Op-Ed: Facing the realities of CO2 shipping

Sean McLaughlin, Strategy Consultant, Houlder

By Sean McLaughlin, Strategy Consultant, Houlder

The shipping industry’s decarbonization will partly rely on transportation of CO₂. Sean McLaughlin, Strategy Consultant at design and engineering consultancy, Houlder, emphasizes how, as the need for CO₂ shipping increases, carrier vessels must be viewed as integral components of the broader supply and logistics chains, encompassing a range of aspects from ship design to containment systems.

A demand surge is anticipated in coming years for transporting larger quantities of CO₂ (in various forms), to support initiatives for decarbonizing shipping and heavy industry. The projected demand increase is essentially rooted in the expanding network of routes for sequestering CO₂ captured from industrial processes, but is this the full extent of the opportunity?

Production of certain net-zero emission e-fuels, such as e-methanol and e-methane (e-LNG), require captured or biogenic CO₂ as an essential feedstock. This CO₂ will be sourced from a combination of capture equipment linked to land-based industry, and equipment onboard ships. It’s also expected that significant volumes of CO₂ will be captured from the atmosphere (Direct Air Capture – DAC), but DAC has a high energy requirement and utilizes very large equipment, so is yet to play a significant role in rising to the challenges of climate change.

Rethinking the CO₂ carrier

To date, shipping CO₂ has been a very small part of the industry. Recently, attention has been raised to the need to transport large quantities of CO₂ by sea, with recognition that just making the existing carriers bigger isn’t necessarily fit for purpose. The growth in CO₂ reuse opportunities presents another new set of challenges, with the potential for new routes dictating different, larger, and long-distance carrier designs. Added to this is the challenge of onboard capture, requiring a network of unloading and consolidation points for the captured CO₂.

Does this give the potential for a fleet of short sea feeder vessels? Rystad Energy predicts that, based on planned carbon capture projects, over 90m tonnes per annum (tpa) of CO₂ will be shipped by the end of the decade – volumes potentially requiring a fleet of 55 carriers by 2030. These demand growth forecasts are largely based on the growing network of sequestration routes for CO₂ captured from industrial processes. Given the other drivers, are we understating the commercial opportunities?

Carbon capture quandaries

Various types of onboard carbon capture technology are being developed. Carbon capture is not a novel concept—historically, it has been integrated into industrial processes, and the focus on capturing CO₂ from exhaust gas streams has emerged only in the last decade. Addressing challenges of capture in a marine environment is a relatively recent development. To successfully incorporate this process onboard, shipping must collaborate with carbon capture technology providers. Equally crucial is the industry’s understanding of challenges throughout the logistics chain to fully leverage opportunities presented by onboard capture and bulk LCO₂ transport.

Misconceptions or misunderstandings could lead to over-specification of storage tanks or liquefaction plants, resulting in unnecessary CAPEX or operational constraints. There is a risk of incurring ‘baked-in’ OPEX, due to significant and potentially unnecessary increases in non-revenue-earning cargo weight and energy consumption in the associated containment plant.

On the topic of purity

A major hurdle in CO₂ shipping lies in the CO₂ variability—not all CO₂ is the same. The purity of CO₂ is essentially influenced by the method of capture and its source, such as exhaust gases or industrial and chemical processes.

Going beyond a simple percentage calculation, the nature of impurity is often as crucial as its quantity. The presence and type of impurity play a role in determining the size and type of onboard containment, the design of the liquefaction plant, and even require additional purification processes before it can enter the sequestration processes. This has repercussions on both capital expenditure (CAPEX) and operational expenditure (OPEX) decisions.

Zooming out

Taking a broader perspective, it’s essential to acknowledge that merely capturing CO₂ is insufficient; effective sequestration or reuse is crucial for reducing greenhouse gas emissions. This requires ship and onshore infrastructure to work in tandem. CO₂ shipping, whether as a primary cargo or a result of onboard capture, highlights the importance of considering ships as an integral part of the entire logistics and supply chains, rather than an isolated element needing to “fit in”.

Coordinated end-to-end CO₂ supply chains cannot be expected to materialize on their own. Proactive, cross-industry collaboration is essential, as highlighted in the Houlder Navigator decarbonisation whitepaper which, developed a year ago, drew insights from interviews with shipowners in various segments.

Acting with boldness, questioning assumptions, and avoiding adherence to traditional working methods are key to developing new CO₂ supply chains and addressing challenges of CO₂ shipping. Through embracing new paradigms and operational approaches, the challenges of the decarbonization transition can be truly confronted. With this mindset, the emerging onboard capture and CO₂ shipping sectors offer exciting opportunities.