In order to take up Norway's twin challenge of reducing CO2 emissions, while meeting its growing energy demand with domestic resources, the deployment of carbon capture and storage (CCS) plays an important role in Norwegian energy policies. This study uses the Functions of Innovation Systems approach to identify key policy issues that need to be addressed in order to prolong Norway's international leadership position in the development of CCS. The analysis shows that Norway has been successful in building an innovation system around CCS technology. The key determinants for this achievement are pinpointed in this article. However, the evolution of the innovation system seems to have entered a critical phase that is decisive for a further thriving development of CCS in Norway. The results provide a clear understanding of the current impediments in the CCS innovation system and stress the need to direct policy initiatives at the identified weak system functions-i.e. entrepreneurial activity and market formation-to improve the performance of the system. We discuss how policymakers can use these insights to develop a coherent set of policy instruments that would foster the deployment of CCS concepts related to power production and enhanced oil recovery in Norway. © 2008 Elsevier Ltd. All rights reserved.