Shipping CO2 out to sea

Transporting CO2 via ship will be critical to reach European CCS targets. CO2 carrier orders need to come thick and fast, but technical and economic challenges need to be overcome.

Shipping CO2 in liquid form will play a key role in many of the larger proposed carbon capture utilisation and storage (CCS) projects in Europe. For short distances, pipelines have the edge and can handle a steady flow of volumes. However, as the CCS sector grows, shipping will necessarily play a more important role.

While liquefied CO2 shipping is technologically mature, there are some technical and commercial challenges to overcome. One factor that will have an impact is a sufficiently high carbon tax, which would spur the creation of a global market for physical carbon.

The roster of CCUS projects in Europe is growing rapidly with many involving liquefied CO2 shipping at some stage.

First mover

Thus far, though, only one project, Norway’s Northern Lights, has ordered CO2 carriers. A first mover in the CCS space, the project – which involves Equinor, Shell and TotalEnergies – is on schedule for commissioning this year.

It will involve the delivery of liquefied CO2 via ship to a receiving terminal in Oygarden. At this site, on Norway’s west coast, the CO2 will be temporarily stored.

From there, the CO2 will move via pipeline to a saline aquifer, 100 km from shore. The project’s initial storage capacity will be 1.5mn tonnes per year, but is set to reach 5-6mn tpy by 2026 under a yet-to-be-sanctioned second phase.

Northern Lights’ developers signed a first commercial agreement for CO2 storage in August 2022 with Dutch fertiliser producer Yara, for 800,000 tpy starting next year. The following year, a deal was struck with Orsted to store 430,000 tpy of CO2 from two power plants in Denmark.

Four specialised CO2 carriers, built at the Dalian Shipbuilding Industry Co. (DSIC) yard in China, will provide transportation. The Chinese yard should deliver the first two of these vessels this year.

Northern Lights ordered the first three vessels itself, with Japan’s K Line selected as a charterer. The project consortium will charter the fourth CO2 carrier, which Germany’s Bernhard Schulte ordered.

The vessels will each have a storage capacity of 7,500 cubic metres. They will be LNG-fuelled, with the option of switching that fuel with lower-emission bio-LNG or synthetic LNG in the future at no extra capital cost. They are also being equipped with wind-assisted rotor sails and air lubrication systems, to reduce their emissions further.

Thin market

Globally, there is little else on the orderbook for CO2 carriers. Japan’s Sanyu Kisen received a 1,500-cm demonstration vessel last year, built by Mitsubishi Shipbuilding, for operational tests.

Meanwhile, Greek shipowner Capital Maritime & Trading has ordered four 22,000-cm vessels from the Hyundai Mipo Dockyard in South Korea, with no specific CCS project in mind. Those ships will be designed for the transport of other liquefied gases as well, such as LPG and ammonia.

Besides Northern Lights, other storage projects that are advancing with an interest in CO2 shipping solutions include the Stella Maris CCS project in the Norwegian North Sea.

While Track 1 CCUS cluster projects in the UK are only focused on pipeline CO2 transport, CO2 shipping is likely to be incorporated at some of the Track 2 projects.

The developers of one of those projects, Acorn CCS in Scotland, signed a memorandum of understanding (MoU) last December with Germany’s Uniper on shipping CO2 from a power plant on the UK Isle of Grain in southeast England.

On the production side, companies looking to make a move into the commercial development of CO2 carriers for CCUS in Europe include Norway’s Knutsen and Lavrik, both of which have been shipping the gas on a small-scale for years for the food and beverages industry. No commercial contracts are in place yet though.

Pipeline versus ship

“When you’re looking at larger CO2 volumes [and] shorter distances, pipelines are cheaper than ships,” DNV’s business development director for CO2 shipping, Erik Mathias Sørhaug, told E-FWD.

While pipelines carry a heftier construction cost, they also mean lower operating costs.

Shipping options are generally cheaper than a subsea pipeline when the sequestration site is located more than 100 km offshore, Rostom Merzouki, director of global gas solutions at the American Bureau of Shipping (ABS), noted.

This said, one of the largest CO2 transport projects planned in Europe is NOR-GE, which aims to install a pipeline with a 900-km length to transport CO2 captured from German industry to offshore storage sites in Norway from the early 2030s. This is a case where the sheer volume of CO2 – 20-40mn tpy – outweighs the distance consideration.

The EU is targeting 50mn tpy of CO2 storage capacity by the end of this decade. This will rise to 280mn tpy by 2040 and around 450mn tpy by 2050.

As the bloc pursues these ambitious targets, Europe and specifically the North Sea area should drive the global adoption of CO2 shipping, Rystad Energy estimates.

