Shell’s 2025 Carbon Capture Strategy: Project Analysis and Investment Breakdown
Shell’s Commercial CCUS Projects: A Shift from Pilots to Infrastructure Hubs
Shell’s Carbon Capture, Utilization, and Storage (CCUS) strategy has matured from operating a single, controversial asset to deploying a global portfolio of large-scale infrastructure hubs and investing in emerging carbon removal technologies. This transition reflects a deliberate move to build a commercially viable carbon management business.
- Between 2021 and 2024, Shell’s public image in CCUS was largely defined by its operational Quest project in Canada. While it captured millions of tonnes of CO₂, it faced significant criticism over its net emissions and financial reliance on subsidies, with reports claiming an effective capture rate of only 48%. During this period, Shell laid the groundwork for future growth by forming key partnerships with ATCO EnPower for the Atlas Carbon Storage Hub and strengthening its technology alliance with Technip Energies.
- Since the start of 2025, Shell’s strategy has shifted to large-scale execution and technological diversification. The Northern Lights project in Norway, a joint venture with Equinor and TotalEnergies, began commercial operations in August 2025 and received a $714 million Final Investment Decision (FID) for a major expansion. The company also expanded its focus to emerging technologies with direct investments in Direct Air Capture (DAC) startups like Avnos and a commercial agreement with RepAir.
Shell’s CCUS Investment and Capital Allocation Analysis 2025
Table: Shell’s Key CCUS Investments and Capital Commitments
| Partner / Project | Time Frame | Details and Strategic Purpose | Source |
|---|---|---|---|
| Avnos | November 6, 2025 | Shell and Mitsubishi are investing up to $17 million to fund a pilot plant for Avnos’s hybrid DAC technology, which captures CO₂ and produces water. This venture investment is designed to de-risk a promising carbon removal technology. | Shell, Mitsubishi invest $17M in hybrid direct air capture … |
| Aramis CCS Project | April 25, 2025 | After Shell and TotalEnergies reduced their investment, the Dutch government committed $726 million (€639 million) to salvage the project. This event highlights the model’s heavy reliance on public funding for large-scale infrastructure. | Netherlands Commits $726 Million to Carbon Capture … |
| Northern Lights Phase 2 | March 27, 2025 | Shell, Equinor, and TotalEnergies committed $714 million (NOK 7.5 billion) for the Phase 2 expansion. The investment aims to increase CO₂ storage capacity from 1.5 million to 5 million tonnes per year by 2028. | Shell, Equinor, TotalEnergies to invest $714 million in … |
| Shell Low-Carbon Budget | June 2, 2025 | Shell reduced its annual low-carbon solutions budget to $3.5 billion from a previous high of $5.6 billion. This corporate-level decision affects the total capital available for CCUS and other transition technologies. | Carbon capture is struggling just as big projects start – C&EN |
| Polaris & Atlas Projects | June 26, 2024 | Shell announced the FID for these projects in Canada. The investment, part of a $10-$15 billion low-carbon plan, is supported by Canada’s federal CCUS Investment Tax Credit. | Shell to build carbon capture and storage projects in Canada |
| Avnos | July 13, 2023 | Shell Ventures participated in an $80 million funding round for Avnos, a startup developing hybrid DAC technology. This represents an early-stage bet on a novel carbon removal pathway. | Carbon Capture Startup Secures $80M from Shell … |
How Shell’s Partnership Strategy is Building a Global CCUS Network
Table: Shell’s Key CCUS Alliances and Joint Ventures
| Partner / Project | Time Frame | Details and Strategic Purpose | Source |
|---|---|---|---|
| Petroleum Development Oman (PDO) | October 2, 2025 | Shell and PDO initiated a joint study to explore CCUS opportunities in Oman. This partnership marks a strategic expansion of Shell’s carbon management business into the Middle East. | Shell and PDO team up for CCUS projects in Oman |
