The energy transition’s costly blind spot could be an irreversible setback.

By 2025 Virtual ET2 Fellow Saurabh Kumar

This is a critical point for the future of carbon capture — the action we take now decides whether this vital technology lives or dies.

Markets must evolve to meet this moment with collaboration and innovative financing. Miss this chance, and carbon capture may be out of reach forever.

Rapid construction of new data centers is transforming electricity use. Load growth from the sector has already tripled over the previous decade and is projected to triple again by 2028.

The U.S. is home to over half of global data center capacity, but the nation is lagging on renewable energy deployment. Earlier this year, the International Energy Agency almost halved its forecast for total renewable capacity in the U.S. by 2030.

Meanwhile, gas-fired generation capacity under development has more than doubled over the previous year. The effect: higher electricity prices for consumers, and more greenhouse gas emissions.

Major corporations across all sectors from financial services to auto manufacturing are missing or abandoning climate targets altogether without consequences, and we are all paying the price.

Fewer than five years remain until the first major milestone year for global decarbonization, and the Paris Agreement target of limiting warming to 1.5°C is decidedly out of reach.

The more separation that’s created between how emissions are generated and remedied could create the risk of fossil lock-in. Electrification depends on a cleaner, cheaper, more resilient grid — goals we are currently working against.

It’s estimated that by 2050, 8 to 10 billion tonnes of CO₂ must be removed annually to meet climate goals. Today, only about 50 million tonnes of capacity exist worldwide. Even if every planned and proposed project comes online, a mere 7% of the need is met.

With little demand for captured CO₂, energy intensive capture projects struggle to secure financing. Debt investors remain wary of market and technology risk. Without this capital, projects cannot scale, costs stay high, and demand remains weak.

Capturing one tonne of CO₂ can cost over $1,000 depending on the technology, but a $100-per-tonne cost basis is needed before a true market can develop.

About 35% of the emission reductions needed for a net-zero world depend on technologies that have not yet been proven at commercial scale, and several emerging technologies such as sustainable aviation fuel and green cement rely on an accessible supply of renewable CO₂ to achieve their fullest decarbonization potential.

While these technologies can help create demand for carbon capture, years remain until they are mature enough to make a dent. Synthetic fuels currently make up the largest such use case for renewable CO₂, but the total of all planned synthetic fuels projects is only around 4 million tonnes of additional carbon capture.

Tech sector hyperscalers with outsize influence on future energy demand are grabbing headlines by signing large-scale power purchase agreements and carbon removal offtakes to spur the buildout of these assets. Google alone spent more than $100mn on carbon credits in 2024, and other advance market commitments like Frontier — assembled by Stripe with support from Shopify, Meta, and others — have mobilized almost $1bn for carbon capture.

However, all kilowatt-hours are not created equal.

Electrons being produced on the margins to meet growing peak demand from data centers are often the dirtiest — not the pre-purchased ones being generated by renewables hundreds of miles from the source.

What’s more is the gas-fired assets installed today could be in service through 2070, producing harmful emissions well into the future. The need for more renewable capacity — while actively being targeted by the federal policy — is clear. As more emission-intensive generation sources come online, it becomes harder for investments in electrification and decarbonization to pencil whether seeking financial or environmental returns.

Without investors sharing risk across the capital stack — and businesses, governments, and communities pushing beyond business-as-usual solutions — the economics of carbon capture will stay stuck in spreadsheets while oil and gas profits keep climbing and society foots the bill.