Governments approving new oil and gas fields face a persistent debate between industry arguments regarding continued energy demand and jobs, and climate advocates’ concerns about emissions incompatibility with net-zero targets. A proposed framework could bridge this divide by requiring producers of new fossil fuel developments to fund the permanent geological storage of an increasingly large share of carbon contained in their products, moving beyond voluntary pledges or vague commitments.
The approach addresses a fundamental market failure in carbon capture and storage infrastructure. While carbon storage capacity exists in geological formations and technical capabilities are proven, storage remains commercially unreliable because industrial emitters hesitate to commit to long-term contracts without subsidies or price guarantees, while storage operators cannot finance necessary pipelines and injection facilities without guaranteed customer volumes. This creates a circular dependency that public funding currently attempts to resolve. The United Kingdom, for example, has committed up to £20 billion to support carbon capture, utilization and storage projects with targets to capture and store 20-30 million tonnes annually by 2030.
Attaching storage obligations to fossil fuel production creates a direct customer base for storage services while leveraging producer resources and subsurface expertise. This applies principles already established in other industries through extended producer responsibility programs for packaging, electronics and waste. Oil and gas companies could comply by building storage infrastructure themselves, contracting with independent providers, or purchasing certified storage credits, creating competition and market-driven solutions.
The mechanism requires careful design to prevent greenwashing. Any obligation must begin at meaningful levels and follow a legally binding trajectory rising toward complete coverage of produced carbon. Requirements should apply to imported fuels where possible to prevent carbon leakage. Storage standards must ensure permanence, independent verification, additionality and exclude temporary alternatives like forest credits or avoided emissions claims.
Recent UK policy debates, including a proposed amendment to the Energy Act 2023, have explored this framework. Research suggests such progressively increasing obligations could finance storage at costs below conventional carbon-pricing approaches through the 2040s, while transforming storage from aspiration into enforceable market demand rather than relying solely on government subsidies or voluntary corporate commitments.
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