CCUS Permitting Bottleneck, Exxon Mobil’s 53 M Ton Permit, a $4 B CF Industries Project, and 10+ Offtake Deals (2022-2026)

CCUS Project Development, Exxon Mobil Confronts the Class VI Permitting Bottleneck

The U.S. carbon capture industry is defined by a fundamental conflict between robust federal financial incentives and a severe regulatory bottleneck in sequestration infrastructure. While the Section 45 Q tax credit makes a wide range of Carbon Capture, Utilization, and Storage (CCUS) projects economically attractive, the slow pace of obtaining Class VI well permits for permanent CO 2 storage is delaying project timelines and threatening the sector’s growth trajectory. This dynamic forces developers to navigate a complex environment where project viability depends as much on regulatory navigation as on technology and finance.

45 Q Incentive Rush (2022-2025)

The period following the 2022 passage of the Inflation Reduction Act (IRA) triggered a surge in project announcements across the United States. The enhanced 45 Q credits, offering $85 per ton for point-source capture and $180 per ton for Direct Air Capture (DAC), created a strong business case for industrial decarbonization. This incentive structure, largely preserved by the “One Big Beautiful Bill Act” (OBBBA) in 2025, spurred companies to advance plans for large-scale facilities, with the expectation that regulatory frameworks would support this rapid expansion.

Class VI Permitting Reality Check (2026)

By 2026, the initial optimism confronted the reality of the Class VI well permitting process. The Environmental Protection Agency (EPA) faced a significant backlog, with review times extending for years. While some states like Texas and North Dakota gained primacy, allowing them to manage their own permitting, the overall pace remained a critical constraint. This bottleneck is now the primary factor determining which of the many announced projects will proceed to construction, shifting the competitive advantage to companies with advanced regulatory strategies and access to permitted storage sites.

$4 B CF Industries Project and DOE DAC Hub Funding Volatility

Capital allocation in the CCUS sector reflects the industry’s core tension, with significant private investment in commercially ready projects contrasting with the policy-driven uncertainty surrounding nascent technologies like Direct Air Capture. While major industrial players are moving forward with multibillion-dollar point-source capture facilities, federal support for DAC hubs has experienced significant volatility, creating an uneven investment environment.

• Recent Major Carbon Removal Offtake Agreements

  Agreement Date⇅	Buyer⇅	Market Segment⇅	Supplier / Project⇅	Volume (tonnes of CO2 removal)⇅	Duration⇅	Source⇅
  Aug 5, 2026	Microsoft	Wastewater Carbon Removal	CREW Carbon		Long-term	Microsoft Backs Wastewater Carbon Removal With CREW … ↗
  Mar 24, 2026	Microsoft	Direct Air Capture	Liferaft	1000000	10 years	Liferaft Announces a 10-Year, 1 Million Carbon Removal … ↗
  Jul 9, 2025	Microsoft	Waste-to-Energy with CCS	Gaia (Denmark)	2950000		Microsoft signs offtake deal for waste-to-energy facility CCS … ↗

  iBlank cells indicate the underlying source did not report a value for that column.
  

  US Direct Air Capture Project Implementation Stalls by 2026
  Only 3 of 31 US direct air capture (DAC) projects announced between 2021 and 2025 are under construction by 2026. This 10% conversion rate highlights a significant implementation bottleneck despite increasing interest in carbon removal technologies.

  (Source: GAO — via Carbon capture and storage: Opportunities for federal action to support domestic energy production and industrial innovation – Clean Air Task Force)

  Point-Source Capture Secures Major Investment:

  The most significant capital deployments are targeting industrial facilities where carbon capture technology is mature. A primary example is the Blue Point One project, a joint venture involving CF Industries, JERA, and Mitsui & Co., which broke ground in August 2026. This facility represents a capital investment of approximately $4 billion and is designed to be the world’s largest low-carbon ammonia plant, leveraging the 45 Q tax credit.

