Power sector shifts towards monetising captured CO2 through utilisation pathways

The conventional framing of carbon capture as principally a route to permanent geological storage is giving way to a more plural view in which captured CO2 becomes a feedstock and a revenue stream. Power producers contemplating capture investments now face a choice not only between storage and emissions abatement, but between treating CO2 as an expense to be buried or as a commodity to be monetised. That shift changes project economics, risk profiles and the strategic role of power companies in industrial decarbonisation.

Carbon utilisation expands the suite of decarbonisation levers available to utilities and energy-intensive operators. Efficiency, fuel switching and renewables remain essential, but converting captured CO2 into products, synthetic fuels, building materials, chemical feedstocks and polymers, creates direct market value that can be stacked atop electricity sales and policy-driven incentives. According to Power Info Today, this revenue stacking can make carbon capture projects materially more attractive than capture-and-storage-only approaches, because captured CO2 can be sold or transformed into goods with intrinsic market demand.

Synthetic fuels are the most mature and high-profile utilisation pathway for power-sector capture. Combining captured CO2 with green hydrogen produced by electrolysis enables e-kerosene, e-methanol and other hydrocarbons that are drop-in compatible with existing transport and industrial infrastructure. This makes them particularly relevant to aviation and shipping, sectors for which electrification is currently impractical at scale. Industry projects across Europe and Iceland are already demonstrating pilot-scale synthesis and conversion routes, illustrating technical feasibility beyond laboratory proof-of-concept. However, the economics remain heavily dependent on low-cost renewable electricity, hydrogen prices and supportive policy: research and market commentary indicate that e-methanol, for example, may require carbon prices in the hundreds of dollars per tonne to be competitive without subsidies.

Beyond fuels, CO2-derived building materials and chemical feedstocks present a complementary and often less energy‑intensive route to commercialisation. Accelerated mineral carbonation and other processes can lock CO2 into aggregates, cement additives and polymers that carry low-carbon or carbon-negative value propositions for construction and manufacturing markets. Power Info Today notes that such materials can command premiums because buyers in developed markets increasingly demand certified low-carbon inputs. These product markets typically require less CO2 than fuel synthesis but can deliver a more resilient revenue stream where sustainability standards and procurement policies create stable demand.

Power-to-X architectures and sector coupling amplify the strategic options for power producers. Firms with renewable generation, electrolysers and capture capacity can pivot production between hydrogen, methane, fuels and chemicals in response to market signals, capturing value across multiple chains. That flexibility mitigates single‑product exposure and positions power companies as hubs for broader industrial decarbonisation. The OECD has previously highlighted CCUS’s role in enabling continued operation of some fossil assets while integrating renewables and decarbonising hard-to-abate sectors, underscoring the systemic value of such coupling.

But technical and economic barriers remain substantial. Conversion processes can be catalyst‑intensive and energy hungry, and lifecycle benefits shrink if the electricity input is not low-carbon. Direct air capture offers feedstock diversification but is currently more expensive than point‑source capture. Academic studies and reviews emphasise that significant R&D is required to lower energy and materials intensity, work that includes developing non‑precious‑metal catalysts, more efficient sorbents for DAC and cheaper, larger electrolysers. The MDPI journal Sustainability identifies advances in sorbents and DAC–renewables integration as critical levers to improve viability; complementary techno‑economic analyses highlight the sensitivity of CCU projects to carbon prices and hydrogen costs.

Policy and market design will determine whether utilisation moves from demonstration to industrial scale. The World Economic Forum’s September 2025 report argues that scaling carbon capture and utilisation across fuels, chemicals and materials will require greater investment diversity, collaborative partnerships and cohesive policy frameworks. Existing mechanisms such as emissions trading, carbon taxes and tax credits, the U.S. 45Q programme being a prominent example, help, but current carbon prices in many jurisdictions typically remain below levels that make most utilisation pathways commercially viable unaided. The International Energy Agency stresses that a mix of financial support, mandates for sustainable fuels and standards for low‑carbon materials will be necessary to de‑risk first‑of‑a‑kind projects and stimulate demand.

Commercial models are evolving accordingly. Power companies are experimenting with vertically integrated configurations that combine renewable generation, electrolysis and conversion facilities; with dedicated utilisation subsidiaries; and with hub‑and‑spoke industrial clusters that aggregate CO2 from multiple emitters into centralised conversion assets. Such clusters can lower per‑unit costs through shared infrastructure and improve feedstock reliability. Partnerships between energy incumbents and technology developers are also becoming central, enabling scale-up while allowing specialist firms to focus on innovation.

Finance remains a practical constraint. Utilisation projects carry technology, market and regulatory risks that can inflate the cost of capital. Long-term offtake agreements, contracts for difference or other revenue‑stabilising instruments, plus clear certification regimes to prevent double‑counting of emission reductions, will be crucial to attract institutional investment. The OECD and the World Economic Forum both point to policy certainty and standards as enablers of investment appetite.

For power producers, the strategic calculus is therefore twofold. In the near term, carbon utilisation can improve the economics of capture retrofits and provide outlets for captured CO2 that reduce reliance on volatile carbon markets. In the medium to long term, as electrolysis and capture costs fall and renewable electricity becomes cheaper, integrated power‑to‑X facilities could become commercially self‑sustaining and central to decarbonising sectors that cannot be electrified directly. Academic frameworks exploring renewable‑hub valorisation show that where renewable electricity prices fall into targeted bands and hydrogen costs approach $1.50–$2.50 per kilogramme, many CCU pathways materially improve their competitiveness.

The policy imperative is clear: to move carbon utilisation from niche demonstrations to industrial scale, governments should combine predictable carbon pricing, targeted incentives for low‑carbon products, procurement mandates for sustainable fuels and materials, and standards for lifecycle accounting. Without such interventions, many of the higher‑impact pathways, particularly synthetic fuels, will remain dependent on subsidies or premium carbon markets.

Carbon utilisation does not obviate the need for storage or for aggressive emissions reductions elsewhere in the power system. But for sectors constrained by energy density or high‑temperature demands, and for power producers seeking to monetise capture investments, utilisation provides a pragmatic and potentially lucrative complement to storage. As the World Economic Forum and international agencies have observed, realising that potential will require coordinated policy, continued technical innovation and new commercial partnerships that align power producers with the downstream markets they aim to serve.