Insights and Commentaries
Role of CCS in US Data Centre Decarbonisation
18th March 2025
Efficiency gains from adoption of artificial intelligence (AI) technology are driving its penetration into broad sectors of the US economy, ranging from business intelligence, healthcare, and education to the apps on the phone in your hand. The computational power underpinning AI technology resides in data centres – buildings or facilities that house IT infrastructure for running applications, data storage, and, increasingly, cloud computing services.
One type of data centre linked to AI is called a hyperscale data centre. Sometimes hyperscale data centres are called "hyperscalers" – named for their scalability and distributed high-performance processing (IBM, 2024). Large technology companies are investing heavily in hyperscale data centres as AI technology matures. In January, Microsoft announced plans to invest US$80 billion in FY2025 to build AI-enabled data centres (Smith, 2025). Apple also plans to invest US$500 billion in the US over the next four years in new and existing data centres supporting Apple Intelligence infrastructure (Apple, 2025).
AI-driven data centre demand is increasing future power consumption estimates. Globally, data centres consumed an estimated 460 terawatt-hours (TWh) in 2022 and could exceed 1000 TWh in 2026 (IEA, 2024). For context, the Los Angeles Department of Water and Power (the largest municipal utility in the US) supplied 21.6 TWh to its customers in the 2022-23 fiscal year – merely 1/20th the global data centre consumption in the same year (LADWP, 2024).
In the US alone, the Electric Power Research Institute (EPRI) estimates data centres could comprise between 4.6% and 9.1% of power consumption in 2030 (Figure 1, EPRI, 2024). The US Department of Energy found similar results in a separate study, estimating data centres will comprise 6.7% to 12% of power consumption by 2028 (Shehabi et al., 2024).
Figure 1 - Projections of potential electricity consumption by US data centres from 2023-2030 (EPRI, 2024).
Data centres require 24/7 power, typically sourced from municipal electric grids or on-site power generation facilities; however, because power outages at data centres can result in data loss, service disruption, or financial loss, diesel-fuelled generators are often used as a backup power supply (Youssef, 2020). Federal and local laws regulate the use of diesel generators in the US because they emit nitrogen oxides and particulate matter that impact local air quality. They also emit carbon dioxide (CO2).
CCS as a data centre decarboniser
CO2 emissions from data centre electricity consumption can be significant – an estimated 61 billion kilograms of CO2 equivalent for 176 TWh in the US in 2023 (Shehabi et al., 2024). This fact isn't lost on the likes of Amazon, Google, Meta, and Microsoft. These four companies were the US's largest corporate offtakers of clean power in 2024 – collectively accounting for 19 gigawatt (GW), or 68% of total corporate power purchase agreements (BloombergNEF and BCSE, 2025).
Carbon capture and storage (CCS) is a versatile technology and can be an enabler for data center decarbonisation, with the potential to capture 90-95+% of a power generation facility’s CO2 emissions (Barlow, Shahi and Kearns, 2025). A business model is emerging which applies CCS to purpose-built power generation facilities "behind the meter" (not connected to municipal electric grids) to minimise data centre carbon emissions while meeting their firm, high-reliability power demand. In this model, CO2 emissions from natural gas turbines are captured, transported, and permanently stored before they reach the atmosphere – significantly decarbonising the data centre power supply.
Industry is responding to the data centre decarbonisation opportunity in the US and other countries. In December 2024, ExxonMobil revealed plans to build a 1.5+ GW natural gas power generation facility with CCS for a data centre that would capture and remove >90% of the associated CO2 emissions (ExxonMobil, 2024). In January, Chevron and its partner, Engine No. 1, announced a similar effort to develop data centres with up to 4 GW of co-located electricity, initially designed as a behind-the-meter solution, with the flexibility to integrate CCS at the same 90+% capture rate (Chevron, 2025). In March, Frontier Infrastructure and Baker Hughes announced a plan to utilise the storage resources in its Wyoming-based Sweetwater Carbon Storage Hub to develop 256 megawatts of behind-the-meter gas-fired power generation with CCS for data centre projects (Frontier, 2025).
The same trend is developing in Europe, where in February, Eni signed collaboration agreements with UAE-based MGX and G42 to supply up to 1 GW of "blue power" to data centres in Italy. “Blue power” refers to facilities that generate electricity with natural gas and capture and store the CO2 emissions – in this case, stored at the Ravenna CCS hub in Italy (Eni, 2025).
GE Vernova, a leading manufacturer of natural gas turbines, is also optimistic about decarbonising data centres using CCS. When asked about gas power generation during its December investor update, GE Vernova CEO Scott Strazik told investors that in places like Texas and Louisiana with considerable CO2 storage resources, there is "an economic path" to add carbon capture to data centre gas plants (GE Vernova, 2024). He also noted that GE Vernova's turbines will be used with CCS in the UK's Net Zero Teesside project.
CCS is a scalable solution
A limited number of options exist to deliver gigawatt-scale, low-emissions electricity. Technologies such as nuclear, geothermal, and renewable electricity with battery storage can be excellent energy solutions, but may not be cost competitive or easily scalable in every instance. This is where CCS applied to natural gas power generation (“NG + CCS”) stands out among low- or zero-carbon electricity source options. BloombergNEF and the Business Council for Sustainable Energy estimate that NG + CCS provides among the lowest levelised cost of electricity (LCOE) for dispatchable, or firm, power generation – lower than coal with CCS, hydrogen gas turbines, or nuclear. (BloombergNEF and BCSE, 2025).
Moreover, the US is the world's leading producer of natural gas, removing fuel as a critical constraint. The US also has a high side estimate of more than 21,000 billion tonnes (gigatonnes, Gt) of CO2 storage resources – many of which are in places like Texas and California where data centre demand is high – making NG + CCS an immediately deployable and scalable solution for data centre electricity supply (US DOE/NETL, 2015; US EIA, 2025).
The path ahead for CCS applications to US data centers
The right combination of policy and economic factors must be in place or developed for the data centre market to adopt the NG + CCS power solution. Data centre developers must balance the supply, accessibility and costs of natural gas, capture equipment, CO2 transportation infrastructure, CO2 storage resources, permitting timelines and complexity, and any tax incentives, such as the 45Q tax credit for storing or utilising CO2.
Currently, companies can qualify for a credit of $85/tonne of CO2 captured from data centre point sources and stored in saline formations and $60/tonne for conversion of that captured CO2 into useful products (e.g., fuels, chemicals, building materials) or utilised in enhanced oil recovery operations. However, high inflation has eroded the value of the 45Q tax credit since these dollar values were established in 2022. The Carbon Capture Coalition is calling on the US Congress to enhance the 45Q tax credit, including adjusting the credit for inflation (using 2021 as the base index year), introducing tax credit parity for CO2 utilisation, extending the direct pay option for all taxpayers, and other enhancements intended to ensure investment certainty in CCS.
Nevertheless, industry’s AI urgency and its sustained desire to eliminate their greenhouse gas emissions, combined with the versatility and scalability of NG + CCS, is expected to continue to make it a competitive power solution for data centre decarbonisation.
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