• DAC Hubs Face Policy Headwinds: The Department of Energy’s (DOE) Regional DAC Hubs program, backed by the Bipartisan Infrastructure Law, saw funding rescinded in late 2025, casting doubt on the future of selected projects. Although funding was reportedly restored in April 2026, this period of uncertainty has delayed progress and undermined investor confidence in the program’s long-term stability.
• IRS Provides Administrative Certainty: To support project financing, the Treasury and IRS have issued guidance to streamline 45 Q credit verification. Notice 2026-01 and the subsequent Notice 2026-50 established and extended a safe harbor for verifying secure geologic storage, providing developers with much-needed administrative clarity while they navigate the lengthy Class VI permitting process.

Table: Key CCUS Project Investments and Funding Allocations (2025-2026)

Microsoft Signs 3 Carbon Removal Offtake Agreements (2025-2026)

Corporate offtake agreements have emerged as a critical demand-side driver for the carbon removal market, providing long-term revenue certainty that is essential for developers to secure project financing. Technology companies, led by Microsoft, are signing multi-year deals for high-durability carbon dioxide removal (CDR) credits, signaling strong confidence in the sector and establishing a commercial model for both point-source and direct air capture projects.

Corporate Offtake as a Bankable Demand Signal

Voluntary carbon removal purchases from corporations like Microsoft and TD Bank are proving instrumental for early-stage carbon capture companies. These agreements function as a de-facto subsidy and a bankable revenue stream, enabling developers to attract the capital needed for first-of-a-kind commercial deployments. The focus is on technology-based removal pathways that offer permanent sequestration, aligning with corporate net-zero goals.

Key Deals from Microsoft in 2026

In 2026, Microsoft continued its active role in building the CDR market through several key agreements. In August 2026, the company signed a deal with CREW Carbon to purchase removal credits generated from capturing CO 2 in wastewater treatment facilities. Earlier, in March 2026, Microsoft committed to a 10-year, 1 million-ton carbon removal offtake agreement with Liferaft, further validating the commercial potential of emerging CDR technologies.

Table: Notable Carbon Removal Offtake Agreements

US State-Level Primacy, Texas Accelerates CCUS Permitting While Louisiana Pauses

The geographic distribution of CCUS in 2026 is being dictated by which states can offer a clear and efficient regulatory pathway for CO 2 sequestration. States that have secured primacy from the EPA to permit their own Class VI injection wells are becoming the epicenters of project development, while others face significant delays. This regulatory divergence is creating a fragmented map of CCUS activity, with Texas emerging as a clear leader.

• Texas Leads on Permitting: After being granted Class VI primacy in late 2025, Texas has moved quickly to approve sequestration projects. In September 2026, the Railroad Commission of Texas approved permits for Exxon Mobil‘s Rose CCS facility, which has a planned capacity to store up to 53 million metric tons of CO 2. This rapid approval demonstrates the competitive advantage states with primacy hold in attracting CCUS investment.
• Louisiana Hits Pause: In contrast, Louisiana, another state with significant geologic storage potential, announced a pause on Class VI permitting in October 2025. This move, intended to allow regulators to refine their processes, has introduced uncertainty for the numerous projects planned in the state, including those associated with the Port of South Louisiana.
• Federal Permitting Remains Slow: For states without primacy, projects must go through the federal EPA process, which remains slow. In April 2026, the EPA issued a Class VI permit to Pure Field Carbon for a project in Kansas, but such approvals are infrequent and the overall backlog of applications remains large. The disparity between state-led and federally-led permitting is a major factor shaping the top 10 US carbon capture projects.

Technology Maturity: Point-Source Capture Reaches Commercial Scale While DAC Faces Execution Risk

The U.S. carbon capture market in 2026 shows a clear divergence in technological maturity. Post-combustion capture for industrial point sources is a commercially proven technology now being deployed at scale, driven by the straightforward economics of the 45 Q tax credit. In contrast, Direct Air Capture remains in a more nascent stage, with its path to commercialization complicated by high costs and policy-related execution risks, despite its higher 45 Q credit value.

