The U.S. Carbon Capture and Storage Market: Fluor’s Role, 45Q’s Influence, Challenges for New and Existing Technologies and Which Projects Can Succeed

By Sunil Vyas
Fluor
Technical Director – Business Incubation
CCUS Subject Matter Expert

Introduction

Though carbon capture and storage (CCS) technology has proven effective, the market in the United States has faced various drivers and challenges, leading to slow progress. To get closer to net zero and successfully decarbonize industries, CCS projects need to be implemented as part of the solution. This article aims to discuss Fluor’s role in the CCS market, the impact of carbon credit tax incentives, current challenges and which types of projects have the greatest chances of moving forward.

Carbon utilization is a growing market with numerous new technologies using carbon dioxide (CO₂) as a feedstock. Many of the insights herein are applicable to carbon utilization, however, it is not the primary focus of the article.

45Q History and Current State

The carbon oxide sequestration credit, or 45Q, was first enacted in the U.S. in 2008. Since then, there have been three modifications to the credit, which have been a catalyst for growth in the CCS market in the U.S.

In 2008, the tax incentive was $20/tonne (t) for sequestration and $10/t for utilization, which in 2008 mostly meant enhanced oil recovery (EOR) or use in the food and beverage industry. These values were not significant enough to drive project implementations as they were low compared to the capital and operating costs of the project.

Ten years later, 45Q was reformed as part of the Bipartisan Budget Act. Eligibility was broadened and the tax incentive values were increased to $50/t for sequestration and $35/t for utilization over 12 years. To be eligible, construction of the facility needed to start by 2026. The increase did have a slight impact on the market as emitters began to show interest in CCS and study its costs and implications.

In 2022, 45Q was modified again as part of the Inflation Reduction Act (IRA). Changes included:

Increasing the values to $85/t for sequestration and $60/t for utilization.
Separating direct air capture (DAC) into its own category and increasing the values to $180/t for sequestration and $130/t for utilization.
Lowering the minimum capacity required for eligibility.
Offering direct pay for five years and expanding transferability of the tax incentives.
Specific construction related requirements included: prevailing wages to workers (Davis-Bacon Act) as well as U.S.-sourced iron, steel and construction material
Extension of the construction start date to 2033.
Inflation adjustments begin in 2027, with 2025 as the base index year.

The 45Q changes included in the IRA, along with a substantial increase in U.S. Department of Energy (DOE) grant funding, did cause a significant increase in carbon capture inquiries for all types of technologies. However, the number of projects to reach FID remains limited.

With the administration change in the U.S. in early 2025, uncertainty surrounding 45Q increased as many of the IRA enacted incentives were perceived to be under threat. The One Big Beautiful Bill (OBBB) was passed in July 2025 and made the following changes to 45Q:

The values for utilization including EOR were increased to $85/t for point source capture and $180/t for direct air capture.
Restrictions were put in place to limit foreign entities of concern from benefitting from the tax incentives.

Not only was 45Q preserved, but the values for utilization increased. The hope is that the certainty surrounding 45Q now gives investors, corporations and project developers the confidence to further develop CCS projects and get them to final investment decisions (FID).

Fluor’s Carbon Capture Technologies

Fluor’s nearly 27,000 employees provide professional and technical solutions that deliver safe, well-executed, capital-efficient projects to clients around the world. Fluor provides engineering, procurement, construction (EPC) and maintenance services for carbon capture projects including CO₂ compression and transportation. Our CCS project experts focus on the delivery of innovative, reliable and cost-efficient project solutions built on more than 110 years of EPC and maintenance experience and more than 40 years of experience in CCS. Additionally, Fluor offers proprietary licensed carbon capture technologies described in more detail below.

Fluor is currently executing late-stage engineering on commercial scale carbon capture and storage (CCS) projects in North America and Europe for clients in the gas-fired power, blue hydrogen, waste to energy and cement industries.

