The IEA's Sustainable Development Scenario, the IPCC's 1.5 scenario, and the Shell Sky Scenario illustrate the massive extent to which CCS, carbon dioxide removals (CDR) and CO₂ storage projects need to be deployed to reach climate objectives, as shown in Table 1.

The same message was given more than 20 years ago, when CCS appeared on the agenda of climate change policy makers, with the publication of the IPCC Special Report on CCS in 2005. Yet the rate of deployment of CCS has not kept pace with what the scenarios require (IEA, 2016).³

CCS deployment has in effect faced historical barriers ranging from high upfront capital costs, low price signals, insufficient policy and regulatory incentives (including slow permits), technical challenges (such as limited storage availability), through to cross-chain risks (i.e., if one element of the value chain is deficient, none of the other elements can function) as well as social and environmental concerns, including public trust issues.

Consistent policy support to incentivize CCS that includes mandates and pricing incentives, is particularly critical, with policy shifts and removal of financial support, rather than technology or costs, considered to be responsible for the high failure rate of CCS projects (DNV, 2025).⁴ The slow rate of CCS deployment is reflected in insufficient CO₂ geological storage rates compared to what the IPCC 1.5 and 2 °C median pathways require (Figure 1).

CO₂ storage capacity data between 1996 (when the first commercial geologic storage project in Sleipner, Norway, began) and 2020 indicate an annual growth rate of 8.6% in CO₂ storage, which could result in cumulative storage of 441 Gt if carried through to 2100 (Zahasky and Krevor, 2020). Yet this is still insufficient compared with the median IPCC 1.5 °C model pathway that has a target of 865 Gt in 2100 (Figure 1).⁵

In contrast, according to the IPCC, while there are uncertainties, the global capacity to store CO₂ deep underground is large. Depleted oil and gas reservoirs are estimated to have a storage capacity of 675–900 GtCO₂ (for comparison, the United States emitted 5.960 GtCO₂ in 2023; European Commission, 2024). Deep saline formations are very likely to have a storage capacity of at least 1,000 GtCO₂ Intergovernmental Panel on Climate Change, (2007b).⁶

Geological storage of CO₂ does not inherently generate income, thus lacking a conventional business case for its implementation. Instead, its deployment has been facilitated through a variety of policy instruments, both regulatory and fiscal, such as the CCS 2009 Directive and the 2024 Net Zero Industry Act in the EU or the 45Q tax credit and the Inflation Reduction Act in the US Carbon Gap Policy Tracker, (2009).⁷

To scale up geological storage of CO₂ to levels significant enough to contribute meaningfully toward achieving global net-zero emissions, a robust global carbon market framework for removals is essential. This framework would include high integrity carbon credits for verified CO₂ storage in the context of international compliance and voluntary markets that include a space for removals. These credits would be integrated into national and global targets. Harmonized monitoring, reporting and verification (MRV) methodologies as well as secure long-term legal and financial guarantees, would underpin this framework.

Guiding principles would include transparency, environmental integrity and additionality, as embedded in the provisions of Article 6 of the Paris Agreement, that can act as the global blueprint for such a framework, connecting markets worldwide Michaelowa and Butzengeiger, (2017). Compared to the Clean Development Mechanism (CDM) under the Kyoto Protocol, Article 6 creates the basis for a more robust global carbon market that is more flexible, open to all countries on a bilateral or multilateral basis and that includes both market and non-market approaches, with stricter accounting rules (Asian Development Bank, 2018).

The inherent characteristics of CO₂ geological storage necessitate this approach: countries possessing the geological capacity and expertise for large-scale CO₂ storage would host these projects. The carbon credits generated from these projects could then be internationally transferred and utilized as offsets by both governments and the private sector.

The implementation of low-carbon policies and regulations, coupled with the commitment to net-zero emission goals, has significant implications. This shift is prompting governments, national energy companies, and private sector entities to diversify their energy portfolios and their economic structures, contributing to the expansion of the overall market for CCS that is expected to reach USD 14.51 billion by 2032, up from USD 4.51 billion in 2025 (Fortune Business Insights, 2025).

The goal of achieving net-zero emissions by 2050 poses a significant challenge for countries reliant on fossil fuel extraction and production. However, these nations possess the expertise and knowledge necessary for geological CO₂ storage. Implementing CO₂ storage could offer a viable pathway for these countries to “decarbonize” their products, facilitating the transition to a carbon-neutral economy while minimizing macroeconomic costs.

Supply-side climate policies focused on the supply of fossil resources need to play a role complementing the established toolbox of policy instruments on the demand side if carbon neutrality is to be achieved in a sustainable manner.⁸ Specifically, these policies need to unlock the storage capabilities of fossil fuel-producing countries so that these countries can constructively contribute to the transition to net-zero emissions globally, including through the deployment of CDR technologies such as DACCS Hovi et al., (2016).⁹

Most of the current storage projects are concentrated in high-income countries with high historical oil and gas production (HOGP) and are located mainly in the Northern Hemisphere (USA, Canada, UK, Norway) and the Middle East (Saudi Arabia, UAE, Qatar; Alcalde et al., 2025).

