Equinor DAC Initiatives, $714 M Northern Lights Expansion, 1 Captura Pilot, and 1 Paused Investment (2024 to 2026)

DAC Commercialization Risks, Equinor’s Paused Investment Signals Market Friction

Equinor’s 2025-2026 strategy exposes a fundamental market-wide conflict between the urgent need for large-scale carbon removal infrastructure and the slow development of commercial models to support it, culminating in a significant pause on new investments. This dynamic reveals the core challenge facing the entire carbon capture industry: the immense capital required for physical assets is running ahead of the market and policy frameworks needed to guarantee a return on that investment.

Equinor’s Dual-Pronged Strategy

The company pursued a distinct dual strategy, balancing foundational infrastructure with speculative technology development. On one hand, Equinor committed significant capital to scaling its commercially-oriented Northern Lights CO₂ transport and storage project. On the other, it nurtured a portfolio of early-stage, potentially cost-disruptive Carbon Dioxide Removal (CDR) technologies to secure future options.

• In March 2025, this infrastructure-first approach accelerated when Equinor and its partners, Shell and Total Energies, sanctioned a $714 million (NOK 7.5 billion) Phase 2 expansion for Northern Lights, designed to increase CO₂ storage capacity from 1.5 million tonnes per year (Mtpa) to 5 Mtpa.
• Concurrently, the company advanced its proprietary ENCORE Direct Air Capture (DAC) system through a UK-funded project and expanded into a novel removal pathway by partnering with Captura for a Direct Ocean Capture (DOC) pilot.
• This approach allowed Equinor to secure a first-mover position in Europe’s carbon management market while simultaneously hedging against technological obsolescence by investing in next-generation removal methods.

The 2026 Market Reality Check

This forward momentum met significant commercial headwinds, forcing a strategic recalibration. The decision to halt new projects underscored a broader industry sentiment shift in 2025, where initial enthusiasm confronted the economic realities of a nascent market.

• In February 2026, Equinor announced a pause on new Carbon Capture and Storage (CCS) investments, citing that the market was developing “slower than expected.”
• This move reflects a wider “realism phase” for the DAC and CCS sectors, where high operational costs, which currently range from $400 to $600 per tonne of CO₂, and a lack of bankable offtake agreements stalled multiple large-scale projects globally, including some from major players like GE Vernova.
• The pause indicates that while foundational projects with strong government backing and co-funding like Northern Lights can proceed, purely commercial ventures remain financially unviable without more robust carbon pricing or mature credit markets.

DAC Purchase Volume Sees Sharp Decline into 2025
DAC purchase volume peaked at 1M in 2023, then sharply declined to 841.1K in 2024, with a projected further drop to 158K by H1 2025, indicating a significant short-term market contraction or re-evaluation.

(Source: CDR.fyi — via Equinor Carbon Capture 2025, $714M FID with Shell)

£4.9 M Grant, Equinor’s Cautious Capital Allocation for New Technology

Equinor’s investments in 2025-2026 show a pattern of using targeted, smaller-scale funding and venture capital to nurture a portfolio of next-generation carbon removal technologies, while shelving larger, undefined capital outlays amidst market uncertainty. This capital discipline reflects a pragmatic approach to managing risk in a sector where technology and market viability are still being proven.

Targeted Funding for Technology De-risking

Rather than making a single large bet, Equinor spread its capital across different technologies and maturity levels. This venture-style approach aims to identify cost-effective pathways to scalable carbon removal without over-exposing the company to any single technology’s failure.

• Equinor secured a £4, 992, 408.30 grant from the UK government’s innovation program to fund Phase 2 development of its proprietary ENCORE DAC system, which aims to drive down costs to below $200 per tonne.
• Through its venture arm, the company made a strategic investment in Rep Air Carbon Capture in September 2025 to gain exposure to a novel electrochemical DAC technology that promises greater energy efficiency than current solvent-based systems.
• In another move to diversify its portfolio, Equinor acquired a 45% share in two US-based lithium project companies in 2025, signaling a broader strategic interest in the critical minerals supply chain that underpins the energy transition.

The Strategic Pause on New CCS Projects

The most significant financial signal from Equinor during this period was not an investment but a deliberate halt in spending. This decision provides a clear indicator of the commercial barriers facing the CCS industry.

• The announcement in February 2026 to pause new investments in CCS projects was explicitly linked to weak market signals and unfavorable project economics.
• This move highlights the sector’s heavy dependence on government policy to bridge the profitability gap, with projects relying on incentives like the $180/ton 45 Q tax credit in the U.S. and the 60% CCUS Investment Tax Credit in Canada to become financially viable.
• The decision suggests that future large-scale capital deployment from Equinor and its peers will be contingent on the materialization of a stable, high-price carbon market, not just technological readiness.

