Is CCS too expensive?
Hamish Wilson, CEO of BluEnergy, writes…
Many commentators argue that CCS is too expensive and that there are lower-cost ways of achieving net zero. This paper compares the carbon abatement costs of supporting solar PV and wind into the market in the 2010s as a benchmark against which to compare today's CCS costs. We then compare the fully built-up carbon abatement cost of wind power against sequestering an equivalent amount of CO2 from an ammonia plant. The costs of CCS compare very favourably. Abated gas power (i.e. a CCGT power station fitted with CCS) is directly comparable to offshore wind in carbon abatement cost terms. On this basis, CCS is very clearly not too expensive — it is equivalent to the cost of the current renewable energy portfolio.
The challenge for CCS is how to price it in the market. There is not yet an equivalent of a long-term power price against which to raise capital. Until there is scale, CCS will remain a challenge — despite being demonstrably lower cost.
Carbon Abatement Cost: Renewables Subsidies, the ETS, and CCS
1. Purpose and method
I have reviewed the implied cost of carbon abatement (£ or $ per tonne of CO2) for a series of policy support mechanisms, starting with the UK's earliest renewable electricity subsidies and working forward to a like-for-like comparison between new-build wind and point-source CCS at an ammonia plant. Figures are indicative, back-of-envelope calculations rather than official published abatement-cost statistics, since no single government publication puts these schemes on a common basis. The method used throughout, unless stated otherwise, is:
abatement cost (£/tCO2) = net subsidy premium over the wholesale/reference price (£/MWh) ÷ carbon intensity of the generation or process displaced (tCO2/MWh or per tonne of product)
All figures should be read as indicative of scale and relative ranking, not precise to the pound or dollar. Key assumptions are flagged at each step.
2. Original subsidy costs
2.1 Solar PV Feed-in Tariff (launched April 2010, ≤4kW systems)
● Generation tariff: 43.3p/kWh (£433/MWh)
● Wholesale power price at the time: ~4.5p/kWh (£45/MWh)
● Net subsidy premium: ~38.8p/kWh (£388/MWh)
● Grid carbon intensity, 2010: ~0.45–0.5 tCO2/MWh average (or ~0.35–0.4 tCO2/MWh if solar is assumed to displace marginal gas rather than the average grid mix)
Implied abatement cost: roughly £780–£1,050 per tonne of CO2.
This is the figure behind the heavy criticism the original solar FIT attracted from the National Audit Office and others — it was designed as a deployment/industry-building subsidy rather than a cost-effective abatement tool, and the tariff was cut by roughly 50% within about a year of launch once this became apparent. However, it did stimulate the market for domestic PV in the UK.
2.2 First CfD auction — offshore wind (Allocation Round 1, 2015)
● Strike prices awarded: £119.89/MWh (2015/16 delivery) and £114.39/MWh (2016/17) — e.g. East Anglia One, Neart na Gaoithe
● Wholesale reference price, mid-2010s: ~£45–50/MWh
● Net subsidy premium: ~£65–75/MWh
● Grid/marginal carbon intensity, mid-2010s: ~0.35–0.4 tCO2/MWh
Implied abatement cost: roughly £170–£210 per tonne of CO2.
Even in its first, most expensive round, CfD offshore wind was already 4–6x cheaper per tonne abated than the original solar FIT — despite a similar or higher headline £/MWh price — because offshore wind's much higher capacity factor delivers far more abated carbon per pound of subsidy.
2.3 Summary table
Scheme
Headline subsidy
Implied abatement cost
Solar PV FIT (2010, ≤4kW)
43.3p/kWh generation tariff
~£780–1,050 /tCO2
CfD offshore wind, Round 1 (2015)
£114–120/MWh strike price
~£170–210 /tCO2
We can observe that PV and wind were supported into the market at effective carbon prices well in excess of the current ETS price.
2.4 Cost to the UK Government
If one takes a slightly different view and considers the cost to the UK taxpayer per tonne of carbon dioxide abated over, say, the first two years of operation, the following table results:
Spend, first 2 years
CO2 abated
£/tCO2
Solar FIT
£152m (solid)
~210,000–270,000t (solid)
~£560–720
CfD offshore wind
~£150–350m (estimated)
~700,000–1,300,000t (estimated)
~£190–270
These figures compare directly with the funds the Government is now investing to support the nascent CCS industry in the UK. The Government has committed £21.7bn over 25 years (i.e. roughly £860m per annum) to capture 8.5 million tonnes of CO2 per annum. Depending on how the ramp-up in capacity is treated, this equates to roughly £120–170 per tonne of CO2 — a carbon abatement cost that compares very favourably with the initial support given to wind and solar.