The Norwegian consultancy estimates that over 90mn tpy of CO2 will be shipped by 2030, based on planned carbon capture projects. Norway alone will account for 26mn tpy, or 30%, followed by the Netherlands with 23mn tpy and the UK with 20mn tpy.

Northern Lights taking final investment decision (FID) on a second phase is likely to trigger the next CO2 carrier order. Some reports have suggested this may take place this year.  

If Europe is to achieve its CCS targets, orders will need to come thick and fast, according to Sørhaug.

Tech and economics

CO2 vessel storage tanks can be designed for varying pressures and temperatures. In contrast to LNG, CO2 cannot be stored in liquid form with atmospheric pressure. At a minimum, the CO2 must be stored at around 6-7 bar pressure. This requires a temperature of about -50-55°C.

If the pressure and temperature is lower, CO2 reaches the triple point, where it exists as a mixture of solid, liquid and gas simultaneously, risking leaks and even explosions. At the other end of the spectrum, tanks can be built for pressure of about 75 bar and 10°C. The carriers ordered for Northern Lights are about at the mid-range, with a pressure of 19 bar and temperature of -35°C.

On the one hand, lower pressure and lower temperature can allow the tanks to be larger, Sørhaug explains. That reduces transport costs. However, it raises the cost of preparing the cargo for transport. It requires more energy to cool the CO2 to a lower temperature.

The vessels carrying CO2 for the food and beverage industry operate with medium pressure and temperature. These designs are tried and tested, having been in service for decades.

No vessels have yet been built for a low pressure of around 6-9 bar. The challenges are commercial not technological, according to Merzouki.

“Actually, there is no complexity in the design [of these vessels]. It’s just a pressurised gas carrier,” he said. “The challenge is more on how to make the vessel commercially variable by maximising the density of the CO2 carried by using designs operating around 6 bar and optimising the tank sizes by using high tensile steels to reduce the shell size and increase the volume.”

Impurities

Adequate steel grades must be obtained for a price that makes their fabrication cost effective, he continued. Operationally, meanwhile, the issue is to avoid CO2 solidifying when it nears the triple point.

“Adding to the complexity, in order to make the value chain business model viable, the cost of captured CO2 from different emitters needs to be reduced to its minimum before being put onboard a liquefied CO2 carrier,” he says.

This means that flue gases will be less treated and the captured CO2 will contain impurities. As a result, the triple point is reached at a higher pressure and potentially causes corrosion. As such, the industry is looking to develop a standard for acceptable impurities to make CO2 transport safe.

Merzouki expects the first low-pressure design CO2 carriers to be ordered in the second half of this year. Yards would start delivering these from the third quarter of 2025.

“The design is very robust and proven. It’s only a matter of optimisation to make it more economically viable,” he said.

For CO2 transport to shape into a truly global market, there needs to be a high carbon tax.

“Cost is the biggest dilemma in the shipping of CO2 equation. All indicators show that, to make the shipping projects viable, the cost of the carbon traded needs to be above $130 per tonne,” Merzouki said. “Otherwise, it will be cheaper for emitters to pay the carbon and fuel tax instead of disposing of their air waste.”

Fuel choice

As noted, Northern Lights’ carriers will be built to run on LNG with wind-assisted rotor sails. Using LNG and biofuels with cold ironing capabilities in port is essential to keep costs low, according to Merzouki.

Sørhaug expects LNG to remain a popular fuel option for CO2 carrier orders, in line with the broader trend seen across the shipping industry as it looks to decarbonise.

LNG has been the alternative fuel of choice more broadly over several years. Recently, though, methanol has been gaining ground and in 2023 just topped LNG in terms of vessel newbuilding orders. However, the ability of the maritime industry to secure sufficient supplies of green methanol and ammonia remains an open question.

For CO2 carriers in particular, this is significant. Using alternative fuels and other methods to reduce fuel consumption and cut emissions is even more important. Sørhaug explained the sector’s carbon footprint attracts heightened scrutiny, given its role in cutting emissions.

Further innovations may be coming in shipping. Onboard carbon capture and storage (OCCS) would allow ships to continue to use cheaper heavy fuel oil. This is picking up interest, with several research and several pilot projects ongoing.

Liquefied CO2 will play a part as the CCS industry moves beyond the local to the regional. With Northern Lights taking on the first mover risk, CO2 shipping is becoming more viable.

Shipyards are booming. Buying in new CO2 carriers will be expensive, but failure to do so will cripple expansion plans. Projects must consider whether they are more worried by inflation – or missing the boat.