The Sabatier reaction (that is, CO2 methanation) is undergoing a revival for two main reasons. First, the power-to-gas concept offers the prospect of large-scale recycling of (point source) CO2 emissions, in combination with the use of large quantities of renewable energy to form methane. When this can be achieved in a cost-effective manner, it can use the gas distribution infrastructure that already exists. However, methanation is no simple panacea to the detrimental environmental effect of CO2 emissions, and reaction products other than methane should also be targeted. Second, methanation has been identified as an important reaction to facilitate long-term space exploration missions by space agencies, such as NASA. This Perspective discusses the current understanding of CO2 hydrogenation within these concepts, from fundamental mechanistic aspects to several parameters that will ultimately define its technical and economic feasibility on Earth and in space, as we transition into the era of small-molecule activation.