Carbon Capture Enters Its Commercial Era as First Megascale DAC and CCS Plants Near Operations
With the Stratos direct air capture facility in Texas targeting Q2 startup, California's first CCS project nearing injection, and Norway's Northern Lights expanding, the carbon capture industry is transitioning from pilot projects to commercial-scale operations in 2026.
The Scale-Up Moment
For years, carbon capture technology has been discussed in the conditional tense — a promising tool that could help decarbonize heavy industry and remove legacy emissions from the atmosphere, if only it could be built at scale and at a price the market would bear. In 2026, the conditional is giving way to the present tense. A cluster of commercial-scale projects across three continents is approaching operations simultaneously, marking what the International Energy Agency has called a period of “new milestones” for the carbon capture, utilization, and storage (CCUS) sector.
The projects span two distinct approaches: point-source carbon capture and storage (CCS), which intercepts CO2 emissions at industrial facilities before they reach the atmosphere, and direct air capture (DAC), which pulls diffuse CO2 directly from ambient air. Both are reaching operational scale in the same year for the first time, creating a natural experiment in which approach — and which business model — can deliver commercially viable carbon removal.
Stratos: The World’s Largest DAC Plant Takes Shape
The most closely watched project is Stratos, a direct air capture facility in Ector County, Texas, developed by 1PointFive, a subsidiary of Occidental Petroleum. Phase 1 of the plant is in the final stages of startup and is expected to be online in Q2 2026, with Phase 2 commissioning also beginning in Q2 and operational ramp-up continuing through the rest of the year.
At full capacity, Stratos is designed to capture up to 500,000 metric tons of CO2 per year, making it by far the largest DAC facility ever constructed. For context, Climeworks’ Mammoth plant in Iceland — previously the world’s largest — has a nameplate capacity of 36,000 tons per year. Stratos represents more than a tenfold increase.
The project has already secured offtake agreements for its carbon removal credits. In January, Bain & Company agreed to purchase 9,000 metric tons of carbon removal credits over three years, joining Airbus, Amazon, AT&T, and Microsoft as buyers. These agreements are critical because DAC economics depend heavily on demonstrated demand: without forward contracts, the capital expenditure required to build capture infrastructure is difficult to justify.
Stratos uses Carbon Engineering’s liquid solvent technology, which passes air through large contactors where a potassium hydroxide solution absorbs CO2. The captured carbon is then processed, compressed, and injected into deep geological formations for permanent storage. The project has received Class VI well permits from the EPA, authorizing the underground injection.
California’s First CCS Project Nears Injection
While Stratos represents the DAC frontier, point-source CCS is reaching its own milestone on the West Coast. California Resources Corporation announced on March 2 that construction of carbon capture equipment is complete at the Elk Hills Cryogenic Gas Plant in Kern County for the Carbon TerraVault I (CTV I) project, California’s first CCS facility. The company is commissioning the equipment and targeting first CO2 injection at the nearby 26R storage reservoir in spring 2026, subject to EPA approval.
CTV I is the first CCS project in California to secure EPA Class VI permits for CO2 injection and storage in depleted oil and gas reservoirs. At maximum capacity, the facility is expected to store up to 1.46 million metric tons of CO2 per year, with the underlying reservoir holding an estimated total capacity of up to 46 million metric tons. The project is structured as a joint venture between CRC, which holds 51 percent, and Brookfield, which holds the remaining 49 percent.
The significance of CTV I extends beyond its capacity figures. California has some of the most stringent emissions regulations in the United States, and the state’s cap-and-trade program provides a compliance market that can underwrite CCS economics independently of federal tax credits. If successful, the project could establish a template for deploying CCS in regulatory environments where carbon has an explicit price.
Northern Lights Expands in Norway
Across the Atlantic, the Northern Lights project — a joint venture among Equinor, Shell, and TotalEnergies — is already operational and expanding. Phase 1, which began injecting CO2 beneath the North Sea floor in August 2025, has a capacity of 1.5 million tonnes per year. In March 2025, the consortium announced a Phase 2 expansion worth NOK 7.5 billion (approximately $700 million) that will increase total injection capacity to a minimum of 5 million tonnes per year, with completion expected in the second half of 2028.