Table: Equinor’s Key Carbon Management Investments and Strategic Shifts (2025-2026)

Equinor’s 4 Key Carbon Removal Partnerships (2024 to 2026)

Equinor is constructing a carbon management ecosystem through strategic partnerships that address different parts of the value chain, from technology development and infrastructure sharing to market creation. These collaborations are essential for sharing the high capital costs of development, accessing novel technologies, and building demand for carbon removal services.

Infrastructure and Technology Alliances

Equinor’s partnerships focus on building the physical and technological foundations of the carbon management industry. By collaborating with peers and technology pioneers, the company mitigates risk and accelerates development timelines.

• The cornerstone partnership is the Northern Lights joint venture with Shell and Total Energies, which is creating the world’s first open-access CO₂ transport and storage infrastructure to serve industrial emitters across Europe.
• A pivotal technology partnership was solidified with Captura to pilot Direct Ocean Capture, leveraging Equinor’s decades of offshore operational expertise. The collaboration includes a 1, 000-ton-per-year pilot in Hawaii and plans for another in Norway.
• In March 2025, Equinor partnered with Poland’s ORLEN to collaborate on CCS technology and deployment, expanding its network of industrial partners seeking to decarbonize their operations using the Northern Lights infrastructure.

Building the Demand-Side Market

Beyond building supply, Equinor is actively working with partners to create the commercial demand needed to make carbon removal projects bankable. These agreements are critical for establishing market confidence and price signals.

• To help create a market for high-quality carbon removal credits, Equinor signed a 10-year agreement in September 2024 to purchase 330, 000 tonnes of CDR credits from Ørsted’s Asnæs Power Station bioenergy CCS project in Denmark.
• In September 2025, it formed a strategic partnership with Microsoft to advance the development of the carbon capture value chain, connecting a major corporate buyer of carbon removal with a leading infrastructure provider.

Table: Equinor’s Strategic Carbon Management Partnerships (2024-2025)

SWOT Analysis, Equinor’s DAC Strategy and Market Exposure

Equinor’s strengths in infrastructure development and offshore operations position it as a leader in the carbon management sector, but its strategy remains highly exposed to the slow maturation of carbon markets and policy frameworks. This external threat was validated by the company’s own strategic investment pause in early 2026, highlighting the fragile economics of the emerging industry.

Table: SWOT Analysis for Equinor’s Carbon Management Initiatives

Equinor’s Next Move, 1 Critical Signal for 2026 CCS Investment

The primary indicator for the future of Equinor’s broader carbon management strategy is whether it will reverse its February 2026 pause on new CCS investments. This decision hinges almost entirely on the emergence of bankable, long-term commercial offtake agreements for CO₂ storage and removal credits.

If Market Signals Strengthen, Watch This

A reversal of the investment pause would signal renewed confidence in the commercial viability of carbon management. This would be driven by concrete market evidence rather than projections or policy promises.

• If Equinor sees a rapid filling of capacity for Northern Lights Phase 2 with firm, multi-year contracts from industrial emitters, it will validate the business model and likely trigger a resumption of investment in new CCS hubs.
• Watch for announcements of additional high-volume CO₂ offtake agreements that go beyond the initial Ørsted deal. The key will be securing contracts from hard-to-abate sectors like cement and waste-to-energy, or from developers of blue hydrogen.
• Positive performance data from the ENCORE and Captura pilots demonstrating cost reductions toward the sub-$200/tonne target would also de-risk future investments by providing a pathway to a proprietary, lower-cost CO₂ source.

If Market Stagnation Continues, This Could Happen

If commercial momentum does not accelerate, Equinor will likely maintain its cautious capital stance. The focus would shift from expansion to optimization and R&D.

• If offtake agreements remain scarce and voluntary carbon credit prices fail to rise significantly, the investment pause will almost certainly extend, and Equinor may pivot capital toward more mature energy transition businesses like renewables.
• In this scenario, Equinor would continue to operate Northern Lights as a strategic, utility-like asset but would halt the development of new, more speculative CCS hubs and proprietary DAC facilities.
• The company’s low-carbon efforts would then concentrate on its venture portfolio and small-scale technology pilots, effectively waiting for a more definitive shift in policy or market economics before committing further major capital.

The questions your competitors are already asking

This report covers one angle of Equinor’s carbon capture commercial strategy. The questions that matter most depend on your work.

• Bankable carbon capture offtake agreements
• Major oil companies new carbon capture investments
• Direct ocean capture pilot project results
• Cost per ton for new carbon removal projects

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