Two caveats are worth noting on this CCS figure. First, it reflects only the confirmed £21.7bn funding; DESNZ has separately recognised up to £34bn of contingent liability against these first-of-a-kind projects, which — if included — would raise the effective cost substantially, into the £250–450/tCO2 range. Second, the figure is necessarily prospective: Track-1 is not expected to be operational until around 2028, so unlike the wind and solar figures above, which are drawn from metered generation and actual payments, the CCS cost is a forecast against nameplate capacity rather than a demonstrated outcome. Both points argue for treating the £120–170/tCO2 figure as an optimistic-but-plausible case rather than a settled one — though even the higher, contingent-liability-inclusive range remains within striking distance of the historic renewables figures above.
3. What about today — wind vs CCS carbon abatement costs
At the single-turbine-array level, the current bare CfD strike price is a plant-level cost; it excludes the cost the wider system incurs to accommodate intermittent generation — backup capacity, balancing, curtailment, and constraint payments. A fair comparison to a dispatchable technology (like CCS-gas) needs to add this back.
3.1 Current system-cost evidence (GB)
● Balancing/constraint costs: £1.9bn in 2024/25 (71% of total balancing costs, up from 44% in 2022/23), driven mainly by curtailing Scottish wind and paying gas plants to replace it
● Wind-specific curtailment + replacement cost: £1.46bn in 2025 (up from £1.23bn in 2024) — ~£380m paying wind to switch off, ~£1.08bn paying gas to switch on
● Capacity Market backup payments: £27–63/kW/yr recently for de-rated capacity — needed disproportionately because wind's capacity credit is only ~10–25% of nameplate
● GB wind output: ~80–90 TWh/year — allocating curtailment/balancing costs across this gives a rough £18–25/MWh adder; including a share of capacity market cost brings a reasonable estimate to ~£30–50/MWh on top of the strike price
3.2 Reworked abatement cost for current offshore wind
Plant-only (CfD strike price)
System-adjusted
Offshore wind cost (~2024/25, AR7 ~£91/MWh)
£91/MWh
~£120–140/MWh
Less wholesale reference (~£70/MWh)
£21/MWh net premium
£50–70/MWh net premium
÷ marginal displaced carbon (gas CCGT, ~0.35 tCO2/MWh)
~£60/tCO2
~£150–200/tCO2
The honest, system-inclusive abatement cost for offshore wind today is probably 2.5–3x higher than the bare CfD number suggests — a material correction.
On a like-for-like basis, therefore, the fully built-up cost of wind (£150–200/tCO2) sits close to the £120–170/tCO2 implied by the UK's CCS support. It is worth noting that the CCS figure is a cluster-wide average across HyNet and East Coast, blending cheaper industrial capture (cement, energy-from-waste) with the costlier Net Zero Teesside power project; the power-only component of CCS is therefore likely to sit toward the upper end of, or above, this range, rather than at its midpoint. Even allowing for that, the two technologies land in the same broad territory — a materially different conclusion from the naive comparison against bare CfD strike prices, and the central point this paper set out to demonstrate.
4. A US comparison
4.1 The credit
Section 45Q, as most recently amended by the One Big Beautiful Bill Act, pays $85 per metric ton of qualified carbon oxide for point-source capture (irrespective of storage or use route) and $180/tonne for direct air capture. Prior to this change, the rate was $85/tonne for saline storage and $60/tonne for enhanced oil recovery (EOR).
4.2 Capture cost depends heavily on source concentration
Source
CO2 concentration
Typical capture cost
Ethanol fermentation, ammonia/fertilizer
~95–99% pure
$10–30/tonne
Natural gas processing
High purity
~$15–25/tonne
Coal power flue gas
~10–15% CO2
$40–90/tonne
Gas power flue gas
~4–8% CO2
$60–120/tonne
$85/tonne comfortably clears the ethanol and fertilizer cases with margin left for transport, storage, and a PE-grade commercial return — which is where the commercial projects actually are today (e.g. Summit Carbon Solutions, ammonia plants across Iowa/Nebraska). For those, the credit level is not the constraint.
The market price achievable determines which parts of the CCS value chain are commercially viable. At $85/tonne, the power sector is not commercial in the US and is not attracting investment on that basis alone — nor will it, until the price on offer is increased or supplemented with other revenue. This is not a contradiction of the UK comparison above: the UK's Track-1 support is a bespoke, negotiated cost-of-service arrangement set project-by-project, not a flat rate like 45Q, which is precisely why it can fund power-sector CCS (Net Zero Teesside) where the US's flat $85/tonne credit cannot. The lesson from the US is not that power CCS is inherently uneconomic, but that it needs a support mechanism calibrated to its actual cost — exactly what the UK has provided and the US, so far, has not.
This illustrates that in a market-driven approach, where the price is set competitively, CCS delivers a commercial return for specific emitters at carbon abatement costs substantially lower than the current subsidy-driven regime adopted in the UK for renewables. For industrial point-source capture in particular, CCS is a markedly lower-cost way of abating carbon than renewable electricity has historically been.