Northern Lights is notable as the world’s first open-access CO2 transport and storage infrastructure. Rather than serving a single emitter, the facility accepts CO2 from multiple industrial sources across Europe, which ship liquefied CO2 by tanker to a receiving terminal on Norway’s west coast. From there, the gas is piped to an offshore injection well. This third-party model is designed to reduce the barrier to entry for industrial emitters that cannot afford to build their own storage infrastructure.
The expansion decision came despite Equinor’s broader recalibration of its near-term CCS investment plans. The company has acknowledged that commercial demand has lagged initial expectations in some project categories, underscoring the tension between long-term climate targets and near-term market realities.
The Next Generation Scales Up
Beyond the headline projects, a second wave of DAC developers is moving toward commercial operations. Heirloom Carbon Technologies, which raised $150 million in Series B funding in December 2024, is building two facilities at the Port of Caddo-Bossier in Shreveport, Louisiana. The first is expected to begin operations in 2026 with an initial capacity of roughly 17,000 tonnes of CO2 per year. A second, larger facility — part of the DOE-backed Project Cypress, which has up to $550 million in federal funding — aims to remove 100,000 tonnes annually starting in 2027.
Heirloom’s approach differs fundamentally from Stratos. Rather than using liquid solvents, the company enhances the natural carbon-absorbing properties of limestone. Crushed calcium oxide is spread on trays and exposed to ambient air, where it absorbs CO2 over a period of days. The enriched limestone is then heated in a kiln to release concentrated CO2 for storage, and the calcium oxide is recycled. The process is less energy-intensive than solvent-based methods but requires more physical space.
The Economics: Credits, Tax Policy, and the Cost Curve
The commercial viability of these projects hinges on three revenue streams: voluntary carbon removal credits purchased by corporations, compliance market revenues in jurisdictions with carbon pricing, and federal tax incentives — principally the Section 45Q credit, which was expanded under the Inflation Reduction Act.
Under the IRA, the 45Q credit provides $85 per metric ton for CO2 captured from industrial sources and stored in geological formations, and $180 per metric ton for CO2 captured via direct air capture. Projects that begin construction before January 1, 2033, can claim the credit for up to 12 years. For a facility like Stratos, the DAC credit alone could generate up to $90 million per year at full capacity — a substantial incentive, though one that still falls short of covering the full cost of capture, which industry analysts estimate at $400 to $600 per ton for current-generation DAC technology.
The World Economic Forum has noted that closing the gap between the cost of capture and the available revenue requires a combination of policy support, technology learning, and scale. The industry’s near-term target is to bring DAC costs below $200 per ton — a threshold that, combined with 45Q credits and voluntary market premiums, would make the technology self-sustaining. Achieving that will require building roughly a gigaton of annual capacity, an investment estimated at approximately $200 billion.
What the Numbers Mean
Even at the ambitious capacity targets now being pursued, the scale of carbon capture remains modest relative to global emissions. The combined capacity of every project expected to be operational in 2026 — Stratos, CTV I, Northern Lights Phase 1, Heirloom’s first facility, and several smaller installations — amounts to roughly 3 to 4 million tonnes of CO2 per year. Global CO2 emissions from energy and industry exceeded 37 billion tonnes in 2024.
The gap illustrates a point that climate scientists have made repeatedly: carbon capture is not a substitute for emissions reductions. The IEA’s net-zero pathway assigns CCUS a role in mitigating hard-to-abate industrial emissions and, eventually, in drawing down atmospheric CO2 concentrations — but only alongside rapid deployment of renewables, electrification of transport, and efficiency gains. The technology’s value lies not in its current scale but in whether 2026’s commercial deployments can demonstrate the economic and operational foundation for the orders-of-magnitude expansion that climate models require.