Shell’s Carbon Capture Strategy 2025: A Pivot to Commercial Scale Projects

Shell’s Commercial CCS Projects: Shifting from Pilots to Profitable Industrial Hubs in 2025

Shell has decisively shifted its Carbon Capture and Storage (CCS) strategy from developing standalone projects to building integrated, large-scale industrial hubs, prioritizing ventures with clear commercial viability and government support.

• Between 2021 and 2024, Shell’s activities focused on laying the groundwork through collaborations and proving operational concepts. This included signing a Memorandum of Understanding with Keyera in March 2022 to explore low-carbon projects in Alberta and leveraging the operational success of its foundational Quest CCS facility, which was capturing over 1 million tonnes of CO₂ annually.
• Starting in 2024 and accelerating in 2025, Shell’s “commercial realism” approach led to a clear prioritization of CCS, evidenced by the final investment decision for the Polaris CCS project in June 2024 and the start of CO₂ injection at the Northern Lights project in August 2025. This focus was sharpened by the cancellation of a major 820,000 metric tons/year biofuels project in Rotterdam due to high costs, redirecting strategic focus toward more profitable, incentive-backed technologies like CCS.
• The adoption of a hub model is now central to this strategy, moving beyond capturing its own emissions to offering CO₂ transport and storage as a service. Key examples include the Atlas Carbon Storage Hub joint venture with ATCO EnPower in Canada, the multi-partner Northern Lights project in Norway, and the S-Hub consortium with ExxonMobil in Singapore, which targets capturing 2.5 million tonnes/year.

Analyzing Shell’s CCS Investment: Capital Discipline and Strategic Allocations

Shell’s investment patterns reveal a disciplined allocation of its $10-$15 billion low-carbon budget (2023-2025), with a clear and growing preference for CCS projects that benefit from direct government incentives and align with its core engineering strengths. While the overall annual low-carbon spending has been reduced, targeted investments in CCS infrastructure have increased significantly.

Table: Shell’s Recent Low-Carbon and CCS Investments (2023-2025)

Shell’s Strategic CCS Alliances: Building a Global Carbon Management Network

Shell is executing its CCS strategy primarily through a network of partnerships with technology firms, engineering companies, industrial peers, and governments. These collaborations are essential for de-risking large capital investments, accessing specialized technology, and building the cross-border infrastructure required for a global carbon management market.

Table: Shell’s Key CCS-Related Partnerships (2021-2025)

Mapping Shell’s Global CCS Footprint: A Focus on North America and Europe

Shell is concentrating its CCS investments in North America and Europe, capitalizing on established industrial clusters, favorable regulatory frameworks, and existing infrastructure.

• North America, particularly Alberta, Canada, has become a central hub for Shell’s CCS operations. Building on the foundation of the operational Quest project, the company sanctioned the Polaris CCS project and the Atlas Carbon Storage Hub in 2024, driven by supportive policies like Canada’s refundable CCUS Investment Tax Credit, valued at $7.6 billion through 2030.
• Europe is another core region, with the Northern Lights project in Norway, a joint venture with Equinor and TotalEnergies, serving as a flagship asset that began injection in 2025. Shell is also a key partner in the Netherlands’ Porthos project and a technology provider for the UK’s Acorn and Net Zero Teesside projects.
• The company’s strategic withdrawal from the Aramis CCS project in the Netherlands in April 2025, just a month after announcing a $714 million expansion of Northern Lights, underscores a highly selective geographic strategy that prioritizes projects with the strongest commercial and regulatory backing.
• While its focus remains on the Atlantic basin, Shell’s participation in the S-Hub project in Singapore signals an intent to replicate its industrial hub model in strategic Asian markets, contingent on the development of cross-border carbon management frameworks.

Shell’s CCS Technology: Maturing from R&D to Commercial Scale Deployment

Shell’s CCS technology portfolio has progressed from developmental stages to full commercial deployment, centered on its proprietary CANSOLV system and supported by advanced digital tools like AI.