4.3 The real bottleneck in the US: EPA Class VI permitting
● As of August 2025, EPA had issued only 11 final Class VI well permits federally, against 232 pending applications across 63 projects
● EPA's own target timeline is 24 months from administrative completeness to permit; actual timelines often stretch to 3–5 years
● Primacy states move faster: North Dakota and Wyoming have collectively issued 17 permits, with North Dakota averaging ~9 months from application to final permit
This supports the claim that, for concentrated-stream industrial CCS (ethanol, ammonia), the current constraint is regulatory throughput rather than the level of the credit. This is an important lesson for the UK and Europe. Regulatory stagnation is severely limiting the growth of CCS in the US and has the very real potential for doing the same in the UK and Europe.
5. Direct comparison: 1 Mtpa ammonia CCS vs. an equivalent new wind array
5.1 Setting up the comparison
Ammonia CCS: 1 Mtpa captured at ≤$84/tonne (45Q ceiling) → ≤$84M/year support cost for 1,000,000 tCO2/yr abated. At ~$1.30:£1, this is approximately £65/tonne.
Wind equivalent: to abate the same 1 Mtpa by displacing grid generation (marginal gas CCGT, ~0.35 tCO2/MWh):
● MWh needed: 1,000,000 ÷ 0.35 ≈ 2.86 TWh/year
● At a modern offshore wind capacity factor of ~45%: capacity required = 2.86TWh ÷ (8,760h × 0.45) ≈ ~725 MW — roughly the size of a single large offshore wind farm (comparable to East Anglia One)
It is worth pausing here to reflect on energy density and the social footprint of CCS: the capture equipment for an ammonia plant sits within the plant's existing footprint, compared with the land or seabed area required for an equivalent-output, grid-scale wind array (or an onshore wind farm of similar output).
5.2 Cost per tonne, two ways
Ammonia CCS (45Q)
Offshore wind, plant-only
Offshore wind, system-inclusive
£/tCO2
~£65
~£60
~£150–200
Basis
Tax credit value
Bare CfD premium over wholesale
+ intermittency/balancing/backup adder
5.3 Which wins?
On a narrow, plant-level basis: roughly a toss-up (~£60–65/tonne either way) — genuinely too close to call given the uncertainty in both estimates.
On a system-inclusive basis: ammonia CCS wins clearly, by roughly 2–3x. This reflects a structural asymmetry: point-source capture on an existing, already-dispatchable industrial process adds essentially zero system integration cost — no curtailment, no extra backup capacity, no transmission congestion, no balancing burden. Wind, however low its per-MWh strike price falls, structurally imposes real system costs simply by being intermittent, and consistency requires counting that cost — with no equivalent penalty to add back for the CCS case.
6. Bottom line
● The earliest UK renewables subsidies (solar FIT) were an order of magnitude more expensive per tonne abated than either the current UK ETS price or DESNZ's own long-run carbon value projections, and considerably exceed the current cost of UK CCS support.
● The first CfD offshore wind round was far closer to fair value, and today's system-adjusted offshore wind cost (~£150–200/tCO2) sits in the same broad range as the carbon abatement cost implied by the UK's CCS support (~£120–170/tCO2, before allowing for contingent liabilities not yet drawn upon).
● In the US, 45Q at $85/tonne has made industrial point-source CCS (ethanol, ammonia/fertilizer) genuinely commercial, with EPA permitting — not economics — the binding constraint. Power-sector CCS remains the costlier case in the US at that flat rate, which is why the UK has instead used bespoke, negotiated support for its power-sector CCS project rather than a flat per-tonne credit.
● A direct, present-day comparison of new-build wind against ammonia-plant CCS for equivalent abatement is close on a plant-only basis but favours CCS once wind's system and intermittency costs are fairly included.
● None of this requires CCS to be perfect: the UK figures are prospective rather than proven, and rest on confirmed funding that excludes a separately-recognised £34bn contingent liability. But even allowing for that, CCS's carbon abatement cost compares favourably with the historic cost of building the UK's renewables fleet — the argument does not need to be overstated to hold.
Sources: Ofgem FIT tariff tables; UK CfD Allocation Round 1–7 results (LCCC/DESNZ); DESNZ "Traded carbon values used for modelling purposes" (2023–2025 editions); DESNZ/BEIS "Valuation of greenhouse gas emissions for policy appraisal" (2021); NESO Annual/Winter Balancing Costs Reports; UK Capacity Market auction results; Carbon Brief and Windpower Monthly reporting on CfD auctions; IRS/GAO summaries of Section 45Q; IEA and IISD analysis of CCS capture costs by source; EPA UIC Class VI permit tracker and state primacy reporting; CCC Carbon Budget analysis; House of Commons Public Accounts Committee report on the CCUS programme (contingent liabilities). Figures are indicative estimates derived by the author from these sources using the method in Section 1, not official published abatement-cost statistics.
