The UK and Europe risk falling behind in the race for carbon capture and storage (CCS) investment without stronger and more predictable government support, according to a new report from Marsh Risk.
The analysis warned that policy uncertainty, rising project costs and regulatory readiness gaps could divert capital away from Europe toward faster-moving markets in the Middle East and Asia, threatening jobs, infrastructure investment and long-term economic growth tied to decarbonisation.
The report, CCS at Scale: Aligning Risk and Reality in Carbon Capture and Storage, is based on a survey of 504 senior UK-based CCS decision-makers across the global CCS value chain. It found that Europe currently leads in planned CCS investment, with 62% of respondents targeting the region, ahead of North America and the Middle East and North Africa.
However, Marsh said the economics of many projects remain fragile. The average forecast cost to capture, transport and store carbon dioxide was estimated at $163.45 per tonne, well above prevailing carbon prices in most markets. As a result, many CCS developments are expected to remain dependent on government subsidies or contractual support mechanisms to reach final investment decisions.
Cost pressures are also expected to intensify. Forty-two percent of respondents anticipate CCS costs rising by 11% to 15%, while a further 31% expect increases of 16% to 20%, adding further strain to project viability.
The report highlighted a staggered timeline for final investment decisions (FIDs), reflecting cautious capital deployment. Around 26% of FIDs are expected between 2025 and 2027, rising to 35% between 2028 and 2030, before tailing off into the early 2030s.
While that approach may reduce near-term financial exposure for developers, Marsh warned it could create bottlenecks later in the decade, placing pressure on financing capacity, supply chains and shared CO₂ transport and storage infrastructure.
The findings come against a backdrop of ongoing UK government efforts to establish CCS at scale through its cluster sequencing programme. The UK has committed billions of pounds in support for early projects across industrial clusters such as the East Coast Cluster and HyNet, with a focus on shared transport and storage networks to lower costs and accelerate deployment.
However, the Marsh report suggests that delays to project approvals, uncertainty over long-term revenue support and evolving regulatory frameworks risk slowing momentum. Developers remain sensitive to clarity around storage licensing, long-term liability allocation and the durability of government-backed contracts, all of which influence bankability and insurability.
Industry participants have repeatedly warned that while the UK’s policy framework is directionally supportive, execution risk remains high without consistent timelines and long-term funding visibility.
Insurance is viewed as a central pillar in enabling CCS development, with nearly two-thirds of respondents saying they rely heavily on insurance to manage risks across construction, operations, environmental exposure and long-term storage performance.
For brokers and insurers, CCS projects present complex, high-value risks spanning multiple phases and long durations. Coverage requirements typically include construction all risks, delay in start-up, operational property damage, environmental liability and, in some cases, bespoke solutions for long-term CO₂ storage integrity.
Marsh said engagement between insurance, risk and technical teams remains limited in many projects, indicating that risk transfer is not always fully integrated into project design at an early stage. That gap creates both risk and opportunity for brokers with specialist engineering, energy transition and environmental expertise.
“Stable policy frameworks, regulatory certainty, and credible risk transfer mechanisms are essential if the global CCS industry is to attract the scale of investment needed to accelerate decarbonisation and support economic growth,” said Andrew Herring, global chair of energy and power at Marsh Risk.
“For this vision to be realised, governments must commit to multi-year funding programmes, establish clear project pipelines, and invest in essential CO₂ transport and storage infrastructure,” he said, adding that the insurance industry is already playing a key role in enabling the sector.
CCS is increasingly viewed as a critical technology for meeting net-zero targets, particularly for hard-to-abate sectors such as steel, cement, chemicals and power generation. The International Energy Agency has repeatedly said large-scale CCS deployment is required to meet global climate goals, with capacity needing to grow significantly by 2030.
While the US and Europe have historically led CCS development - supported by emissions trading schemes, tax incentives and permitting frameworks - Marsh said the market is becoming increasingly multi-regional.
The Middle East is emerging as a major CCS hub, benefiting from scale, lower costs and integration with large energy and industrial projects. Japan and South Korea have strong government backing, while Singapore is positioning itself as a regional transport and storage hub for Southeast Asia. Projects are planned or underway in Malaysia, Indonesia and Thailand.
Australia is leading CCS development in the Pacific, particularly through LNG- and hydrogen-linked projects using existing infrastructure. In China, CCS pilots are expected to expand under the country’s 2060 net-zero pledge.
For the insurance sector, the report suggests that CCS is moving from a niche energy-transition risk to a mainstream line requiring scalable capacity, specialist underwriting and early broker involvement as projects move toward construction later this decade.
