We estimate that the total volume of captured CO₂ transported by sea across borders within APAC could reach about 100 MtPA by 2050. Shipping this volume of liquefied CO₂ would require 85 to 150 vessels, costing from $10 billion to $25 billion.

The Importance of Technical Specifications and Standards

To be shipped, CO₂ must be liquefied and kept under pressure. Today, CO₂ is shipped mainly for food and beverage applications and is usually conveyed under medium-pressure conditions.³ 3 Low-pressure conditions = 5.7 bara to 10 bara, –54.3°C to –40.1°C; medium-pressure conditions = 14 bara to 19 bara, –30.5°C to –21.2°C; elevated-pressure conditions = 35 bara to 46 bara, 0°C to 10°C. Notes: 3 Low-pressure conditions = 5.7 bara to 10 bara, –54.3°C to –40.1°C; medium-pressure conditions = 14 bara to 19 bara, –30.5°C to –21.2°C; elevated-pressure conditions = 35 bara to 46 bara, 0°C to 10°C. But there is growing interest in transporting captured CO₂ under low- and elevated-pressure conditions. Each of these conditions requires specific types of vessels and tank storage infrastructure, and each has advantages and risks.

Getting the technical aspects right is essential for seamless cross-border CCUS project development. Consequently, greater coordination and alignment on specifications governing infrastructure and the conditions under which CO₂ can be transported will be required. The private sector can lead the efforts to achieve effective standards, with governments playing a role in formalizing and endorsing standards once companies reach a general agreement.

The Impact of Economic and Regulatory Gaps

We have identified several gaps in financial support mechanisms and regulations that need to be addressed if cross-border CCUS is to flourish.

Economic Gaps. The investment required to scale up cross-border CCUS is substantial. The end-to-end levelized cost⁴ 4 Levelized cost estimates calculated using 2023 prices, assuming an 8% discount rate and a 20-year project horizon. Analysis considers low-pressure shipping conditions, with the value chain boundary defined from capture to sequestration. Notes: 4 Levelized cost estimates calculated using 2023 prices, assuming an 8% discount rate and a 20-year project horizon. Analysis considers low-pressure shipping conditions, with the value chain boundary defined from capture to sequestration. of cross-border CCUS with shipping (covering capture to permanent sequestration) ranges from $141 to $174 per ton of CO₂ for routes within Southeast Asia to $167 to $287 per ton of CO₂ for routes between Northeast Asia and Australia. (See Exhibit 3.)

Capture and shipping costs account for 60% to 80% of the estimated total expenses of cross-border CCUS routes. Longer shipping routes, such as from Northeast Asia to Australia, tend to have higher average levelized costs owing to greater shipping costs. Moreover, CO₂ shipping routes within APAC involve emitters with low CO₂ concentration streams—including cement, chemical, and iron and steel plants—resulting in increased capture costs compared with emitters that have high concentration streams.

Because of these expenses, a significant gap exists for potential CO₂ exporters between levelized cross-border CCUS costs and domestic carbon pricing. In APAC countries, carbon taxes and emissions-trading-system prices are $2 to $18 per ton of CO₂, which is far below the range of levelized CCUS costs within the region. Without additional financial support, the challenging economics of cross-border CCUS could impede its development.

Regulatory Gaps. Nascent regulations in several areas threaten to hinder the development of cross-border CCUS in the region. In countries across APAC, domestic regulations need to be established to govern carbon accounting and verification methodologies for CCUS, establish permitting procedures for cross-border CCUS projects, and define players’ liabilities. In addition, bilateral and multilateral frameworks are required to clarify the jurisdictional authority responsible for cross-border projects and provide certainty on the allocation of liabilities (such as commercial and operational liabilities for CO₂ leaks). Establishing these regulations and frameworks can provide greater certainty to project developers—mitigating policy risk concerns and supporting CCUS projects and offtake agreements.

Three Components to Actuate Cross-Border CCUS via Shipping

Governments and private sector players need to provide three essential elements to activate the shipping industry for cross-border CCUS.

Direct Economic Support

Governments can extend economic assistance to midstream players, such as shipping and port providers, using financial incentives, support packages that can underwrite cross-value-chain risks, and other forms of business model support. Such measures can help to reduce upfront capital expenditures and overall project costs for companies, which is particularly important for cross-border CCUS and shipping to take off.

Long-Term Contracts and Minimum Volume Guarantees

Emitters will need to provide long-term contracts to shipping and terminal providers—ideally agreements of ten years or more—and commit to transporting a minimum volume of CO₂ to give these value chain participants greater certainty and allow them to plan ahead. (Together with owners and operators of sequestration capacity, emitters are expected to orchestrate the cross-border CCUS value chain by providing long-term contracts, owning key cargo [CO₂] and infrastructure, and leading consultations with governments.) Such commitments also enable shipping and terminal players to obtain the necessary financing for investing in vessels and capacity.

Clarity on Standards and Specifications for Shipping

For the sector to expand, shipping providers need clarity from regulators and leading companies on the standards governing technical matters such as permissible impurities in CO₂ cargo, operating pressures, and temperatures along the value chain. Early alignment on specifications will enable midstream players, such as shipping and terminal providers, to put in place interoperable infrastructure.

Developments in the upstream (carbon capture) and downstream (sequestration) parts of the CCUS value chain will inevitably have a major impact on midstream players, and vice versa, owing to interdependencies along the value chain. Providing financial incentives and regulatory certainty to upstream and downstream companies can help to stimulate investment certainty for the midstream. Consequently, regulators and the private sector will need to monitor linkages between the different parts of the value chain to ensure that they are aligned.

The success of CCUS hinges on the development of all elements of the value chain—including midstream activities, such as shipping and intermediate storage—simultaneously. By working together and overcoming the obstacles outlined in this report, both public and private stakeholders can successfully develop the CCUS value chain in its entirety, unlocking the valuable decarbonization opportunities that carbon capture can offer.

This research was a collaboration between GCMD and BCG. GCMD and BCG engaged with approximately 60 individuals from 17 industry stakeholder organizations when developing the report. This included more than ten hours of group workshops and 16 interviews.