When it comes to energy policies, carbon capture, utilization and sequestration is one of the most controversial.
The technology — where carbon is captured from industrial processes or from the air and stored underground or sold — is expensive, reliant on subsidies and uncertain at scale.
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While the oil and gas industry supports carbon capture, and the technology features in government decarbonization efforts, critics say it delays the transition away from coal, oil and natural gas, creates its own set of environmental problems and isn’t as proven as solar and wind farms.
Nevertheless, many are hoping that carbon capture will become part of an “all of the above” solution for transitioning the globe away from fossil fuels.
“There are good reasons to believe that now is a favorable time to invest in carbon capture and the broader carbon markets,” says Andrew Latham, a certified financial planner and director of content with SuperMoney.com. “Federal support for carbon capture and storage technologies has increased significantly through recent legislation.”
Amid rising political support and subsidies, companies are giving the go-ahead to carbon capture, transport and storage projects in Europe, the Middle East and the United States, with global investment in the industry nearly doubling for a second year in a row to $11.3 billion in 2023, according to BloombergNEF.
“Carbon capture is a technology poised to play a significant role in the energy transition, but it is not a mature market,” says Blaine Townsend, director of the sustainable, responsible and impact investing group at Bailard. “There are so many variables affecting if/when carbon capture reaches scale.”
Investing in pure-play industrial carbon capture companies is mostly done in private markets. But that doesn’t mean everyday investors are completely shut out from getting exposure to carbon-related investments.
Here are seven of the best carbon capture stocks and ETFs to buy now:
| Stock | Type |
| NET Power Inc. (ticker: NPWR) | Carbon Technology |
| Aker Carbon Capture ASA (OTC: AKCCF) | Carbon Capture |
| TotalEnergies SE (TTE) | Carbon Capture |
| Occidental Petroleum Corp. (OXY) | Carbon Capture |
| Quanta Services Inc. (PWR) | Carbon Capture Services |
| KraneShares Global Carbon ETF (KRBN) | Carbon Credit Fund |
| Carbon Streaming Corp. (OTC: OFSTF) | Carbon Reduction |
NET Power Inc. (NPWR)
This company’s technology combusts natural gas with oxygen, producing carbon dioxide that is mixed with recirculated CO2 and used to spin a turbine and generate electricity. Most of the carbon dioxide is recirculated, and nearly all of a small portion that exits the cycle is captured for sequestration or sale.
“For (a) pure play-stock, NET Power may be the most compelling,” says Mike Adams, senior vice president of capital management with 8 Rivers.
“Led by Danny Rice, an energy industry veteran, NET Power stands to benefit from the desire for carbon-free power as well as the burgeoning demand for power from the AI data center building boom.”
Aker Carbon Capture ASA (OTC: AKCCF)
In June, oilfield services giant Schlumberger Ltd. (SLB) bought 80% of Aker Carbon Capture.
The backing by an industry heavyweight gives the smaller company stability, and it adds Schlumberger’s own carbon capture technology to create a more robust player in the industry.
Aker’s technology uses water and solvents to absorb carbon dioxide in a process that can be applied to emissions from gas, coal and cement industries and refineries.
The technology has been offered commercially since 2009, giving Aker Carbon Capture an important foothold in a developing industry that is set to become more important as time goes by.
The acquisition by Schlumberger is just part of the “demonstrated appetite of industry incumbents to continue expanding their business reach in carbon capture and management services,” says Adams. “Major investments are happening by large players.”
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TotalEnergies SE (TTE)
“Carbon capture could be a real bridge to energy transition for traditional fossil fuel companies,” Townsend says. “The more capital investment the traditional energy players make, the more viable the carbon capture market will become.”
This French fossil fuel giant is still very much an oil and gas company, so it’s not a pure-play carbon capture company like Aker. But it has been using its deep pockets to expand into renewable energy production.
It has invested with Equinor ASA (EQNR) and Chevron Corp. (CVX) in a Texas joint venture that Adams notes “is building out a large-scale carbon capture and storage project in the U.S. Gulf Coast.”
TotalEnergies this year acquired Talos Low Carbon Solutions, which is involved in the growing American carbon storage industry. The French company also has carbon storage projects in Norway, Denmark, The Netherlands, Australia and Papua New Guinea.
By 2030, TotalEnergies says it aims to have carbon storage capacity of more than 10 million tons a year.
Occidental Petroleum Corp. (OXY)
“Many incumbents continue to lead in the carbon capture space,” Adams says.
Occidental Petroleum is an incumbent oil and gas company with substantial backing from Warren Buffett‘s Berkshire Hathaway Inc. (BRK.A, BRK.B) that has gained a reputation as a pioneer of carbon capture technology.
“Occidental Petroleum is a strong contender, benefiting from extensive federal support and significant investments in carbon capture technologies,” Latham says.
Occidental says large-scale carbon capture, utilization and storage is essential for near-term emissions reductions.
Quanta Services Inc. (PWR)
One problem with trying to get exposure to carbon capture through oil and gas companies is that their development of that technology is only a small part of their business, which remains supported by hydrocarbon sales.
While oil and gas investors will want to watch to see how much big fossil fuel companies adopt carbon capture and whether it becomes a meaningful part of their revenue stream, investing in smaller companies is another option.
This contracting services company designs, installs, repairs and maintains infrastructure for the electric power, energy and communications industries.
While it has a diverse income stream, its renewable services offerings include carbon capture, solar and wind power engineering, battery energy storage systems and biofuel plant construction.
KraneShares Global Carbon ETF (KRBN)
Carbon reduction projects can produce carbon credits, with each credit representing one metric ton of carbon dioxide saved. Those credits can form the basis for carbon credit futures, which can function as bets on carbon price movements.
You can buy those futures contracts via the CME Group or Intercontinental Exchange, but an easier way to go is through exchange-traded funds, or ETFs, that invest in carbon credit futures.
Those include KraneShares Global Carbon ETF, which has holdings from the major carbon-compliance markets in California, the northeastern United States and the European Union.
This fund “allows investors to benefit from the broader carbon credits market, which is expected to grow as global emissions regulations tighten,” Latham says.
Carbon credit funds will generally rise in price along with carbon, but as carbon capture technology expands and creates more carbon credits these funds may actually fall in value as more CO2 credits in circulation lower the price of compliance.
Carbon Streaming Corp. (OTC: OFSTF)
This company makes upfront payments to carbon reduction projects in exchange for future carbon credits those projects generate. It then generates revenue by selling those carbon credits.
The company has carbon credit streams and royalties related to more than 20 projects around the world. In May, the company, Rubicon Carbon Capital and Microsoft Corp. (MSFT) entered into a carbon deal with a reforestation project in Panama.
“The company’s focus is on projects that generate high-quality carbon credits and have a positive impact on the environment, local communities and biodiversity, in addition to their carbon reduction or removal potential,” Carbon Streaming says.
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Update 08/26/24: This story was previously published at an earlier date and has been updated with new information.
