CCS Policy, Legal and Regulatory Snapshot: Trends and Observations
Policy, legal and regulatory frameworks continue to play a central role in informing global and regional CCS trends.
The Institute’s latest policy, legal and regulatory (PLR) update examines key developments across the sector over the 2025 calendar year, including changes to CCS governance regimes, government initiatives supporting large-scale deployment, and broader market and regulatory trends. Covering the Americas, Europe, Asia Pacific (APAC), and the Middle East and Africa (MEA), the update also highlights ongoing policy and legal challenges affecting the deployment of wind projects worldwide. Below is a summary of the main developments and trends observed across each region.
The full report is available to members through here.
The Americas
In 2025, CCS policy developments varied across the United States (US), Canada, and Mexico. In the US, the various states took on a more prominent leadership role as federal priorities shifted away from the low-carbon space. Federal funding pauses and project terminations created some uncertainty, but Congress preserved and enhanced the 45Q tax credit. In Canada, the CCS Investment Tax Credit (ITC) was reaffirmed. Specifically, the ITC’s eligibility window was extended to 2035 and the ability to claim a 50% ITC for CCS projects was maintained. In addition, Canadian provinces have advanced new storage laws and offset protocols, while Mexico’s state level carbon offset rules complemented the country’s strengthened national climate commitments.
States and provinces increasingly drove CCS policy momentum through new legislation, permitting reforms, and regulatory refinement. In the US, 13 states passed over 20 CCS-related laws. Moreover, three more states received Class VI primacy which will help accelerate storage permitting. Canada saw stronger federal–provincial collaboration, including the Canada–Alberta Memorandum of Understanding (MoU), while Mexico’s state of Colima implemented carbon tax and offset mechanisms.
Overall, 2025 demonstrated that CCS retains broad political appeal and market frameworks to support CCS and CCUS deployment remain intact or were even strengthened in certain instances. The US achieved parity between CO2 utilisation and geological storage under the 45Q tax credit, expanding viable business models for hard to abate sectors. Brazil took major steps toward launching its national carbon market, including passing a law that established the framework for Brazil’s GHG emissions trading system (SBCE), and initiating consultations on CCS/Bioenergy with CCS (BECCS) regulation – laying the foundations for integrating CCS into the SBCE. Scale up of CCS deployment will continue to benefit from robust financial incentives, market design, and clear regulatory pathways in the region.
Asia Pacific And India (APAC)
The APAC region is experiencing steady but uneven progress in developing CCS policy and regulatory frameworks, driven largely by rising international climate commitments and national net zero pledges. While early movers like Australia and Japan continue refining advanced frameworks, a growing number of economies, including Malaysia, Indonesia, South Korea, India, and Thailand are now developing or enhancing CCS specific legislation, regulations, strategies, and roadmaps. Despite this momentum, several nations with high emissions profiles, such as Brunei, Cambodia, and Timor Leste, still lack substantive policy action.
The region continues to rely on international cooperation, bilateral agreements, and regional coordination mechanisms to accelerate CCS deployment. Several countries now recognise CCS in their NDCs and explicitly link their progress to international support in the form of climate finance, technology transfer, and capacity building. This has stimulated a wave of government-to-government MoUs, focused on developing transboundary CCS value chains. At the same time, several APAC nations are working toward harmonising carbon market rules and exploring interoperability across emissions trading schemes (ETS).
In Southeast Asia, state-owned entities (SoEs) continue to drive CCS development. Examples include Petronas, having been awarded the first offshore carbon storage assessment permit after Malaysia’s CCUS regulations entered into force in October; and Thailand’s PTTEP, that have taken Final Investment Decision (FID) on conducting CCS operations in the Arthit gas field, marking Thailand’s first commercial CCS project.
Over the past year, several countries have launched or expanded their ETS schemes and others have strengthened fiscal incentives to support CCS. New Zealand, Indonesia, and South Korea have begun integrating CCS into carbon crediting mechanisms, while India has announced major funding to accelerate CCS deployment across priority sectors. However, despite the growth of carbon markets and funding for CCS, challenges persist. These include differing market participation rules, limited CCS specific methodologies, low carbon prices relative to CCS costs, and lack of market harmonisation.
Europe
Across Europe, 2025 saw the consolidation of a comprehensive policy architecture at the EU level, aimed at accelerating industrial decarbonisation, and with CCS playing a central role. The EU advanced major legislative packages under the Clean Industrial Deal, the Net Zero Industry Act (NZIA), and updates to the EU ETS and Carbon Border Adjustment Mechanism (CBAM), enhancing the EU’s industrial competitiveness and climate strategies. These initiatives were complemented by substantial research and innovation funding, most notably through Horizon Europe and the EU Innovation Fund. Taken together, these initiatives highlight the EU’s intention to expand CO2 storage capacity, and position European industry for global leadership in low carbon technologies.
Funding for commercial scale projects has also continued at the EU and Member State level. Complemented by new or updated regulatory tools, including the Strategic Project Status mechanism under the NZIA, and enhanced CBAM rules, the EU and European nations aim to provide regulatory certainty and clearer investment signals to stimulate CCS deployment.
Over the past year, the EU and the once again emphasising the growing integration of CCS value chains. The EU expanded its portfolio of Projects of Common and Mutual Interest to include additional CO2 transport networks and interconnection with neighbouring regions, while also pursuing wider international cooperation on carbon pricing and CO2 transport. In the UK, 2025 brought major milestones in permitting and licensing rounds, investment decisions, and commercial project activity across industrial clusters. Together, these trends reflect a maturing regional ecosystem in which policy, finance, infrastructure, and commercial deployment are increasingly aligned to deliver large scale CCS as part of Europe’s pathway to net zero.
Middle East and Africa Region
Across the MEA region, CCS policy is shifting from broad ambition to practical implementation as countries update NDCs, release national CCS frameworks, and begin embedding carbon management into climate and energy regulations. However, most countries still lack dedicated CCS legislation, and permitting remains tied to petroleum or general climate laws, limiting large scale deployment.
Carbon market development is accelerating, with South Africa, Kenya, and Nigeria, advancing mandatory or voluntary mechanisms, while regional collaboration grows through new MoUs and Article 6 partnerships. These international agreements often include funding components, reflecting the region’s reliance on external finance and cooperation to progress CCS and broader decarbonisation initiatives.
State-owned energy companies continue to drive CCS deployment, particularly in the Middle East. The region has seen major project announcements and early DAC initiatives in the past year. Although regulatory frameworks remain incomplete, increasing coordination between governments and national oil companies indicates gradual movement toward more formalised CCS governance, even as funding and regulatory gaps remain the region’s main barriers.
Author: Bernardene Smith, Principal PLRC, Global Research and Analysis
