Japan Carbon Capture and Storage Market Analysis

Japan Carbon Capture and Storage Market Outlook from 2025 to 2035

The Japan CCS market is projected to grow significantly, reaching an estimated market size of USD 3,878.5 million by 2035, with a CAGR of 18.4% from 2025 to 2035. Growth is led by the government, coupled with investments made by corporations and the uptake of cutting-edge technologies specifically tailored to the extreme geographic and industrial spectrum of Japan.

Japan's efforts in decarbonizing hard-to-abate sectors, blue hydrogen, and CCS integration into bioenergy and into DAC solutions affirm its leadership position globally in the realm of CCS. More supportive policies and public-private collaboration speed up growth in the market.

Attribute	Details
Anticipated Forecast Value (2035)	USD 3878.5 Million
Value CAGR (2025 to 2035)	18.4%

Market Introduction

Japan's Carbon Capture and Storage market is moving since the country takes huge steps towards reaching its intended carbon neutrality by 2050. Amongst one of the technological leaders in innovation, Japan focuses on CCS deployment as a response to emissions generated from energy-intensive industries such as steel, cement, and chemicals. In the context of the government's Green Growth Strategy, which puts at its center clean energy and sustainability, CCS will be an integral part of the decarbonization process.

Japan is highly dependent on imported fossil fuels, and the densely populated urban areas require compact and efficient CCS technologies. International partnerships and investment in innovation within the country indicate the commitment of the country towards driving CCS adoption and long-term climate goals.

Key Trends

Compact CCS Technologies for Urban Areas

• There is a significant need to develop compact, highly efficient CCS solutions in Japan's densely populated cities. Spider lifts for maintenance of the capture equipment for CO₂ and modular systems for space-limited locations are increasing popularity.
• For instance, Toshiba and Hitachi are leading in development of small-scale, high-efficiency CCS systems suitable for urban climate.

Decarbonizing Energy-Intensive Industries

• Iron and steel, cement, and chemicals processing industries are at forefront to adopt CCS technologies in Japan. These industries contribute significantly to the country’s to meet emission reduction targets by CCS integration.
• The COURSE 50 project by Nippon Steel captures CO₂ from steel production and reuses it for industrial purposes.
• Cement manufacturers are looking into the integration of CCS to capture process emissions, which are a major source of CO₂ in the sector.

Hydrogen Production with CCS

• Japan's Basic Hydrogen Strategy emphasizes the development of blue hydrogen as a transitional energy source. CCS is an essential part of capturing emissions during hydrogen production, especially in gasification processes.
• Projects like the Osaki CoolGen Project combine CCS with hydrogen production, which demonstrates Japan's efforts to reduce emissions while scaling up clean energy initiatives.

Offshore CO₂ Storage Potential

• Though with very limited onshore storage capacity, Japan is also using offshore storage. The projects of collaboration with other countries, like Australia, have focused on utilizing depleted oil and gas reservoirs for CO₂ storage.
• One of the major initiatives of Japan is the Tomakomai CCS Demonstration Project, which is capturing and storing CO₂ in offshore saline formations, demonstrating the feasibility of offshore storage.

Policy and Regulatory Support

• Govt. Policies such as the Long-term Strategy under the Paris Agreement also offer a strong framework for adoption of CCS. Subsidies, grants, and tax incentives by the Ministry of Economy, Trade, and Industry (METI) provide a favorable investment climate for CCS technologies.

Segment Analysis

By Technology

• Post-Combustion Capture (50% Market Share): It is the most extensively used in retrofitting existing industrial facilities and power plants due to its flexibility.
• Pre-Combustion Capture (7.8% CAGR): Primarily utilized in hydrogen production and integrated gasification combined cycle (IGCC) plants.

By Application

• Industrial Sector (50% Share): Adoption in iron and steel, cement, and chemical processing drives industrial segment.
• Power Generation (30% Share): Focus on retrofitting coal and biomass power plants to reduce emissions.

Industry Wise Growth and Trends

Industry	Industrial Sector
CAGR (2025 to 2035	7.0%
Key Trends	Integration of CCS in steel and cement production.

Industry	Power Generation
CAGR (2025 to 2035	6.8%
Key Trends	Retrofitting fossil fuel plants with CCS technologies.

The industrial sector is the largest adopter of CCS in Japan, driven by emissions mandates and technological innovation.

Market Concentration

The Japan CCS market comprises of Tier , domestic innovators, and research institutions working in collaboration to drive adoption and innovation.

Established Players

• Global firms such as Shell and ExxonMobil work together with Japanese companies to tap into their strengths in large-scale storage and carbon capture technologies.

Domestic Innovators

• Japanese companies like Mitsubishi Heavy Industries, Toshiba, and Hitachi are leaders in preparing compact and efficient CCS systems designed to specifically suit Japan's requirements.

Research Institutions

• Researchers at AIST National Institute of Advanced Industrial Science and Technology and the universities, mainly Tokyo Institute of Technology, work on advanced CCS technologies such as CO₂ mineralization and DAC.

Industry Updates

Date	Key Development
March 2025	MHI rolled out a new DAC system focused on scalability for urban and industrial uses.
June 2025	Nippon Steel started a pilot project incorporating CCS into its steel production plants.
August 2025	The Tomakomai CCS project hit a milestone when it stored 400,000 tons of CO₂ offshore.
October 2025	Toshiba launched a compact CCS system that could be applied in densely populated urban areas.

Future Outlook

Steady growth for Japan CCS Market can be anticipated because of technology improvements, government initiatives, and collaboration among other countries. Main drivers in this direction include the following:

CCS for the Hydrogen Economy

• The potential blue hydrogen expansion and scaling-up, which would bring Japan smoothly towards green hydrogen production, would highly rely on CCS.

Offshore Storage Collaboration

• Collaborations with countries such as Australia and Norway will help to expand the available offshore CO₂ storage capacity by overcoming geographical restrictions faced by Japan.

Scaling Up Direct Air Capture (DAC)

• Investments in DAC technologies will pick pace to see Japan take top leadership positions in negative emission solutions.

Industrial Decarbonization

• With the quantitative reduction and commitment goals that are set, the steel and cement sectors will focus more on CCS integration as they seek higher compliance.

Alignment with Circular Economy

• CCS will be integrated with Japan's circular economy by converting the captured CO₂ into products like synthetic fuels and other industrial materials.

Table of Content

1. Introduction
2. Market Outlook
3. Key Trends
4. Segment Analysis
5. Industry-Wise Growth and Trends
6. Market Concentration
7. Industry Updates
8. Future Outlook
9. Frequently Asked Questions (FAQs)