China's recent political gathering highlighted the central challenge of reducing carbon emissions while sustaining industrial growth, a balance complicated by the nation's continued heavy reliance on coal. Coal supplied nearly 64% of China's energy in 2024 and remains integral to steel, chemicals, and cement production. Although demand is projected to decline, the International Energy Agency forecasts an average annual drop of less than 1% over the next five years. To achieve its "dual-carbon" goals of peaking emissions by 2030 and reaching carbon neutrality by 2060, carbon capture technology—encompassing both Carbon Capture and Storage (CCS) and Carbon Capture, Utilisation and Storage (CCUS)—is viewed as a critical solution that can address climate commitments without compromising energy security or the economy.

Project Development and Scale

China has over 100 CCUS/CCS projects in operation or development, showcasing significant scaling. Landmark projects include the Taizhou power plant in Jiangsu, which began operations in 2023 with a capacity of 500,000 tonnes of CO2 per year, and the Zhengning Power Plant, which assumed the title of Asia's largest in 2025 with a 1.5 million-tonne annual capacity. Many operational projects are led by state-owned oil and gas companies, primarily for Enhanced Oil Recovery (EOR). Pioneering examples include Sinopec's project at the Shengli oilfield in 2022. Projects have grown in size and scope: CNPC's Xinjiang onshore project surpassed 1 million tonnes of captured CO2 in 2025, a national first, with plans to develop a 10 million-tonne capacity between 2026-2030. Offshore, CNOOC launched China's first offshore CO2 sequestration demonstration at the Enping 15-1 oilfield, aiming to reinject over one million tonnes to boost oil production, and has plans to expand applications in the South China Sea by 2035. China's offshore areas hold a vast estimated sequestration potential of 25.8 billion tonnes of CO2, with several basins identified as suitable.

Drivers, Challenges, and Policy Framework

The primary commercial driver for CCUS in China is currently Enhanced Oil Recovery, which limits the sector's breadth. Growth is propelled by the need to decarbonize the power sector, particularly through post-combustion capture technologies in coal-fired plants. International projections suggest China's annual CCUS capacity growth could surpass that of the EU and US after 2040. However, a major impediment is the lack of a comprehensive enabling policy framework. CCUS is not yet incorporated into China's carbon markets, and there is no dedicated CCUS/CCS law, creating uncertainty for operators and investors. Researchers and institutes note that most projects, apart from EOR, lack profitable business models, and technology maturity varies, requiring increased investment for large-scale deployment. The absence of a CCS-specific policy roadmap makes it difficult to ascertain if carbon management leadership is an explicit national objective.

Cost Advantages and Economic Hurdles

China possesses distinct cost advantages in CCUS development. Estimates indicate Chinese-built facilities cost $30-$40 per tonne of CO2, significantly lower than the over $300 per tonne faced by European power generators. Chinese state-owned enterprises also claim to complete projects in half the time and at 55% to 70% lower capital expenditure per tonne compared to Western counterparts. This cost advantage is seen as potentially disruptive. However, this benefit is offset by comparatively low carbon trading prices in China, which fluctuate around or below $10 per tonne, unlike the EU ETS, which traded between €60 and €80 per tonne in 2025. Analysts note that current CCUS capture costs are over ten times higher than China's emission allowance prices, undermining commercial appeal.