3 Energy Stocks to Gain Exposure to the Carbon Capture Boom
As groups seek to combat the significant rise in atmospheric carbon dioxide (CO₂) on Earth, the carbon capture and sequestration (CCS) market is set to become an increasingly large part of the economy. Fortune Business Insights values the global CCS market at approximately $4.5 billion in 2025.
By 2032, the research firm expects this figure to move to around $14.5 billion. That would be more than a tripling of the market in just seven years. It also equates to a strong compound annual growth rate (CAGR) of more than 18%.
Due to this, investors have a significant opportunity to reap the rewards of this expanding market. A key avenue to potentially achieve this is through investments in publicly traded stocks that are building out their CCS capabilities. Below, we’ll dive into three stocks that are doing just that, offering investors a way to gain exposure to the CCS market.
California Resources Eyes Hyperscale CCS Deals in Elk Hills
First up is California Resources (NYSE: CRC). The energy company primarily generates revenue by producing and selling oil and natural gas. However, the firm also has a first-of-its-kind project in California underway. Through its subsidiary Carbon TerraVault Holdings (CTV), the firm is pursuing the state’s first CCS project in Elk Hills, CA.
The project is also leading the nation. It is the first project in the United States that the Environmental Protection Agency has authorized to construct Class VI wells.
This is a significant milestone, as Class VI wells must meet strict requirements that show they can contain CO₂ underground for thousands of years. This demonstrates how California Resources is a CCS leader in the United States. The company expects to have the wells completed near the end of 2025 and to be able to start injecting CO₂ in early 2026.
Thus, this is not a far-flung opportunity for California Resources; CCS could become a revenue source soon. Adding to the intrigue is that California Resources hopes to announce a power generation and CCS deal with an artificial intelligence (AI) hyperscaler in 2025. This could be a significant positive catalyst for shares.
Buffett-Backed OXY Looks to Get STRATOS Plant Online in 2025
Next up is Occidental Petroleum (NYSE: OXY). Warren Buffett’s Berkshire Hathaway owns a significant stake in OXY, valued at approximately $13 billion as of March 31. Occidental is building a direct air capture (DAC) plant through its STRATOS project. The facility will pull CO₂ from the air and then store it underground. Importantly, STRATOS has also received Class VI well permits, and the site is on track to start capturing CO₂ in 2025.
When OXY captures and stores CO₂, it will receive carbon dioxide removal (CDR) credits. Other companies looking to reduce their CO₂ emissions artificially can then buy these credits. Near-term, the revenues STRATOS could bring to Occidental might not be needle-moving.
OXY generated more than $27 billion in sales over the last 12 months. However, the firm’s DAC strategy could become meaningful in the long term as it looks to build 100 DAC plants by 2035.
XOM Gets Carbon Capture Operations Underway, Sees $4 Trillion CCS Market
Last up is the most valuable energy stock in the United States, ExxonMobil (NYSE: XOM). Notably, Exxon’s CCS business is already operational.
The company is capturing and storing carbon for a third party using its CO₂ transport and storage network that Exxon calls "the world’s only large-scale system."
Exxon doesn’t say how much revenue it is generating from the project.
However, the firm previously stated that it sees the CCS market growing to a massive $4 trillion by 2050.
This highlights the massive potential opportunity for all three of these firms.
CRC, OXY, and XOM: Avenues for Carbon Capture Exposure
These three companies are making big moves to enter the CCS market. Thus, these names can expose investors to this market, which analysts expect to grow significantly over the coming years.
Still, it is essential to note that no names represent CCS pure plays. They all have other significant parts of their business that will likely exert extensive influence on the movement in their stock prices for years to come.
However, these businesses could significantly supplement their overall growth through CCS investments. This adds upside potential to these names in the long term, especially if their CCS growth manages to outpace that of the general CCS market.
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