Japan Carbon Capture and Storage Market Size, Share & Trends Analysis Report By Technology (Pre-combustion capture, Oxy-fuel combustion capture, Post-combustion capture), By Service (Capture, Transportation, Storage, Utilization), By Utilization Technology (Uptake, Catalytic conversion, Mineralization), By End-User (Power Generation, Oil and Gas, Metal Production, Others) and Forecasts, 2024-2032

Japan Carbon Capture and Storage Market Size

The Japan carbon capture and storage (CCS) market size was valued at USD 184.15 million in 2023 and is projected to reach from USD 226.27 million in 2024 to USD 728.57 million by 2032, growing at a CAGR of 15.7% during the forecast period (2024–2032).

Japan is leveraging CCS technologies to decarbonize energy and industrial sectors. Innovations in catalytic conversion and integration of CCS with hydrogen production are driving adoption.

Driving Factors

Government policies and net-zero commitments

Japan’s commitment to achieving carbon neutrality by 2050 underpins the growth of its CCS market. The government’s Green Growth Strategy, which includes CCS as a critical pillar, provides funding and tax incentives for decarbonization projects. Japan’s Ministry of Economy, Trade, and Industry (METI) has allocated approximately JPY 220 billion (USD 1.5 billion) in 2024 for CCS initiatives. Large-scale projects, such as the Tomakomai CCS Demonstration Project, showcase the government’s resolve to scale CCS infrastructure, with over 300,000 tons of CO₂ captured and safely stored offshore since 2016. These initiatives create a robust foundation for CCS adoption across various industries.

Restraining Factors

High implementation costs and limited geological storage

The high capital and operational costs associated with CCS technologies remain a significant barrier in Japan. According to the Global CCS Institute, CCS projects in Japan cost 20–30% more than global averages due to the country’s limited geological storage options, requiring extensive exploration for suitable storage sites. Additionally, retrofitting existing facilities with CCS capabilities adds to the financial burden. Despite government subsidies, smaller firms find it challenging to adopt CCS technologies, slowing market penetration. Addressing these cost concerns through public-private partnerships and technological innovation is crucial for overcoming this restraint.

Market Opportunities

Integration with hydrogen economy and catalytic conversion

Catalytic conversion, growing at a CAGR of 16.2%, presents immense potential for Japan’s CCS market. By converting captured CO₂ into value-added products such as synthetic fuels and chemicals, this technology aligns with the country’s push for a circular carbon economy. Japan’s burgeoning hydrogen economy is ideal for integrating CCS with green and blue hydrogen production.

• For instance, the Osaki CoolGen Project combines coal gasification, hydrogen production, and CCS to achieve near-zero emissions. These synergies are poised to unlock new revenue streams while promoting sustainable industrial practices.

Regional Insights

The market is characterized by Japan’s strategic push toward carbon neutrality by 2050, supported by government policies, industrial collaboration, and investments in CCS technologies. Key cities across the country are emerging as innovation and deployment hubs for CCS, reflecting diverse applications and regional strengths.

Tokyo, as Japan's economic and policy hub, drives CCS initiatives at the national level. The Ministry of Economy, Trade, and Industry (METI), based in Tokyo, funds pilot projects and promotes industry-academic collaboration. Mitsubishi Heavy Industries, headquartered in the city, develops advanced CO2 capture systems that are adopted worldwide.

Osaka’s industrial base integrates CCS into its manufacturing processes. The Kansai Electric Power Company, in collaboration with technology partners, is advancing post-combustion capture technologies aimed at reducing emissions from power plants in the Kansai region.

Yokohama focuses on leveraging CCS to decarbonize port and logistics operations. Projects in collaboration with JERA, Japan’s largest power generation company, explore carbon capture integration with hydrogen and ammonia energy systems to reduce maritime emissions.

Kitakyushu, known for its environmental innovation, hosts projects linking CCS with energy recycling and industrial symbiosis. The city’s Green Innovation Zone fosters collaborations between research institutions and local industries to develop scalable CCS models.

Sapporo, with its proximity to geological formations in Hokkaido, is a prime location for CO2 storage projects. Pilot initiatives test long-term storage capabilities backed by collaborations between national agencies and academic research centers.

Segmentation Analysis

By Technology

Pre-combustion capture dominates the technology segment and is expected to grow at a CAGR of 15.3% over the forecast period. Pre-combustion capture is gaining traction in Japan due to its hydrogen production and clean energy generation application. Projects like the Toshiba Corporation’s Integrated Gasification Combined Cycle (IGCC) exemplify advancements in this segment, enabling efficient CO₂ separation during fuel processing.

By Services

Capture services dominate the segment and are expected to grow at a CAGR of 15.3% during the forecast period. The capture segment benefits from innovations in solvent-based and membrane-based capture technologies. Japan’s focus on retrofitting industrial plants, such as those in the steel and cement sectors, drives demand for customized capture solutions tailored to local emissions profiles.

By Utilization technology

Catalytic conversion dominates the utilization technology and is expected to grow at a CAGR of 16.2% over the forecast period. Catalytic conversion is central to Japan’s strategy of monetizing captured CO₂. Companies like Kawasaki Heavy Industries are pioneering catalytic systems to produce synthetic fuels, supporting decarbonization efforts in the transportation sector.

By End users

Oil and gas dominate the end-user segment and is expected to grow at a CAGR of 15.1% during the forecast period. The oil and gas sector remains a crucial driver for CCS adoption. Firms like INPEX Corporation are integrating CCS into operations to reduce emissions from upstream and downstream activities, exemplified by the Koshijihara CO₂ EOR Pilot Project.

Analyst’s Perspective

As per our analyst, the Japan carbon capture and storage market is poised for rapid expansion in the coming years. This growth is primarily driven by Japan’s ambitious net-zero targets, government-backed funding, and advancements in CCS technologies. The integration of CCS with hydrogen production and catalytic conversion technologies offers transformative opportunities, particularly in industrial decarbonization. The strategic focus on R&D and collaboration with global CCS leaders positions Japan as a key player in shaping the future of CCS deployment. However, addressing high costs and expanding geological storage capacity will be critical to achieving sustained growth.