As countries intensify their decarbonisation efforts to meet net-zero targets, the maritime transport of carbon dioxide (CO₂) particularly in its liquid form (LCO₂) is emerging as a key enabler of large-scale carbon capture and storage (CCS) infrastructure. While pipelines have traditionally been the primary mode of CO₂ transport, the growing need for flexible and cost-effective solutions to move CO₂ from industrial emitters to offshore sequestration sites is making seaborne options increasingly attractive. This shift is driving the development of a promising LCO₂ shipping market, expected to grow steadily through at least 2050. In response, several shipowners are investing in multi-purpose vessels designed to carry low-temperature, low-pressure cargoes, not only CO₂, but also potentially ammonia and liquefied petroleum gas (LPG). This trend marks a significant evolution in the CCS landscape, offering enhanced scalability and versatility for CO₂ logistics, Director of Risk Assessment (Singapore), UKP&I, said.
The UK P&I Club has taken an active role in understanding the LCO₂ shipping landscape, including its participation on the BIMCO CO₂ drafting committee (formed in April 2024) and as a member of the UK’s Carbon Capture and Storage Association (CCSA). Both groups are working to harmonise cross-border regulatory frameworks and encourage industry standardisation.
A standout example of CO₂ maritime transport is Norway’s Northern Lights project, the world’s first cross-border CO₂ shipping and storage initiative. Since September 2024, specially built LCO₂ carriers operated by K Line LNG Shipping have been transporting captured CO₂ from emitters in Norway, Denmark, and the Netherlands to a receiving terminal in Øygarden, Norway. From there, the CO₂ is piped into the North Sea for permanent sequestration.
Such projects underscore shipping’s essential role in linking emitters especially those without pipeline access to offshore storage, and highlight the opportunity for Europe, especially the UK and Nordic nations, to serve as a CCS hub. Meanwhile, other regions such as the US, Australia, Indonesia, and Malaysia are developing localised LCO₂ transport solutions.
The cross-border transportation of CO₂ enables regions lacking storage options to pursue capture projects. However, the absence of comprehensive and harmonized regulatory frameworks across jurisdictions can add complexity. International cooperation and the establishment of bilateral and multilateral agreements are seen as crucial for addressing these regulatory gaps and enabling wider deployment of CCS value chains across international borders.
The transportation of CO₂ across borders for storage currently remains complicated by international agreements such as the London Convention and the London Protocol. These agreements aim to prevent pollution at sea by dumping wastes, and CO₂ is currently classified as "waste" under these protocols. This classification restricts the export of CO₂ for offshore storage, although amendments and provisional applications have been proposed to address this issue.
Various bilateral and multilateral government initiatives have therefore been established, many of which collaborate on legal and regulatory matters. These efforts are expected to become increasingly important for addressing gaps in regulatory frameworks in less mature countries and enabling wider deployment of CCS value chains across international borders. The cross-border arrangements and the overlap between G2G (governmental) agreements and commercial contracts however add yet another layer of complexity to the process.
The unresolved and evolving regulatory landscape (explained above) can lead to practical and legal issues. For example, under the EU Emissions Trading System (ETS), responsibility for CO₂ cargo transfers to the shipowner at the point of loading. This means that any losses be it from leakage or venting during operations expose the shipowner to considerable liabilities.
Further complications arise from the difficulty in distinguishing between fossil and bio-origin CO₂, especially if the cargo is a blend. While only fossil-derived CO₂ is subject to ETS quotas, shipowners may bear responsibility for the entire volume if a release occurs, unless contractual protections are explicitly defined.
These growing exposures make it critical for charter parties to strike a fair balance of risk. Express indemnities for ETS-related liabilities, clear clauses around cargo quality and responsibility for contamination, and detailed procedures for emergency venting or losses will become essential inclusions in LCO₂ contracts.
The author also mentioned operational and technical challenges, as well as charter party considerations, bills of lading and value attribution, best practices and industry collaboration
LCO₂ shipping is set to become a cornerstone of the global CCS value chain. While the pathway is fraught with regulatory ambiguity, technical constraints, and contractual risk, industry stakeholders including regulators, shipowners, charterers, and insurers are rising to the challenge. If you have any queries, please contact Ansuman Ghosh (Director of Risk Assessment), Mark Rudd (Senior Claims Executive) or your usual Club representative.