Carbon Dioxide Utilization Market Size & Share, by Application (Enhanced Oil Recovery, Chemical Synthesis, Fuel Synthesis, Others); Technology; End user - Global Supply & Demand Analysis, Growth Forecasts, Statistics Report 2025-2037

Carbon Dioxide Utilization Market: Growth Drivers and Challenges

Growth Drivers

• Increasing popularity across diverse industries: Carbon dioxide is becoming increasingly necessary for the gas and oil industries as well as for increased oil recovery operations. Carbon dioxide emissions are rising as a result of the world's rapid industrialization. The United Nations Industrial Development Organization indicated that a post-pandemic recovery was indicated by the 2.3% growth in industrial sectors worldwide, which include manufacturing, mining, power, water supply, waste management, and other utilities. The majority of this dynamism was driven by the manufacturing sector, which increased by 3.2%, while the mining and utilities sector, which makes up the greatest portion of the economy in low-income nations, declined by 0.9%.
  Furthermore, hydrogen can be transformed into a fuel that is simpler to handle and use, like aviation fuel, due to the carbon in CO2. As a raw ingredient for chemicals and polymers, CO2 can also take the role of fossil fuels. Reacting CO2 with minerals or waste streams, like iron slag, to create carbonates for construction materials is one less energy-intensive method.
• Favorable government taxes and funding: Tax incentives such as carbon credits and deductions for carbon capture investments reduce financial burdens for companies adopting these technologies. For instance, the 45Q tax credit for CCUS, which encourages CO2 use by offering tax credits now valued at USD 60 per tonne of CO2 used, was significantly increased as part of the U.S. 2022 Inflation Reduction Act. In a similar vein, the European Union approved the ReFuelEU Aviation proposal in April 2023, which imposes blending mandates on synthetic fuels for aviation. These mandates will increase from 0.7% in 2030 to 28% in 2050. Additionally, the EU Innovation Fund's 2022 large-scale call selected five large-scale CCU projects that target synthetic fuel.
  Additionally, government funding in the form of grants, subsidies, and research support helps de-risk innovation and scale-up efforts in carbon capture, utilization, and storage (CCUS). For instance, the Energy Technology Development and Demonstration Program in Denmark awarded roughly USD 3 million to two projects in June and December. Similarly, one Mission Innovation nation, South Korea, has set the goal of becoming carbon neutral by 2050. The government declared in April that it would invest up to USD 1.2 billion to develop CCUS technologies and evaluate CO2 storage resources.

Challenges

• Higher investment: Large upfront expenditures are needed to set up infrastructure for carbon dioxide use. This covers the initial costs of purchasing the equipment required for carbon capture from point sources, pipeline transit, and eventual transformation into a range of downstream goods. For innovations that are still in the early phases of development and commercialization, the capital intensity is considerably greater. To reduce production costs and facilitate the expansion of new CO2 use pathways, including conversion into fuels, chemicals, cement, and carbonated beverages, large expenditures in research and development are required.
• Stringent frameworks and technological maturity: The absence of strong legislative and policy frameworks facilitating the use of CCU technology is a major obstacle. To encourage investment in CCU technologies, effective policies are required, such as tax incentives, grants, or carbon credits. Furthermore, many CCU technologies have not yet been validated at scale and are still in the pilot or development stages. There are many logistical and technological obstacles when expanding from lab or pilot initiatives to industrial-scale operations.