• Point-Source Capture Scales Up: The technology for capturing CO 2 from industrial flue gas (e.g., from ammonia, ethanol, and cement plants) is well-established. Projects like CF Industries’ Blue Point One ammonia complex and Chevron‘s various initiatives demonstrate that the primary challenge is no longer the capture technology itself, but rather the development of corresponding sequestration infrastructure.
• Direct Air Capture’s Uncertain Path: DAC technologies, like those developed by Climeworks, Carbon Engineering, and Heirloom, are less mature and more expensive. The DOE’s DAC Hubs program was designed to help de-risk these technologies and bring down costs, but the funding volatility in 2025-2026 has slowed momentum and highlighted the technology’s dependence on sustained federal support.
• Modular DAC as an Alternative: Some companies, such as Air Capture, are pursuing a modular approach to DAC. This strategy aims to reduce upfront capital costs and deployment timelines, potentially offering a more resilient commercialization path that is less dependent on large, centralized federal programs.

45Q Tax Credit Insufficient to Cover Most Industrial Carbon Capture Costs
Carbon capture costs for nearly all industrial applications, ranging from Cement (NOAK $105/ton, FOAK $126/ton) to Natural Gas Boiler (NOAK $175/ton, FOAK $227/ton), significantly exceed the 45Q tax credit value (visually ~$85/ton). This cost gap persists across both ‘First of a Kind’ (FOAK) and ‘Nth of a Kind” (NOAK) projects.

Cost Gap Threatens Broad CCS Adoption Across Hard-to-Abate Sectors
The persistent cost disparity highlights a critical barrier to widespread CCS adoption: the 45Q tax credit, even with enhancements, fails to fully de-risk and incentivize capture for hard-to-abate sectors like steel, cement, and power. This gap slows deployment and necessitates additional financial mechanisms or significant cost reduction innovations to unlock industrial decarbonization at scale.

(Source: Louisiana's Carbon Capture Bet: Opportunity, Risk, and the Cost of Slowing Down)

SWOT Analysis for the US CCUS Market in 2026

The US CCUS market in 2026 is characterized by strong financial incentives counteracted by significant regulatory and logistical hurdles. The analysis below outlines the key internal and external factors shaping the industry’s ability to scale, highlighting the critical role of permitting reform and stable policy in realizing the potential of the 45 Q tax credit.

Table: SWOT Analysis for the US CCUS Market (2022-2026)

Scenario Modeling: EPA Permitting Capacity vs. State Primacy Momentum

The trajectory of the U.S. CCUS industry through the end of the decade hinges almost entirely on resolving the Class VI well permitting bottleneck. The critical variable is whether the federal government can increase its permitting capacity or if more states will successfully obtain primacy, creating decentralized and potentially more efficient regulatory pathways. The outcome will determine if the vast project pipeline announced since 2022 translates into operational assets or a series of costly delays and cancellations.

• Acceleration Scenario: If the EPA receives increased funding and staffing to process its backlog, and if key states like Louisiana and Illinois successfully obtain primacy by 2027, the CCUS project pipeline could accelerate significantly. A key signal to watch is the approval rate of primacy applications currently under review by the EPA and any new federal legislation aimed at streamlining the permitting process.
• Stagnation Scenario: If the federal permitting process remains slow and no new states are granted primacy, the development of CCUS projects will likely stall, particularly in regions without established sequestration hubs. Under this scenario, capital will flow only to projects in states with primacy, like Texas, fragmenting the national market. Signals to monitor include project cancellation announcements and companies shifting investment from the U.S. to other regions with more favorable regulatory environments.

The questions your competitors are already asking

This report covers one angle of the US carbon capture market’s development. The questions that matter most depend on your work.

• Status of carbon capture projects in Louisiana
• Which companies have active carbon storage permits in Texas
• Cost to capture carbon in cement and steel plants
• Who is buying carbon removal credits besides Microsoft

This report does not answer these. Enki Brief Pro does.

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