New study highlights huge potential for CO2 shipping in Asia
Shipping’s Role in Carbon Capture and Storage
As the world grapples with climate change, innovative solutions are crucial. A recent study by the Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group (BCG) highlights the significant role of shipping in carbon capture, utilization, and storage (CCUS) initiatives. This report emphasizes the unique geographical challenges faced by the Asia Pacific (APAC) region, where vast oceans separate carbon dioxide (CO2) emitters from sequestration sites. The findings suggest that shipping could be a key player in transporting captured CO2 across borders, particularly in APAC. This article explores the implications of the study and the potential for shipping to facilitate effective CCUS strategies in the region.
Geographical Challenges and Opportunities in APAC
The study reveals that the geographical layout of the Asia Pacific region presents both challenges and opportunities for CCUS initiatives. Unlike Europe, where emitters and sequestration sites are often closer together, APAC faces significant distances between these two points. The report estimates that by 2050, around 100 million tons of CO2 captured through carbon capture technologies will need to be transported across national borders in APAC. This transportation will require a fleet of 85 to 150 liquefied CO2 carriers, each with a capacity of 50,000 cubic meters. The total investment needed for these vessels could reach up to $25 billion.
To address these challenges, several APAC governments, including Australia, Indonesia, Japan, Malaysia, Singapore, and South Korea, are actively pursuing cross-border partnerships. These initiatives aim to support the transportation and sequestration of CO2, facilitating a more integrated approach to carbon management. The study identifies a threshold distance of 500 kilometers as economically viable for shipping CO2, making it a more attractive option compared to pipeline transport for longer distances. This finding underscores the need for collaboration among governments and private sectors to create a robust market for CO2 shipping.
Investment and Regulatory Frameworks for CCUS
Scaling up cross-border CCUS initiatives requires substantial investment in shipbuilding, port infrastructure, and terminal development. The report outlines that the end-to-end levelized cost of cross-border CCUS with shipping ranges from $141 to $174 per ton of CO2 for Southeast Asia routes and $167 to $287 per ton for Northeast Asia-Australia routes. Notably, capture and shipping costs account for 60-80% of these total expenses. However, a significant gap exists between the levelized CCUS costs and current carbon pricing in APAC, which ranges from $2 to $18 per ton of CO2. This disparity poses a challenge for the economic viability of cross-border CCUS projects.
Moreover, nascent regulations could hinder the development of these initiatives. Countries in the region need to establish domestic regulations governing carbon accounting and verification methodologies for CCUS. Additionally, there is a pressing need for bilateral and multilateral frameworks to clarify jurisdictional authority and allocate commercial liabilities for CO2 leaks during transport. Establishing these regulations will provide greater certainty for project developers, helping to mitigate policy risks and support CCUS projects and offtake agreements.
Professor Lynn Loo, CEO of GCMD, emphasizes the potential for APAC to lead in CO2 shipping. She notes that the region’s unique geographical challenges make shipping a more viable option for transporting CO2. To realize this potential, it is essential to build a comprehensive shipping ecosystem. This includes constructing CO2 carriers, developing port-side infrastructure, establishing standards for transporting and offloading CO2, and providing training for crew members. By addressing these challenges, APAC can position itself as a leader in the global effort to combat climate change through effective CCUS strategies.