Econamine FG Plus℠ (post-combustion carbon capture)

Fluor’s commercially proven, proprietary technology for post-combustion carbon capture technology is called Econamine FG Plus (EFG+). Implementing EFG+ to capture CO₂ from an emitting facility, makes the facility eligible for 45Q tax incentives. EFG+ can be designed and installed on new or existing facilities in power generation, cement, steel, glass, pulp and paper, reformers in chemical/oil and gas facilities, waste to power and more.

Figure 1: EFG+ rendering capturing CO₂ from a Natural Gas Combined Cycle plant

Generic carbon capture site with parts labelled

Fluor has built or licensed 30 EFG+ plants over the past four decades. While the EFG+ technology has been around for decades, it has seen significant technological improvements over that time resulting in lower energy consumption, capital cost and environmental profile. With respect to EFG+, Fluor can operate as a technology licensor or a technology licensor and EPC, the latter of which is preferred to allow for a single point of responsibility on projects. Additionally, Fluor has significant experience with CO2 compression design and build as it is often part of the capture project scope.

The major technological advantages of EFG+ include the following:

The EFG+ solvent is relatively inexpensive and available. It can be purchased through several approved chemical manufacturers globally, reducing risk of solvent unavailability. Fluor does not sign supply agreements for solvent, which allows clients to competitively source it.
The EFG+ design includes a solvent maintenance system (SMS) which helps to maintain the efficiency and effectiveness of the solvent over time. Flue gas contaminants cause all amine-based solvents to build up degradation products over time, which impacts the performance of the solvent. To remove the degradation products, standard technologies implement a batch reclaimer and turn it on and off to return the performance of the solvent to its original state. EFG+, on the other hand, continuously operates the SMS which maintains the integrity and consistency of our solvent over time and minimizes solvent losses.
The column design utilizes efficient proprietary packing minimizing the power required from the blower to push the flue gas through the columns and, thus, minimizing the operating cost.
Lastly, a proprietary wash design at the top of our Absorber, minimizes atmospheric emissions.

Fluor’s EFG+ Bellingham facility in Massachusetts remains the world’s only commercial carbon capture plant to run on gas turbine exhaust. Gas turbine exhaust applications prove challenging for post-combustion carbon capture due to low CO₂ concentrations (3.5 vol%) and high oxygen concentrations (13-15 vol%) of the flue gas. The facility processed 40 MW equivalent of flue gas from the power plant to produce 330 tonnes per day (tpd) of liquid CO₂ sold to food and beverage providers. On the project, Fluor was the technology provider, EPC, and operated and maintained the plant for the first five years of operation. The plant ran continuously from 1990 to 2005 with over 120,000 operating hours, achieving >97% availability in the later years. The plant shutdown in 2005 as the power plant became a peak shaver and operated intermittently.

EFG+ continues to be competitive in the marketplace against other commercially available technologies. Fluor is working on numerous projects that are in various stages of engineering with optimism towards FID and implementation.

Figure 2: Bellingham Stripper (left), Absorber (middle), and Direct Contact Cooler (right); Bellingham, MA, U.S.

Plant using Econamine carbon capture technology

Fluor Solvent℠ (pre-combustion carbon capture)

The Fluor Solvent technology is a pre-combustion carbon capture application, which uses propylene carbonate as a physical solvent. The process is applicable to feed gas with 4.5 bar and higher CO₂ partial pressures. Fluor Solvent plants have been designed for natural gas and syngas production with feed gas rates up to 250 kNm³/h (220 MMscfd) and pressures up to 139 bar with CO₂ content varying from 12 to 53 vol%. The technology is particularly suited to blue hydrogen and natural gas processing projects seeking an all-electric capture solution. Fluor Solvent has been implemented in 12 applications.

