS Economics, CO2 Transport, and Market Development

Carbon capture, utilisation, and storage (CCUS) has transitioned from a marginal technology proposition to a central pillar of global decarbonisation strategy. As governments and corporations acknowledge that emissions reduction alone is insufficient to meet Paris Agreement targets, the capture and permanent sequestration of CO2 has gained urgency. For the energy trading community — particularly Swiss-based commodity firms — CCUS creates a new commodity chain: the capture, transport, and disposal of carbon dioxide, with emerging trading mechanisms, infrastructure investments, and risk management requirements that mirror traditional energy commodity markets.

Technology Overview

Carbon capture technologies fall into three broad categories:

Post-combustion capture: CO2 is separated from the flue gas of power plants or industrial facilities after fuel combustion. This is the most mature capture pathway, using chemical solvents (typically amine-based) to absorb CO2 from exhaust streams. Post-combustion capture can be retrofitted to existing installations, making it applicable to the current industrial and power generation fleet.

Pre-combustion capture: Fuel is converted into a synthesis gas (hydrogen and CO2) before combustion, allowing the CO2 to be separated at higher concentrations and pressures. This approach is used in integrated gasification combined cycle (IGCC) power plants and in hydrogen production from natural gas (blue hydrogen).

Oxy-fuel combustion: Fuel is burned in pure oxygen rather than air, producing a flue gas with a high CO2 concentration that simplifies capture. While technically promising, oxy-fuel combustion requires energy-intensive air separation and has seen limited commercial deployment.

Direct air capture (DAC): CO2 is captured directly from ambient air using chemical sorbents or solvents. DAC is the most energy-intensive capture pathway but has the advantage of being location-independent — plants can be sited near CO2 storage or renewable energy sources rather than near emission sources. Swiss company Climeworks, based in Zurich, is a global leader in DAC technology.

European CCUS Landscape

Europe is pursuing an ambitious CCUS agenda, driven by the recognition that certain industrial emissions (cement, steel, chemicals) are extremely difficult to abate through electrification or fuel switching alone:

North Sea storage: The UK, Norway, the Netherlands, and Denmark are developing large-scale CO2 storage capacity in depleted oil and gas reservoirs and saline aquifers beneath the North Sea. Norway’s Northern Lights project — a joint venture between Equinor, Shell, and TotalEnergies — is the most advanced, offering CO2 transport and storage as a commercial service.

Industrial clusters: CCUS projects are being developed around major industrial clusters, where multiple emitters can share capture and transport infrastructure. The Port of Rotterdam (Porthos project), Teesside (UK), and Antwerp are leading examples.

Cross-border CO2 transport: The London Protocol was amended in 2009 to permit cross-border transport of CO2 for geological storage, enabling countries without suitable storage geology to access storage capacity in other jurisdictions. This creates the foundation for an international CO2 transport and storage market.

EU policy support: The EU Innovation Fund, the Connecting Europe Facility, and national funding programmes provide financial support for CCUS projects. The EU’s Net-Zero Industry Act identifies CCUS as a strategic technology and sets a target of 50 million tonnes per annum of CO2 injection capacity by 2030.

CO2 as a Commodity

The emergence of CO2 transport and storage as a commercial service creates the foundation for CO2 commodity trading:

Transport: CO2 can be transported by pipeline (the most cost-effective method for large volumes over moderate distances), by ship (for cross-border and offshore transport), and by road or rail (for small volumes). The development of a CO2 pipeline network — analogous to the natural gas pipeline infrastructure — would enable hub-based trading of CO2 transport capacity.

Storage capacity: Geological CO2 storage capacity is unevenly distributed across Europe, with the North Sea region offering the most substantial and best-characterised capacity. Access to storage capacity may become a tradeable commodity, with storage operators offering injection services on a per-tonne basis.

Pricing: CO2 capture, transport, and storage costs vary widely depending on the source concentration, capture technology, transport distance, and storage geology. Current costs range from approximately EUR 50-100 per tonne for industrial post-combustion capture to EUR 400-800 per tonne for direct air capture. These costs are expected to decline with scale and technological development but will remain above the current EU ETS carbon price for most applications, necessitating policy support.

