What's Happening?
The International Maritime Organization (IMO) and the European Union (EU) are advancing efforts to establish a regulatory framework for onboard carbon capture and storage (OCCS) technology. This initiative aims to address the carbon emissions from shipping,
a significant contributor to global greenhouse gases. The IMO has approved a plan to develop regulations for OCCS, with a target for a formal structure by 2028. Meanwhile, the EU's FuelEU Maritime regulation, effective since January 2025, has not yet included OCCS due to its limited maturity and lack of an international framework for traceability. The technology, however, is progressing faster than the regulatory environment, with companies like DNV and Carbon Ridge working on solutions to integrate OCCS into maritime operations. The main challenges include port-side infrastructure, carbon accounting, and the economics of offloading captured CO2.
Why It's Important?
The development of OCCS technology is crucial for the shipping industry as it faces increasing pressure to reduce carbon emissions. The EU Emissions Trading System (EU ETS) now requires shipping companies to account for 100% of their emissions, significantly increasing operational costs. For instance, a large containership on the North Europe-Asia corridor could face annual carbon costs between $8.7 million and $12.4 million. OCCS offers a potential solution to mitigate these costs by capturing CO2 emissions onboard. However, the success of this technology depends on the establishment of a supportive regulatory framework and infrastructure for CO2 offloading and storage. The ability to effectively implement OCCS could lead to significant cost savings for shipowners and contribute to global decarbonization efforts.
What's Next?
The next steps involve the development of port-side infrastructure and regulatory frameworks to support the widespread adoption of OCCS. Projects like CO2next and Aramis in Rotterdam are targeting final investment decisions by 2026 or 2027, which could provide the necessary infrastructure for CO2 storage. Additionally, the classification of captured CO2—whether as waste, a commodity, or a new category—will influence the regulatory and economic landscape. Companies like Carbon Ridge are working to bridge the gap by providing a service model that handles the entire CO2 capture and storage process, potentially easing the transition for shipowners.
Beyond the Headlines
The implementation of OCCS technology raises important questions about the classification and handling of captured CO2. The decision on whether to treat it as waste, a commodity, or a new legal category will have significant implications for international transport permissions and the development of measurement, reporting, and verification frameworks. Furthermore, the success of OCCS could influence the broader adoption of carbon capture technologies across other industries, potentially accelerating global efforts to combat climate change.
