Executive Summary

Gas-fired power plays a material role in the EU electricity system, accounting for 13% of net generation in 2025. While EU countries have rapidly built out renewable energy, gas will remain a significant source of the bloc’s power capacity and greenhouse gas emissions in the coming decades.

Despite this, there are currently few gas‑fired power stations in the EU that officially plan to use or retrofit carbon capture and storage (CCS) technology. This reflects the lack of commercial-scale gas CCS plants anywhere in the world as well as the underperformance of CCS projects for other applications in terms of capture rates, cost and delivery timelines.

Most potential European gas CCS projects are in the UK, where CCS subsidy support and accompanying legislation are much further progressed. The UK has assigned £23 billion in subsidies for its sole under-construction gas power with CCS plant. CCS-equipped power stations would not go forward without such government subsidies.

Struggling to meet its 2050 net-zero obligations, the European Commission introduced an Industrial Carbon Management Strategy (ICMS) in February 2024. This aims to develop technologies and infrastructure for capturing, transporting, storing and using carbon dioxide to help the EU reach net zero. The ICMS was designed to target hard‑to‑abate sectors such as cement, lime and steel production, and initially sought to channel capture technologies toward these areas. But it does not explicitly exclude CCS for power generation.

Some EU Member States with high levels of gas generation are actively pursuing hydrogen strategies, planning to retrofit existing methane‑based power generation facilities to use hydrogen blends or full hydrogen combustion. But the hydrogen market remains in its infancy. Using hydrogen as a fuel to decarbonise gas power plants is a materially more expensive option than adding CCS.

Taken together, these factors raise the risk that the EU, faced with ongoing dispatchable power requirements and the cost and immaturity of hydrogen markets, may increasingly seek to extend CCS use for gas power plants. Given the high cost, technical immaturity and general failure of CCS projects globally to date, this presents a high-risk and expensive option at the expense of cheaper, technically proven renewable energy solutions.
Source: IEEFA