White paper
Onboard Carbon Capture Systems in Deep Sea Shipping: Regulatory Barriers and Policy Sequencing Requirements
Summary
Onboard carbon capture can cut vessel-level CO₂ by roughly 20–30% without a fuel switch, which makes it a practical transition option while zero-carbon fuels remain scarce and expensive. The constraint on deployment is not only retrofit cost. It is regulatory fragmentation across IMO instruments, EU climate law, sustainable-finance rules, and international CO₂ transport law — a combination that leaves captured carbon hard to underwrite.
Why this matters in ship finance
Lenders and owners need captured CO₂ to count as avoided emissions in compliance, disclosure, and cash-flow models. Until EU ETS, FuelEU Maritime, CII, and envisaged IMO carbon pricing treat OCCS consistently, the technology sits in a bankability gap: physically real, contractually and financially uncertain. That gap affects residual value, retrofit timing, and whether an OCCS project can support senior debt.
Key findings
The paper’s causal ranking is clear. Timing misalignment is the dominant root cause: EU carbon costs are already live, while IMO operational recognition for OCCS is still being negotiated. Legal uncertainty over cross-border CO₂ transfer, port reception, custody, and liability comes second. Accounting treatment and financing asymmetry are downstream of those two.
The relevant window is 2026–2028. That is the period in which regulators, ports, financiers, and owners can turn OCCS from a technical option into a bankable compliance pathway before 2030 capital decisions harden.
How it connects to the Knowledge Center
The EU ETS explainer covers the cash cost that OCCS would need to offset. CII explains the operational intensity metric that still does not treat captured carbon uniformly. Residual-value risk is where delayed recognition shows up in loan books.