The solvent offers the following advantages:

Propylene carbonate has favorable treating properties: high solubility for CO2, low heat of solution of CO₂, low solvent vapor pressure, low solubility for light hydrocarbons and low viscosity.
Low solvent freezing temperature makes the process suitable for cold climate operation, requiring minimum winterization.
The solvent is non-hazardous, chemically non-reactive to natural gas components.
Solvent does not degrade or foam, requiring minimal operator attention.
The solvent absorbs water in the feed gas, producing a dry gas meeting the pipeline specification

Additionally, Fluor Solvent offers the following benefits:

Low operating temperature: The solvent’s CO₂ holding capacity increases with lower temperature, requiring less solvent circulation. Solvent temperature, as low as -20°C, is proven in operation.
Solvent regeneration: Lean solvent is produced by successive pressure letdown, followed by vacuum pressure or a solvent stripper. Rich solvent can be heated by heat exchange with feed gas or semi-rich solvent. External heating is not required.
Selectivity: Dry gas products of either blue hydrogen or methane have minimal losses, minimized by flashed vapor recycle.

Large Scale CCS Project Challenges

CCS projects face challenges like most large-scale industrial projects but there are additional unique aspects that apply to CCS projects that have historically caused them to stall or stop before reaching the implementation phase.

First, large-scale CCS projects are expensive and complex.

CCS project complexity requires several parties working together simultaneously. As an example, for a post-combustion application there needs to be an emitter with a flue gas, a project owner/developer, a carbon capture technology licensor, an EPC company to design and construct the capture and compression facility, potentially another EPC to design and construct the balance of plant supporting the project, a pipeline and sequestration owner or a utilization off-taker, and numerous investors and equipment suppliers. All the stakeholders need to work together to make the project progress and be delivered on time and budget. Additionally, government agencies in charge of permitting and insurance providers offering coverage for specific aspects of the project can also be involved.
Megaton CCS projects can cost several hundreds of millions or even upwards of a billion dollars to build. Access to capital to fund the projects may be limited and difficult to secure. Investors are looking at a broad spectrum of projects to invest their financial resources. CCS projects are forced to compete for capital with those other projects often with a proven project track record and business model.
Lastly, technology selection is an important de-risking factor. Investors and owners expect a commercially proven process to de-risk their investment or at least a technology that has completed the required scale-up and proven the economics. Technologies lower on the Technology Readiness Level (TRL) scale generally present too much risk for large investments.

Some of the challenges listed above are not unique to the CCS market and can be true for any large-scale project in any industry. What makes the CCS market uniquely challenging is that the business model for CCS projects is unlike most other industrial projects’ business model.

45Q gives tax incentives for 12 years which can, in many cases, act as the only revenue generator for the project by providing tax relief to the owner or by being transferred or sold by the owner. However, CCS plants are designed and built to operate for 20, sometimes 30 years. Will the CCS plant operate at a loss after 12 years when it no longer qualifies for 45Q? The likely answer is no, unless the emitting facility risks regulatory shutdown without CCS. This creates a misalignment between the tax incentive benefits and the plant life that the owner must reconcile.
The voluntary carbon markets (VCM) are relatively new and unstructured. However, selling carbon credits can boost a business case for CCS. There is not a market to sell credits for non-CDR projects currently. Conversely, DAC or other carbon negative projects like bio-energy CCS (BECCS) are selling into the VCM and can drastically alter the business case for a project (see example in later section).
Supply chain shortages and inflation caused a dramatic rise in costs throughout the value chain since the global pandemic began in 2019. That makes it very difficult to provide cost certainty in the early phases of projects when all the stakeholders are trying to understand how much the facility is going to cost. Fluor’s supply chain group estimates that global material and equipment prices increased by approximately 30% from 2021 to 2024 (see figure below). For CCS projects, the revenue side is fixed by the 45Q tax incentives while the cost side has increased, eroding the 45Q boost from 2022 and causing projects to slow or stop entirely. As currently written, 45Q will adjust for inflation starting in 2027, which will help but won’t account for the inflation from the past five years.