Establishing carbon markets for geological storage can help address this imbalance by creating incentives for nations outside the current group to host storage projects, thus creating a more just and geographically equitable distribution of these initiatives with their geological assets (United Nations Economic Commission for Europe, 2021; Rassool and Havercroft, 2021). Significant geological storage potential is present in countries like Russia or on the African continent (in Algeria, Nigeria or South Africa) (Esau, 2021).¹⁰

Participation in these markets will need to be supported by North/South and South/South transfers of carbon technologies that can be facilitated through joint ventures and existing technology mechanisms.¹¹ Financing of projects will require broad derisking investment strategies as well as continued support from multilateral climate Funds and global financial institutions (Sustainability Directory, 2025; Etefe, 2024).¹² These steps can support greater participation from emerging economies and developing countries in the new market mechanisms of Article 6.

Creating carbon markets and in particular effective operationalization of Article 6 can thus help address the geographical imbalance in the deployment of geological storage of CO₂ by connecting the storage potential and capabilities of developing countries directly to global markets, creating much more of a level playing field, with common standards and methodologies as well as de-risk investments (Sandler and Schrag, 2024).

High-income HOGP developing countries already have much of the infrastructure and expertise in place for CO₂ geological storage.¹³ Middle or low-income developing countries that are not in this position would have the opportunity of creating a new storage industry domestically, with support from climate finance, international partnerships and multilateral development banks, thereby helping to alleviate poverty, unemployment and inequality.¹⁴ The assetization of emissions avoidance or removals in the context of evolving carbon markets is in effect an important aspect of a just and equitable global energy landscape.

Developing countries would also thereby be provided with the option of using CO₂ geological storage to help reduce their carbon footprint and meet their nationally determined contributions (NDCs) under the Paris Agreement.

Article 6 establishes a framework for international collaboration aimed at achieving climate goals in a more cost-effective way. It lays the groundwork for creating a global carbon market mechanism that could include emissions reductions or removals through geological storage.

In particular, the market mechanisms of Article 6 could create a space for stocks of geologically stored carbon to be marketed internationally using CSUs. The use of CSUs would both lean on and reinforce international linkage of regional, national and sub-national climate policies in support of collective ambition of the NDCs.¹⁵

CSUs, traded as Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6 could help incentivize all types of CCS technologies, using a similar carbon credit concept (Heidug and Zakkour, 2019).

The availability of CSUs presents a potential new revenue stream for governments hosting storage projects. Countries looking to fulfill a portion of their NDCs through storage may drive demand for CSUs. Additionally, industries seeking to offset emissions that are challenging to reduce could purchase CSUs. These units could also support compliance with low-carbon fuel standards and regulations.¹⁶

Article 6 of the Paris Agreement has been compared to a climate club (Stua, 2022).¹⁷

The concept of climate clubs originates in the theory of economic clubs as proposed by Buchanan (1965), with William Nordhaus developing a theory of environmental clubs in 2015.¹⁸ A Nordhaus Club would include (1) members that would commit to a binding carbon price and (2) penalties for non-compliance of members and non-participants Nordhaus, (2015).

On the other side of the spectrum, a broader definition of Clubs includes Clubs that represent any form of minilateral arrangement by a group of countries, including discussion forums (Hall, 2024).

Article 6 represents the foundation for a governance framework or Club that facilitates the assetization of carbon emissions mitigation and is considered to be a potential basis for a low-carbon Bretton Woods (Stua, 2017). International organizations such as the World Bank are thus setting up their own climate clubs under Article 6 (Srinivasan and Zunin, 2020).¹⁹

A Storage Climate Club, operating under the framework of Article 6, would thus enable a group of key “enthusiastic” countries (Hovi et al., 2016) to join forces to drive forward deployment of CO₂ geological storage at scale.

The essential service provided by the Club would be its definition and certification of CSUs that would be tradable under Article 6, operating on the basis that providing a non-rivalrous but excludable good can be more effective and flexible than relying on more general international agreements to help resolve “hard” global commons problems such as climate change and are better able to advance specific areas of action (Hovi et al., 2016; Stewart et al., 2013).

A Storage Climate Club (SCC) would work in support of objectives of the Paris Agreement, in the context of a transition to net-zero emissions by 2050. This means that storing carbon underground and managing stocks of carbon would supplement rather than contradict the key objective of reducing GHG emissions. Article 4 of the Paris Agreement explicitly mentions “sinks i.e. storage”, as being key to reaching long-term temperature goals as set out in Article 2.²⁰

Members of the Club would include those that have a direct interest in deploying these technologies, i.e. fossil fuel producers that have the know-how and the expertise to deploy CO₂ geological storage projects, together with governments and stakeholders that are already engaged in deploying CCS and CO₂ storage projects.