• Between 2021 and 2024, the consistent performance of the Quest project in Canada, capturing 1 million tonnes of CO₂ annually, served as the primary proof-of-concept, validating the technical feasibility and long-term reliability of large-scale geological storage.
• The year 2025 marks a clear shift toward commercialization, highlighted by the July 2025 global alliance with Technip Energies to deliver the CANSOLV CO₂ Capture System as an integrated EPC package. This positions CANSOLV not just as an internal tool but as a marketable product for decarbonizing third-party industrial facilities.
• Digital technologies are accelerating this transition, with Shell reporting in January 2025 that it uses AI machine learning models to analyze subsurface CO₂ storage sites 100,000 times faster than traditional methods. This capability is critical for de-risking and speeding up the deployment of new storage hubs.
• While post-combustion capture is its mature focus, Shell is also cultivating future options through venture investments in Direct Air Capture (DAC) startups. The $17 million investment in Avnos and $3 million in RepAir Carbon in 2025 represent early-stage bets on next-generation technologies.

SWOT Analysis: Shell’s Strategic Position in the Global CCS Market

Table: Shell CCS SWOT Analysis (2021-2025)

Future Outlook for Shell’s CCS Business: What to Watch in 2026

The immediate future of Shell’s CCS strategy hinges on the successful execution of its new Canadian projects and a final decision on its major European hydrogen ventures, which will serve as a litmus test for its “commercial realism” doctrine.

• The most critical upcoming milestone is the execution of the Polaris CCS project in Alberta following its June 2024 Final Investment Decision. Its on-time, on-budget delivery will be the first major test of Shell’s ability to build new CCS infrastructure under its revised capital framework.
• The final fate of the €1 billion Holland Hydrogen I project remains a key indicator of Shell’s strategic direction. A definitive cancellation would cement its pivot away from capital-intensive renewables and double down its focus on CCS, whereas a decision to proceed would signal a more balanced, albeit still selective, energy transition strategy.
• Market observers should closely monitor the allocation of the reduced $3.5 billion annual low-carbon budget. A continued disproportionate flow of capital towards CCS initiatives like the Northern Lights expansion will confirm that CCS is now the undisputed centerpiece of Shell’s low-carbon business.
• The commercial performance of the Northern Lights project, which became operational in 2025, will be a crucial watchpoint. Its success in attracting and signing up third-party industrial customers will provide the first real-world validation of Shell’s CCS-as-a-service business model.

Frequently Asked Questions

What is the biggest change in Shell’s approach to Carbon Capture and Storage (CCS)?
Shell has shifted its strategy from developing standalone pilot projects to building large-scale, integrated industrial hubs. This “commercial realism” approach prioritizes ventures with clear profitability and government support, moving beyond just capturing its own emissions to offering CO₂ transport and storage as a commercial service.

Is Shell investing more or less in its low-carbon business?
Shell is investing less overall but is focusing more on CCS. The company reduced its planned annual low-carbon investment to $3.5 billion as of April 2025. However, within that budget, targeted spending on CCS has increased significantly, as shown by a 55% rise in CCS investment in 2023 compared to 2022.

What are Shell’s most important CCS hub projects?
Shell’s key projects are part of its industrial hub model. These include the Polaris CCS project and the Atlas Carbon Storage Hub in Alberta, Canada; the multi-partner Northern Lights project in Norway, which began CO₂ injection in 2025; and the S-Hub consortium with ExxonMobil in Singapore, which aims to capture 2.5 million tonnes/year.

How is Shell using technology and partnerships to advance its CCS goals?
Shell is commercializing its proprietary CANSOLV capture technology through an exclusive global alliance with Technip Energies. It also uses AI to analyze potential CO₂ storage sites up to 100,000 times faster. Partnerships are critical, with joint ventures like Northern Lights (with Equinor and TotalEnergies) and Atlas (with ATCO EnPower) used to de-risk investments and build infrastructure.

Why did Shell withdraw from the Aramis CCS project but invest more in the Northern Lights project?
This reflects Shell’s strict commercial discipline and selective investment strategy. Shell abandoned the Aramis project in April 2025 because it did not meet the company’s profitability criteria. In contrast, just one month earlier, it invested in a $714 million expansion of the Northern Lights project, which is considered to have stronger commercial and regulatory backing, making it a more attractive investment.