Inflation Rate and Global Material Price Increases from 2019 to 2024

Inflation Sources: US Bureau of Labor Statistics, UK - Office for National Statistics, EUROSTAT, National Bureau of Statistics of China, Japan Ministry of Internal Affairs & Communications, India Ministry of Statistics and Programme Implementation (MOSPI); Escalation Source: Fluor Internal

Graph showing the costs of materials varying before, during and after Covid

Lastly, CCS project location selection can create issues if all local aspects are not planned and accounted for:

Environmental air permitting is heavily dependent on the project location. California, for example, has stricter permitting requirements, likely increasing the time it takes to receive permits.
Another challenge for permitting is receiving Class VI well permits for sequestration. This is handled by the EPA and is technically supposed to take 24 months to get approval if there are no issues. However, historically, getting Class VI permitting has taken much longer. In states with primacy like Louisiana, North Dakota and Wyoming, it may be possible to receive permits quicker.
Availability and proximity of CO₂ pipelines. There are not many existing CO₂ pipelines in the U.S., so connecting the CO₂ to a pipeline to get to a sequestration site may be challenging and come with its own permitting and safety issues.
Lastly, carbon capture projects are energy intensive and require utilities such as steam and power. Having a balance of plant strategy in the early stages of a project is crucial when setting the design basis and cost allocations for the CCS project. Steam and power generation costs should not be an afterthought as they can be a significant part of the overall project costs.

Potential Mitigations for Large-scale CCS Projects

Establish partnerships with all required stakeholders in the early phases of the project.
Selection of a commercially proven carbon capture technology helps to reduce the risks associated with technology performance. If a carbon capture technology has not been proven at the required scale or for the specific type of flue gas, identifying what testing or scale-up work has been done or could be done to alleviate technology concerns is important.
Selection of an experienced EPC to help achieve cost and schedule certainty.
Having a shared risk profile between all the stakeholders such that all entities are working together to implement a successful project.
Insurance vehicles can be put in place to protect a portion of investor resources in the case where project performance or schedule is not met.
Lobby for further expansion of carbon tax incentives.
If possible, develop a strategy around selling carbon credits, selling the CO₂ product for carbon utilization projects, or increasing the price for the low carbon product that the emitter is producing (i.e. low carbon power or cement). Each of these strategies can generate additional revenue for the project.
Start the environmental and storage permitting process as early as possible so that it reduces the risk of becoming a bottleneck.
Lastly, local community engagement is an important aspect of project execution. Whether the Class VI permit is to be issued by the EPA or the state, the local community has the ability to make it difficult to receive a permit so educating and including them in the process can be vital to project success.

Emerging Technologies and Fluor’s Business Incubation Group

With government and venture capital funding geared towards progressing the energy transition over the first half of the 2020s, new CCUS technologies and start-up companies emerged to compete with existing technologies aiming to bring down costs.

In the CCS space, emerging technologies need to prove they can work at various scales and, more importantly, they need to make investors and adopters comfortable that the techno-economic projections are met at commercial scale. To achieve that, a start-up needs a commercialization plan which often starts with lab-scale work, building a pilot, then a scale up to a demonstration, and another scale up to a commercial facility.

Typical Commercialization Plan for Emerging Technologies

The timeline to achieve all the steps can be approximately 5-8 years. During each scale up, the technology must check all the necessary boxes on capital and operating cost, performance, reliability and safety.

Level setting expectations: timeline of five to eight years to commercialize innovations

Additionally, emerging technologies must compete with mature technologies that already have a track record both on the performance side, but also the cost certainty side. They must provide compelling differentiation against proven technologies to gain traction in the CCS market. When comparing performance and cost to mature technologies, emerging technologies must ensure the comparison is on a standardized basis. For example, if an emerging post-combustion capture technology can recover 95% of the incoming CO₂ in the flue gas, matching a mature technology, but the CO2 purity achieved is lower, this must be reconciled and accounted for in the comparison of the technologies’ lifecycle costs.