| Technip Energies | July 17, 2025 | Shell and Technip Energies formed a global alliance to deliver end-to-end CCUS projects. The partnership combines Shell’s CANSOLV capture technology with Technip’s project delivery expertise. | Technip Energies and Shell Catalysts & Technologies … |
| Mitsubishi, RepAir | January 22, 2025 | A collaboration on the Pelican project in Louisiana to deploy RepAir’s DAC technology. Shell and Mitsubishi are providing up to $3 million in a commercial agreement to validate the technology. | Shell & Mitsubishi: Revolutionising Climate Action with DAC |
| ATCO EnPower | June 26, 2024 | A 50/50 joint venture was formed to develop the Atlas Carbon Storage Hub in Alberta. This creates an open-access infrastructure asset designed to generate service revenue from third-party emitters. | Shell to build carbon capture and storage projects in Canada |
| ExxonMobil, Singapore Government | March 1, 2024 | Shell and ExxonMobil were selected to work with Singapore to advance a cross-border CCUS value chain. The S-Hub consortium aims to solve Singapore’s lack of domestic storage options. | A joint press release by the S-Hub consortium. |
| ONGC | December 13, 2022 | A Memorandum of Understanding was signed to study CCUS potential in India. The collaboration focuses on evaluating CO₂ storage sites and assessing opportunities in industrial areas. | Shell and ONGC to evaluate carbon capture, utilisation and … |
| ExxonMobil, CNOOC | June 27, 2022 | An MoU was signed to study a large-scale CCS hub in China’s Daya Bay Petrochemical Industrial Park. The project could capture up to 10 million metric tons of CO₂ per year. | ExxonMobil, CNOOC and Shell to pursue carbon capture … |
Shell’s Geographic Expansion: From Canada to Europe and the Middle East
Shell’s geographic focus for CCUS has expanded from a base of operations concentrated in Canada to include major infrastructure execution in Europe and new project development in the Middle East. This diversification spreads risk and positions Shell to capitalize on varying regional policy support and geological advantages.
- From 2021 to 2024, Shell’s most prominent CCUS activities were in Canada, with the operational Quest facility and the development of the Polaris and Atlas projects in Alberta. The company also initiated early-stage feasibility studies in Asia through MoUs in China and India, while the Northern Lights project in Norway was under development.
- The period from 2025 onward marks a significant pivot to Europe as a center for commercial execution. Norway became a key operational hub with the start of the Northern Lights project and its subsequent expansion FID. The Aramis project in the Netherlands moved forward with substantial government backing, further cementing the North Sea as a strategic CO₂ storage basin for Shell and its partners.
- In late 2025, Shell initiated a new strategic push into the Middle East by forming a partnership with Petroleum Development Oman (PDO). This joint study to explore CCUS opportunities in Oman signals an intent to establish a foothold in a new, resource-rich region for carbon management.
Technology Status: Shell’s Dual-Track Approach to CCUS Innovation
Shell is executing a dual-track technology strategy, deploying its mature, commercial-scale post-combustion capture systems for immediate decarbonization while simultaneously investing in next-generation Direct Air Capture technologies to build future capabilities.
- Between 2021 and 2024, Shell’s primary technology focus was the commercial deployment of its proven amine-based systems, such as the CANSOLV CO₂ Capture System. This technology was central to its global alliance with Technip Energies. The initial investment in Avnos in 2023 was an early indicator of its interest in diversifying into emerging carbon removal solutions.
- Starting in 2025, this dual strategy has become more defined and action-oriented. Shell is scaling its mature technology through its partners, while its venture investments in DAC have progressed to pilot-stage funding with the $17 million commitment to an Avnos pilot plant and the $3 million commercial agreement for the RepAir Pelican project. Furthermore, Shell revealed it is developing its own proprietary solid sorbent DAC technology, showing a long-term commitment to owning intellectual property in the carbon removal sector.