These members would provide critical political and economic momentum and help raise the profile of CO₂ geological storage as a key removal/sequestration technology in the move to net-zero.

This core group would provide basic membership stability for the Club. All members would join on the basis of their acceptance of CSUs as an asset class. This means that all members of the Club would adhere to the certification of CSUs that meet internationally recognized standards and quality thresholds, as well as to the trading of carbon storage credits on international markets on the basis of these CSUs.²¹ CSUs would in effect certify the safe and permanent storage of CO₂.

The core group of members would also include stakeholders such as large corporations that have a direct interest in CCS and CO₂ geological storage or who wish to purchase CSUs as part of their carbon offsetting or ESG requirements. Over the long run, membership of the Club would become diverse, attracting all countries that have expressed an interest in CCS through their NDCS or that wish to develop their CO₂ geological storage potential. Different tiers of membership could thus co-exist within the Club.²²

A Club would also fulfill roles such as development and policy innovation that would establish robust and credible frameworks as well as promote regulatory/financial incentives (such as long-term national strategies, fiscal incentives, emissions trading schemes that include removals, etc.). The need to provide long-term visibility and certainty for investors is especially important given the high levels of upfront investment and long-term timeframes required for CO₂ geological storage projects.

A Storage Climate Club would set up common funding and finance partnerships as well as technical assistance to facilitate the development of large-scale joint projects, particularly in developing countries of the South, as well as support capacity-building such as mapping out CO₂ geological storage potential and Article 6 market readiness.²³

A Club would be instrumental in supporting the deployment of CCS and removal technologies. This would include supporting the development of patents, helping establish joint ventures and partnerships, encouraging private sector participation, or helping scale up R&D activities.²⁴

Supporting the proper design of carbon markets worldwide will also be key, with a view to supporting the acceptance of CSUs as credible carbon credits on well-functioning markets (both compliance and voluntary markets).

A key role of a Storage Climate Club would be to make CSUs operational in the context of Article 6.2 of the Paris Agreement.

A CSU cooperative approach under Article 6 would correspond to a process whereby countries would verify whether their cooperative approaches fit the framework and guidelines of Article 6 as well as those of international law and of their respective national countries. A Storage Climate Club could assist in this process.

A sustainable and credible economic incentive for CO₂ geological storage would thereby be created.

The Storage Climate Club would adopt a plurilateral trading model, whereby a number of countries would sign up to a common set of rules and guidelines that would govern the relationship between all countries that participate in the Club, with CSUs being accepted as an asset class by all members of the Club and by carbon market participants beyond the Club.

CO₂ geological storage suffers from a disconnect in terms of public perception, that represents an obstacle to its deployment at scale through the trading of CSUs. The geological storage of CO₂ is not a very “popular” option, at least in comparison with renewables and energy efficiency, while negative emission technologies like direct air capture, which ultimately rely on geological storage, are held in much higher regard. A Storage Climate Club could help raise the profile of CO₂ geological storage and help correct public (mis)perception of CO₂ storage.

Concerns over environmental and safety aspects of CO₂ geological storage can be addressed by communicating scientific findings and industry experience through consultations with the public and through third party certification and verification (Mackie and Aarnes, 2022).²⁵

Appropriate standards and certifications would apply to safety, permanence, issues of leakage or reversal, issues of liability, as well as monitoring, reporting and verification of storage projects over time.²⁶

The founding members would take the key strategic decisions at the level of governments.

One key political decision that would need to be taken early on at this level would be whether to aim to deploy CO₂ geological storage on as large a scale as possible, i.e. involving a greater number of countries, in particular from the developing world, or whether to concentrate principally on developing CO₂ geological storage only in those countries that are already actively involved in developing CO₂ storage at present and that have the most impact on a global level in terms of carbon removal or avoidance. This goes to the heart of the climate change mitigation problem that needs to be balanced against sustainable development and equity concerns.

The Club would issue a CSU standard for certified geological carbon storage and then issue CSU certificates as its key function. The standard used could be drawn from existing standards that include the IPCC, ISO, CDM, national laws and regulations Labregere and Van den Bogert, (2024). In other words, the Club would act as a type of “clearing house” for CSUs analogous to financial market clearing arrangements. Members of the Club would have the objective of contributing to a global net-zero objective and beyond, meeting and extending their commitments in their NDCs via measured and monitored CSUs.

This in turn would incentivize the deployment of all CCS and CDR technologies such as DACCS, with a Club working to avoid storage bottlenecks and create a de facto business case for this technology, as well as support R&D in process and materials required for this technology (Qiu and Yang, 2018) and provide much-needed policy support (Sovacool et al., 2022).²⁷

A neutral balance would ultimately be reached between the carbon stored and the carbon emitted or embodied.

The regulatory framework designed by the Club would provide certainty for all participants, including from the private sector, as well as deal with issues such as liability or any legal issues between countries and stakeholders that are members of the Club and that are engaging in CSU trading. The actual organizational framework of the Club would be modeled on that of the Secretariat of an international organization.²⁸