CCS and the world of shipping

CCS offers several benefits to the shipping sector. Firstly, it allows ships to continue using fossil energy in a sustainable manner, providing more time for research and testing of alternative fuels and energy sources. This extra time is invaluable as the industry seeks the best long-term propulsion technology and energy source. The transition to green energy poses a significant challenge, particularly for modes of transport that heavily rely on stored energy, such as ships and aeroplanes. IMO’s decarbonisation goal for 2050 leaves a limited timeframe for determining the types of ships to construct. CCS can serve as a solution to avoid making incorrect decisions in this critical period.

When it comes to the costs and economic feasibility, Mr Cartwright emphasised the initial challenges that accompany any significant technological transition.

Undoubtedly, CCS needs to be economically viable. Apart from the capex required for the onboard equipment, the major cost factors include the energy consumed during the CCS process, temporary storage costs, offloading expenses, costs associated with on-land transport, and sequestration expenses. Collectively referred to as the fuel penalty, these costs are projected to increase the opex by 10% to 40%, depending on factors such as CCS system type and size, CO2 density, carbon capture rate, and other relevant factors. Extensive research by DNV has been conducted on this subject. However, the maritime sector is still in its nascent stage with this technology, and more data is required to make more accurate cost predictions.

Shipowners considering decarbonisation through CCS should take into account the space and additional energy required for an onboard CCS system, which adds weight to the vessel. The CO2 capture rate of the design should align with the ship’s greenhouse gas (GHG) reduction goals throughout its operational life. Carbon pricing is another crucial factor to consider. For example, with shipping included in the EU Emissions Trading System (ETS), the cost of emissions allowances is rising, making CCS more attractive. Singapore has committed to limiting its peak emissions to 60M tonnes of CO2 equivalent by 2030 and will gradually increase its carbon tax. The country’s industrial clusters present numerous opportunities for CO2 capture and utilisation, and regional sequestration projects are being prepared.

However, noted Mr Cartwright, uncertainties remain, such as the future availability and pricing of green fuels, the fuel penalty, and the costs associated with CO2 offloading and sequestration, making it challenging to develop a business case. As emissions limits become stricter, there will be a significant demand for green fuels across industries. DNV research suggests that, in a scenario with a substantial price gap between fossil and green fuels and a high carbon tax, CCS could be a viable business case. Additionally, CCS offers greater flexibility, marketability and resilience against fuel price fluctuations, making it an option worth considering as a decarbonisation strategy.

Register now to discuss shipping and decarbonisation at the Maritime Decarbonisation, Europe: Conference, Awards & Exhibition 2023, which will be held 26 - 27 September 2023. Secure your delegate package here.