Over the next decade, Wood Mackenzie forecasts global carbon capture capacity to increase from 70 Mtpa to almost 450 Mtpa, supporting efforts to cut hard-to-abate emissions. But with captured emissions then needing to be permanently stored, how can countries without adequate storage potential get in on the act?

Earlier this month, Norway’s Northern Lights project became the first commercial European CO2 transport and storage hub to start operations and the first project globally to transport captured CO2 to the storage facility via ship. Next year, it will blaze more trails when it begins storing imported carbon dioxide from the Netherlands and Denmark.

Will this flagship project kickstart a global push towards the cross-border transport and storage of carbon emissions? Lucy King, Anastasia Cooper, Hetal Gandhi and Stephanie Chiang from our Carbon Capture, Utilisation and Storage (CCUS) team take a closer look.

What’s driving cross-border activity?
Globally, there’s abundant CO2 geological storage potential in both depleted oil and gas fields and saline aquifers. We estimate that capacity will reach 2,350 Mtpa by 2050, an impressive hike from the 77 Mtpa expected by the end of this year. The geographic spread is uneven, however, with several major carbon-emitting economies across Northwest Europe and Northeast Asia lacking sufficient sub-surface storage capacity. Faced with challenging decarbonisation targets, these countries are looking beyond their own borders to export captured emissions by ship for permanent storage.
The opportunity for cross-border transport and storage of CO2 is considerable, at close to 160 Mtpa by 2050. Based on our forecasts for both capture and storage capacity, we estimate up to 9% captured emissions globally (adjusted for utilisation) will be stored outside their country of origin.

Why is Northern Lights significant?
On 17 June, Equinor, TotalEnergies and Shell reached operational readiness at Northern Lights. The volumes of CO2 shipped so far may be inconsequential, but the flagship project’s commissioning represents a monumental milestone in European and global CCUS.

Northern Lights boasts a trio of firsts: Europe’s first commercial CO2 transport and storage hub to start operations, the first project globally to transport captured CO 2 via ship and, by next year, the first commercial cross-border CO2 transport and storage project when it receives cargoes from industrial and power sector emitters in the Netherlands and Denmark. The Northern Lights project is also pioneering several CCS innovations, offering valuable insights and practical experience in cross-border maritime shipping of liquefied CO2.

Are other cross-border projects making progress?
Where Northern Lights is leading, others are following. The Project Greensand ship, Carbon Destroyer 1, is now complete – the first built in Europe – and will transport CO2 from Denmark and potentially Sweden to storage facilities offshore Denmark later this decade. More widely, we expect most European stores will be open source, storing cross-border transported CO2. Norway and Denmark are leading on bilateral agreements, with both signing agreements with five European countries to date. Policies in the EU’s Net Zero Industry Act include carbon storage obligations to support a single market for CCUS in Europe, pivoting from locally clustered value chains towards access for a wider pool of emitters.

Following this raft of European agreements, the next major opportunities lie in Asia Pacific. With limited domestic sub-surface storage potential, Japan and South Korea are the frontrunners. Four of Japan’s nine self-described “Advanced” CCS projects are looking to store CO2 overseas across three planned projects in Malaysia and one in Australia.

These will take time to materialise. In the near term, however, Singapore’s planned 2.5 Mtpa S-Hub project is receiving a lot of attention. Several storage projects – including Phase 1 of the proposed Pertamina- and ExxonMobil-led Sunda Asri CCS transport and storage hub in Indonesia and the Southern Peninsular hub in Malaysia – are targeting emissions from the S-Hub capture cluster. In both cases, CO2 will be shipped from Singapore to the receiving countries for injection into an offshore saline aquifer or depleted gas fields.

What are the key challenges?
As with all CCUS projects, costs are the obvious obstacle. But with cross-border CCUS, shipping costs are an additional factor. To succeed, governments must step up and boost incentives, including subsidies and tax credits for investments, particularly in Asia where only limited financial encouragement has been secured to date.

International regulations for shipping and storage of CO2 are also yet to be fully locked in. Cross-border transport of CO2 remains prohibited under the 1996 London Protocol to prevent marine pollution. To remain compliant, policy amendments and bilateral agreements for cross-border CCS – including CO2 accounting and responsibility, risk and liability – must be pushed through at haste. Securing anchor emitters for cross-border projects is also key to reducing risk. But getting companies over the line for first-of-a-kind projects will take time.

Cross-border carbon transport and storage offers an enticing CCUS opportunity for countries that lack adequate storage potential. Governments and regulators must now commit to lasting incentives and policy support to ensure this missing element of emissions reduction delivers on its potential.
Source: Wood Mackenzie