Start-ups often need the most assistance in areas such as scaling up their technology, design of the balance of plant systems around their technology, fabricability and constructability of their design, and estimating total installed costs. The Business Incubation group at Fluor leads the efforts to be an EPC thought partner and work with start-ups who need assistance in the areas listed previously as they make their way to commercialization. The Business Incubation team fosters and maintains connections within the climatech ecosystem’s growing list of stakeholders (i.e. start-ups, accelerators, project developers, venture capitalists, philanthropic funders, etc.). Driven by these relationships, Fluor has contracted with start-ups in DAC, e-Fuels, carbon mineralization, direct ocean capture (DOC), and carbon capture. Fluor does not take equity in the start-up nor ask for exclusivity for later project stages. Follow-on scopes of work are based on merit and value-added with the hope of establishing a co-development partnership to achieve technology scale-up and techno-economic viability.

Lastly, going through the commercialization process takes time and money. To meet the 45Q deadline, construction of a facility needs to start by 2033. The DOE has historically supported the scale up efforts of many emerging technologies through grant funding. However, the availability of future DOE grant money is currently unlikely in the short-term causing more hurdles to achieve a construction start by 2033 than in the previous several years.

Which CCS Can Succeed

CCS project types can vary significantly depending on the size, location and industry. There are a few types of projects that have greater potential for moving forward.

Utilization projects – If it is possible to create a saleable product using CO₂ as a feedstock, the additional revenue along with 45Q benefits can help to make projects more profitable. Utilization examples include selling CO₂ to the food and beverage market, for use as a feedstock for an e-fuels/e-chemicals plant, mineralizing the CO₂ in cementitious materials, or EOR. To claim 45Q for utilization, a Life Cycle Analysis (LCA) needs to be completed to determine the specific amount of CO₂ isolated or displaced from the atmosphere.
Large emitting facilities (1000+ metric tonnes per day (MTPD)) – The more CO₂ a facility emits, the more 45Q tax incentives that can be captured. A large facility can also take advantage of economies of scale on the cost side in most cases. The challenge is that these projects have high capital costs so securing financing can be challenging.
Facilities able to sell carbon credits in the voluntary market – The sale of carbon credits for any price or length of time will be beneficial to the overall financial viability of the project. DAC, DOC, and BECCS projects have been able to fund project development capital through the sale of carbon credits.
Case Study: Post-Combustion Cost Comparisons
Results from a capital and operating cost model for post-combustion capture show the potential benefits of higher concentration flue gas sources and being able to sell CDR credits. Looking at a hypothetical example of a carbon capture plant capturing 1 MMTPA for 3 different flue gas sources: a natural gas combined cycle plant with a flue gas CO₂ concentration of ~4%, a coal-fired power plant with a flue gas concentration of ~12%, and a pulp and paper facility with a flue gas concentration of ~12%.
In our hypothetical example, the pulp and paper project IRR is significantly higher than the other projects due to the ability to sell CDR credits.
DOE or philanthropically funded projects - as previously mentioned, capital costs are high for large CCS projects. If the government or a philanthropic institution can fund a portion of that capital cost, that can help a project move forward. The recent DOE award cancellations for large scale carbon capture projects have likely created considerable challenges for those previously awarded projects.
Projects with local taxes/tax incentives – for example, California or other states where there are penalties for CO₂ emissions above a certain level. Any penalty that can be avoided by capturing CO₂ can be thought of as “pseudo”-revenue along with the 45Q tax incentive.
Projects where the product price can be increased without significantly affecting demand for that product. Behind-the-meter power generation with CCS for data centers or low carbon cement may be current examples. Buyers could be willing to pay more for these lower carbon products.
Projects where the CO₂ is at a higher concentration and/or pressure than post-combustion capture applications – for example: ethanol production, natural gas processing, hydrogen/ammonia production, or oxy fuel combustion to name a few. The $/t to capture CO₂ from those types of facilities can be much lower than post-combustion capture.

Conclusion

45Q has been and continues to be a major driver of the CCS market in the U.S. There are still project challenges that remain before widespread implementation is achieved. However, certain projects offer a better chance of moving forward. Fluor’s history and experience in the CCS space and in the emerging technology/startup space allows us to be a trusted partner, whether by implementing our own technology or allowing us to be an EPC for another technology.

Questions?

Contact the author at sunil.vyas@fluor.com.