SWOT Analysis: Shell’s Strategic Position in the CCUS Market
Table: SWOT Analysis of Shell’s CCUS Strategy
| SWOT Category | 2021 – 2024 | 2024 – 2025 | What Changed / Validated |
|---|---|---|---|
| Strengths | Operational experience from the Quest project and ownership of proprietary technology like CANSOLV. Established partnerships with key engineering (Technip) and infrastructure (ATCO) firms. | The joint venture model is validated through the successful FID and operational start of the Northern Lights project. The technology portfolio expanded into DAC through investments in Avnos and RepAir. | Shell validated its ability to move beyond a single, criticized project to lead a multi-partner, large-scale infrastructure model that is commercially operational. |
| Weaknesses | Significant reputational risk from Quest’s reported 48% net capture rate and allegations of selling “phantom” emissions credits, undermining the technology’s credibility. | The strategy’s high dependency on government subsidies was exposed when the Aramis project required a $726 million government bailout after Shell reduced its investment. The corporate low-carbon budget was also reduced. | The financial fragility of the CCUS business model was confirmed, demonstrating that even for a major like Shell, these projects are not yet viable without substantial public funding. |
| Opportunities | Conceptualized a new business line offering carbon storage as a service, exemplified by the planned Atlas Hub, leveraging its geological and subsurface expertise. | Began monetizing the carbon-as-a-service model with the launch of the Northern Lights third-party storage service. Positioned to lead a $64.55 billion global CCUS market. | The opportunity transitioned from a strategic concept to a tangible, revenue-generating business with the launch of the world’s first open-access, cross-border CO₂ storage service. |
| Threats | Persistent threat of being labeled as “greenwashing” due to the poor net performance of the Quest project, which critics argued was used to prolong fossil fuel operations. | Political and regulatory risk became a demonstrated reality. The reliance on public funds like the EU Innovation Fund grant (€131 million) and national bailouts exposes the project pipeline to shifts in policy. | The threat of policy dependence materialized, proving that the economic success of Shell’s CCUS strategy is inextricably linked to the stability and generosity of government support. |
Future Outlook: Execution and Validation Are Key for Shell’s CCUS Ambitions
Shell’s success in the CCUS sector now hinges on its ability to execute its large-scale infrastructure projects in Europe and Canada on time and on budget, while proving that its investments in Direct Air Capture can become technically and economically viable.
- The successful commissioning of the Northern Lights Phase 2 expansion by its H2 2028 target is the most critical milestone to watch. Achieving the planned 5 million tonnes per year capacity will validate the scalability of the open-access storage model and anchor Shell’s position in the European market.
- The operational outcomes of the Avnos and RepAir DAC pilots will be a crucial indicator of Shell’s future direction. Successful technical validation could trigger larger investments and a more pronounced strategic pivot toward the carbon removal market, which is necessary for addressing diffuse emissions and achieving net-zero targets.
- Final investment decisions for other large-scale hubs, such as the Polaris project in Alberta, will serve as a key test for the effectiveness of regional incentive programs like Canada’s CCUS Investment Tax Credit. A positive FID would solidify Canada as a core growth region for Shell’s global carbon management business.
- The future of the entire CCUS industry, including Shell’s project pipeline, is linked to the evolution of global climate policy. Observers should monitor updates to the 45Q tax credit in the U.S. and carbon pricing mechanisms in the EU, as these will directly influence the economic feasibility and investment pace for future projects.
Frequently Asked Questions
What is the primary shift in Shell’s CCUS strategy since the beginning of 2025?
Since 2025, Shell’s strategy has shifted from focusing on a single operational project like Quest in Canada to executing a global portfolio of large-scale infrastructure hubs, such as Northern Lights in Norway. The company has also diversified its technology focus by making direct investments in emerging Direct Air Capture (DAC) startups like Avnos and RepAir.
How is Shell funding its CCUS projects, and what are the financial risks?
Shell is funding its projects through a combination of corporate capital and joint venture partnerships. For example, Shell and its partners committed $714 million to expand the Northern Lights project. However, the strategy faces significant financial risk due to its heavy reliance on government subsidies. This was highlighted when the Dutch government had to commit $726 million to the Aramis project after Shell and a partner reduced their investment.
What are the main types of carbon capture technology Shell is investing in?
Shell is pursuing a dual-track technology strategy. It uses its mature, proprietary CANSOLV technology for large-scale, post-combustion capture in projects with partners like Technip Energies. Simultaneously, it is investing in next-generation Direct Air Capture (DAC) technologies through venture funding and commercial agreements with startups like Avnos and RepAir to build future capabilities in carbon removal.
What is the Northern Lights project and why is it significant for Shell?
Northern Lights is a joint venture in Norway between Shell, Equinor, and TotalEnergies. It is significant because it is the world’s first open-access, cross-border CO₂ storage service, marking a shift from a project-specific model to a carbon-storage-as-a-service business. Its successful launch and expansion are crucial for validating Shell’s new infrastructure hub strategy in Europe.
Where is Shell expanding its CCUS operations geographically?
While Canada (with projects like Polaris and Atlas) remains a core region, Shell’s focus has significantly expanded. Europe has become a center for execution with the operational Northern Lights project in Norway and the Aramis project in the Netherlands. In late 2025, Shell also initiated a strategic push into the Middle East through a partnership with Petroleum Development Oman (PDO) to explore CCUS opportunities.
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