The States Take the Lead: How Regional Policy Is Shaping U.S. Carbon Capture Regulation

For decades, carbon capture and storage (CCS) has lingered on the edge of energy strategy: technically sound for managing emissions, but slow to scale. Now, a shift is underway. Across the U.S., states are stepping into the regulatory spotlight, working with federal agencies to accelerate permitting and oversight. 

Federal oversight was designed for a slower market, one focused on environmental protection, not rapid energy transformation. In 2010, the EPA issued the Class VI well rule to regulate underground CO₂ storage and safeguard drinking water, not accelerate large-scale commercial CCS deployment. Today, the landscape has expanded. As CCS projects move forward globally and domestic demand grows, more states are pursuing “primacy” — EPA approval to issue and enforce their own permits for Class VI wells. 

The result? A hybrid governance model. State regulators bring regional expertise; federal agencies maintain national consistency. Measurement, Reporting, and Verification (MRV) frameworks are also part of that evolution, ensuring captured carbon is permanently stored and verifiable under standardized methods. 

With six states now approved for Class VI primacy — Texas, Arizona, and West Virginia received approval this year — and more than 40 MRV plans approved nationwide, most in the past two years, oversight is catching up to ambition. Together, these milestones are helping convert policy frameworks into actionable projects.

The stakes are rising fast. Data centers, manufacturing onshoring, and electrification are reshaping energy demand and creating the conditions for CCS to play a larger role. 

“Customers like hyperscalers are investing in natural gas-fueled combined-cycle plants to ensure reliability, while at the same time creating a path to carbon neutrality,” says Mike Schuster, Director of Emerging Technologies, Mitsubishi Power. “Carbon capture extends the value of those assets, providing a practical way to further reduce emissions while maintaining dependable power.” 

CCS allows utilities to meet today’s reliability needs while building toward the cleaner future that hyperscalers and others increasingly demand. As more states gain Class VI primacy and more projects secure MRV approval, the pieces are falling into place. Regulatory support, corporate demand, and proven technology are converging, setting the stage for CCS to scale in the U.S. 

State Policy Is Accelerating Carbon Capture and Storage (CCS)

State authorities are responding to the shift by pushing for a greater role. Class VI primacy gives them the authority to oversee underground storage directly, streamlining reviews and tailoring oversight to regional conditions. But getting that authority isn’t fast. The EPA’s primacy approval process is slow and opaque, often taking years to complete due to national-level review and staffing demands. 

Once granted, though, state primacy changes the game. It can dramatically cut permit approval times; in Wyoming, for example, it can take less than a year. By drawing on states’ deep knowledge of regional formations and existing oil and gas activity, local regulators can evaluate injection zones and monitor plans with local data, aligning oversight more closely with on-the-ground realities.

“With primacy, states can move at their own pace, and that pace is often faster,” says Schuster. “They can staff up and set priorities. That’s how you turn policies into progress.”

Primacy determines where and how carbon can be stored. MRV plans determine how that storage is verified and valued. These plans ensure that the CO₂ injected underground is measured, reported, and permanently stored in accordance with federal standards. For developers, an approved CCS MRV plan unlocks eligibility for 45Q tax credits — federal incentives that reward each metric ton of CO₂ securely stored — and access to verified carbon markets, providing the financial certainty that investors need. For regulators, MRV plans deliver transparency and accountability, ensuring projects deliver measurable benefits. 

Together, Class VI primacy and MRV oversight connect the technical and financial sides of CCS, transforming policy frameworks into infrastructure.

Carbon Capture Technology Is Ready

In the U.S. power sector, the challenge isn’t technology. It is execution. Mitsubishi Heavy Industries has deployed CCS at commercial scale for years, and the technology is mature and proven. Mitsubishi Power and Mitsubishi Heavy Industries apply this expertise regionally, helping utilities and developers advance gas turbine plus CCS solutions across North America. 

The Broadwing Energy project in Decatur, Illinois — the first-ever corporate offtake agreement for a CCS-enabled gas plant — is a key test case. Announced in October, it will pair Mitsubishi Power’s M501JAC gas turbine with CCS to capture and permanently store about 90% of its CO₂ emissions using Archer Daniels Midland’s adjacent Class VI wells. Google has agreed to offtake some of the power generated by the project, providing financial backing to build and connect this new, clean baseload power source to the regional grid.

While some projects have proven successful, the economics of CCS remain challenging. The projects are capital-intensive — demanding significant upfront investment in equipment, infrastructure, and labor. Coupled with EPC bottlenecks, labor shortages, and rising construction costs, these projects are difficult to get off the ground.  

Unlike solar or wind, CCS doesn’t benefit from small-scale applications that drive down costs through widespread adoption. Each project is a bespoke, large-scale infrastructure build that depends on regional geology, permitting, and industrial partners. Cost reductions will come instead from replicable designs and shared infrastructure, reducing capital expenditure and risk. 

Over time, these efficiencies could make CCS more affordable, but today the technology’s economics hinge on policy support, investor confidence, and the successful delivery of more full-scale projects.

Local Leadership Is Defining U.S. Energy Competitiveness

State oversight of CCS projects works alongside federal authority, creating a clearer path from demonstration to deployment.

International models offer some lessons. For instance, the UK has moved quickly with government-backed CCS clusters on Merseyside and Teesside, integrating transport and storage. Supported by more than $26 billion in public funding commitments over 25 years, these clusters exemplify how centralized planning and government partnership can accelerate deployment and create thousands of jobs. 

In contrast, U.S. policy relies more heavily on tax incentives like 45Q. The credit has energized the U.S. carbon management market, but in the absence of coordinated infrastructure investment, many projects remain isolated efforts rather than components of an integrated national system for CO₂ transport and storage.

Continued state-led efforts can accelerate commercialization and build confidence across geographies, but states can’t do it alone. Scaling CCS will require coordination between regulators, utilities, developers, and communities, supported by state-federal partnerships that build trust, reduce risks, and create momentum. 

What’s Next for Carbon Capture and Storage?

State oversight is expanding, demand is rising, and technology is ready. 

As part of Mitsubishi Heavy Industries, Mitsubishi Power is partnering with energy producers, regulators, and developers to turn regional CCS policy momentum into real-world carbon capture projects in the U.S. and across North America. What happens next depends on public and private-sector leadership. States that build permitting capacity and expertise today will attract early CCS investment and the next wave of infrastructure funding.

The global picture reinforces that urgency. The IEA reports that projects under construction could nearly double today’s carbon capture capacity, a clear sign that the industry is shifting from planning to execution.

Carbon capture won’t be unlocked by one state or one piece of storage legislation. But the rise of state-led oversight signals practical collaboration between regulators and industry. More states are applying for Class VI primacy, and more are expected to seek EPA carbon capture approval and develop MRV frameworks. 

For utilities, capture-readiness for new gas builds and retrofits is no longer optional. Waiting means falling behind. For policymakers, primacy must be paired with investment, or it risks becoming a bottleneck rather than a catalyst.

The U.S. has the tools, incentives, and demand to lead in carbon management. What’s needed now is proof at scale and the resolve to move from readiness to deployment. 

It’s time to turn commitment into construction — advance CCS projects, invest in shared infrastructure, and build the partnerships that accelerate deployment. Regulators can streamline approvals and scale oversight to match industry ambition. The opportunity is here; let’s build it.