Trading mechanisms: Several market development initiatives are exploring the creation of tradeable CO2 removal credits, which would represent verified permanent carbon sequestration. These credits could be integrated into compliance carbon markets or traded in the voluntary carbon market, creating a revenue stream for CCUS project operators.

Swiss CCUS Ecosystem

Switzerland has developed a notable CCUS ecosystem despite its small size:

Climeworks: The Zurich-based DAC company has deployed commercial plants in Iceland (the Orca and Mammoth facilities, which store captured CO2 through mineralisation in basalt formations) and is planning additional facilities in Europe and North America. Climeworks’ technology represents a Swiss contribution to global carbon removal that is attracting significant corporate and government interest.

Research institutions: ETH Zurich and other Swiss universities are conducting leading research in capture chemistry, CO2 mineralisation, and storage monitoring. The Swiss Competence Centre for Energy Research (SCCER) has supported collaborative research across institutions.

Corporate demand: Swiss corporations, including Zurich Insurance, Swiss Re, and UBS, have been among the earliest and most significant purchasers of carbon removal credits, providing crucial early-stage revenue to support technology scale-up.

Trading opportunity: Swiss commodity trading houses are monitoring the development of CO2 commodity markets closely. The logistics, risk management, and market-making capabilities required for CO2 trading are directly transferable from existing energy commodity trading operations.

Integration with Energy Markets

CCUS intersects with energy markets in several important ways:

Blue hydrogen: CCS is the enabling technology for blue hydrogen production, which uses natural gas as a feedstock with carbon capture to reduce lifecycle emissions. The economics of blue hydrogen depend critically on both natural gas prices and CCS costs. For more on the hydrogen market, see our green hydrogen analysis.

Gas-fired power with CCS: Carbon capture applied to gas-fired power generation could enable dispatchable low-carbon electricity, complementing variable renewable generation from wind and solar.

Industrial decarbonisation: CCS enables continued operation of essential industrial facilities (cement, steel, chemicals) whilst meeting climate targets. The carbon cost imposed by the Swiss carbon tax and the EU ETS creates financial incentives for industrial CCS deployment.

Enhanced oil recovery (EOR): CO2 injection for enhanced oil recovery has been practised for decades, primarily in North America. While EOR provides a revenue stream that can offset CCS costs, the association with increased oil production creates sustainability concerns that limit its appeal in the European context.

Risk and Challenges

CCUS faces several significant challenges:

Cost: Capture costs remain high relative to carbon prices, requiring policy support to bridge the economic gap. The viability of CCUS depends on sustained carbon price increases, dedicated subsidies, or both.

Storage permanence: Ensuring that stored CO2 remains permanently sequestered requires robust monitoring, verification, and long-term liability frameworks. Regulatory uncertainty around long-term storage liability discourages private investment.

Public acceptance: CO2 transport and storage face public opposition in some jurisdictions, particularly regarding onshore storage and pipeline routing. Community engagement and transparent risk communication are essential.

Scale: Current global CCS capacity captures approximately 45 million tonnes of CO2 per annum — a small fraction of the gigatonne-scale capture required to meet climate targets. Scaling up by orders of magnitude requires unprecedented investment in capture facilities, transport infrastructure, and storage development.

Technology readiness: While post-combustion capture is commercially proven, DAC and certain industrial capture applications remain at earlier stages of deployment. Continued technology development and cost reduction are critical.

Outlook

CCUS is poised for significant expansion over the coming decade, driven by strengthening climate policy, corporate net-zero commitments, and dedicated public funding. The development of CO2 transport and storage infrastructure will create new commodity flows and trading opportunities that Swiss energy firms are well-positioned to capture.

Key milestones to watch include the commercial launch of Northern Lights (enabling third-party CO2 storage services), the scaling of DAC capacity beyond pilot stage, and the potential integration of carbon removal credits into compliance carbon markets. Each of these developments would expand the addressable market for CO2 commodity trading and create new intersections with existing energy and carbon markets.

Donovan Vanderbilt is a contributing editor at ZUG OIL, covering global energy commodity markets and Swiss trading hub dynamics for The Vanderbilt Portfolio AG, Zurich.