A joint study by the Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group (BCG) has identified shipping to play a key role in enabling CCUS initiatives, particularly when there is a large geographical mismatch between potential captured CO2 sources and sequestration hubs.
The 77-page reportfound that shipping CO2 will be especially important in Asia Pacific (APAC) due to the vast oceans and seas that separate emitters and sequestration sites, when compared to Europe. To address this, several APAC governments, including Australia, Indonesia, Japan, Malaysia, Singapore and South Korea, are pursuing cross-border partnerships and initiatives to support cross-border CO₂ transportation and sequestration.
The study estimated that approximately 100m tons per annum of CO2 captured using carbon capture technologies is expected to be transported across national borders in APAC by 2050. Transporting this annual tonnage would require between 85 to 150 liquefied CO2 carriers of 50,000 cu m capacity where the total investments needed for these vessels by 2050 could reach up to $25bn. Creating a market of this scale will necessitate concerted efforts from both the public and the private sector, including economic incentives, long-term contracts for midstream players, and greater clarity on key standards.
The study found that shipping becomes economically advantageous compared with pipeline transport of the same amount of CO2 at longer distances. A threshold distance of 500 km was identified to be economically viable for transporting 5m tonnes per year of CO2 transport via shipping.
The emerging cross-border CCUS hubs and routes that are aligned with this criteria for CO2 shipping include the Northern Lights project, which spans 500 to 1,000 km; intra-Southeast Asia routes ranging from 450 to 970 km; and the longest routes, Northeast Asia to Australia, which extends from 6,000 to 11,000 km.
The investment required to scale up cross-border CCUS, including shipbuilding, port and terminal infrastructure development, is substantial. The end-to-end levelised cost of cross-border CCUS with shipping ranges from$141-$174 per ton of CO₂ for Southeast Asia routes to $167-$287 per ton of CO2 for Northeast Asia-Australia routes. Capture and shipping costs constitute 60-80% of the estimated total expenses.
A significant gap exists between levelised cross-border CCUS costs and domestic carbon pricing in APAC. Current carbon taxes and emissions trading system prices range from $2 to $18 per ton of CO2, representing approximately a 10-fold gap with the range of levelised CCUS costs in this region. Without additional financial support, the economics of cross-border CCUS could impede its development.
Nascent regulations could also hinder the development of cross-border CCUS in the region. Countries need to establish domestic regulations governing carbon accounting and verification methodologies for CCUS, as well as permitting procedures for cross-border CCUS projects. Additionally, bilateral and multilateral frameworks are required to clarify the jurisdictional authority for cross-border projects and allocate commercial and operational liabilities for CO2 leaks during transport across the value chain.
Establishing these regulations and frameworks can provide greater certainty for project developers, mitigating policy risks and supporting CCUS projects and offtake agreements.
Professor Lynn Loo, CEO, GCMD said: “Our study shows that APAC has the potential to lead in CO2 shipping. In APAC, emitters and sinks are often separated by large bodies of water over vast distances, unlike Northern Europe where CCUS facilities are more geographically concentrated. This makes shipping a more attractive mode of CO2 transport in APAC, underscoring the importance of building up a shipping ecosystem. This effort entails constructing CO2 carriers, developing port-side infrastructure, establishing standards and guidelines for transporting and offloading CO2, and upskilling crew with requisite training.”
