Port planning for carbon capture projects

This interview was originally published in the May 2024 edition of GreenPort.

Can you explain the notion of carbon capture and how this can work for ports?

Carbon capture technology aims to reduce carbon dioxide emissions from industrial processes, power generation, and other sources by capturing CO₂ before it's released into the atmosphere, and storing it underground or repurposing it. Future port infrastructure could play a role in carbon capture by facilitating the transport of captured CO₂ for storage or utilisation. Ports could become hubs for CO₂ transport, handling and storage, potentially enabling efficient and cost-effective deployment of carbon capture technologies on a larger scale. This integration could help mitigate climate change by reducing greenhouse gas emissions from various industries.

How does it play its part in the maritime energy transition?

Ports can play a pivotal role in supporting the entire carbon capture value chain and developing viable business cases around it. By offering services like CO₂ bunkering, ports facilitate the transportation of captured CO₂, thereby enabling the growth of CO₂ trading and credit markets.

Moreover, by serving as hubs for downstream carbon utilisation activities such as green fuel and e-fuel synthesis, ports contribute significantly to the decarbonisation of the maritime industry. Green fuels derived from CO₂ as a feedstock offer a sustainable alternative to traditional fossil fuels, helping reduce emissions from ships and advancing the goals of the maritime green transition.

In essence, ports not only support the deployment of carbon capture technology but also catalyse the development of a circular carbon economy where CO₂ is viewed as a valuable resource rather than a waste product. This holistic approach underscores the critical role ports play in driving sustainability and innovation within the maritime sector.

Port infrastructure projects are expensive – are carbon capture projects something that can be part funded?

The Northern Lights project in Europe is one of the most advanced CO₂ sequestration projects on a major scale. The Northern Lights project is a joint venture between Equinor, Shell, and TotalEnergies and is a good example being primarily funded through a combination of public and private investment. The project received significant financial support from the Norwegian government with Norway allocating funding from its national budget to support the development and implementation of carbon capture and storage (CCS) projects like Northern Lights as part of its commitment to reducing greenhouse gas emissions.

Additionally, private investors such as Equinor, Shell, and TotalEnergies contribute funding to the project as part of their commitment to advancing CCS technology and addressing climate change. These companies recognise the importance of investing in CCS infrastructure to reduce emissions from industrial processes and contributing to the transition to a low-carbon economy.

What are the financial incentives for ports?

Below are the financial incentives for ports using examples from the Northern Lights project and the HyNet project:

1. Revenue Generation:

• Example from Northern Lights: The Northern Lights project generates revenue from CO₂ source providers, such as industrial facilities, that pay fees for the transportation and storage of their captured CO2 to the onshore receiving terminal in Norway. These fees contribute to the financial sustainability of the project.
• Example from HyNet: The HyNet project in the UK aims to develop carbon capture and storage infrastructure in the North West of England. Ports in this region could potentially generate revenue by providing CO₂ bunkering services to ships transporting captured CO₂ to storage sites or utilisation facilities.

2. Government Support:

• Example from Northern Lights: The Norwegian government provides financial support to the Northern Lights project as part of its commitment to reducing greenhouse gas emissions and promoting carbon capture and storage technology. This support includes funding from national budgets and participation in public-private partnerships.
• Example from HyNet: The UK government has allocated funding and support for the HyNet project through various mechanisms such as the Industrial Decarbonisation Challenge and the Clean Growth Fund. This support includes grants, subsidies, and regulatory incentives to accelerate the deployment of carbon capture and storage infrastructure.

3. Carbon Pricing and Credits:

• Example from Northern Lights: The Northern Lights project could potentially participate in carbon pricing mechanisms or carbon credit markets by offering carbon capture and storage services. This could involve monetising CO₂ storage activities and generating revenue from the sale of carbon credits.
• Example from HyNet: The HyNet project aims to establish a carbon capture, utilisation, and storage (CCUS) network that could potentially qualify for carbon credits under emission reduction schemes such as the UK Emissions Trading System or the EU Emissions Trading System. Ports involved in CO₂ transportation and storage could benefit from these carbon pricing mechanisms.

These examples demonstrate how the Northern Lights project and the HyNet project leverage various financial incentives, government support, and carbon pricing mechanisms to develop carbon capture and storage infrastructure, including CO₂ bunkering services at ports.

Can you please give two case studies – one in Europe one in Asia with an emphasis on how the projects were realised and returns?

One example of a port involved in the Northern Lights project is the Øygarden Industrial Park located near Bergen on the west coast of Norway. This industrial park serves as the site for the onshore receiving terminal, which is a key component of the Northern Lights project's infrastructure.

Here's how the realisation of the Øygarden Industrial Park as part of the Northern Lights project is progressing:

1. Location: The Øygarden Industrial Park was selected as the site for the onshore receiving terminal due to its proximity to industrial CO₂ sources, suitable geological formations for CO₂ storage, and access to maritime transportation routes.

2. Infrastructure Development: The development of the Øygarden Industrial Park involves the construction of facilities for receiving, storing, and handling liquid CO₂ transported by ships from various industrial sources across Europe. This includes storage tanks, loading and unloading facilities, pipelines, and safety systems compliant with industry standards and regulations.

3. Regulatory Approval: The realisation of the Øygarden Industrial Park requires regulatory approval from relevant authorities in Norway, including environmental permits, land use permits, and safety certifications. The project consortium collaborates with local, regional, and national authorities to ensure compliance with regulatory requirements and obtain necessary permits for construction and operation.

4. Public-Private Partnership: The development of the Øygarden Industrial Park involves collaboration between the project consortium (Equinor, Shell, and TotalEnergies) and various stakeholders, including government agencies, local communities, and industry partners. Public-private partnerships are established to leverage funding, expertise, and resources for the successful realisation of the project.

5. Timeline: The realisation of the Øygarden Industrial Park is part of the broader timeline for the Northern Lights project, which aims to start operations in phases. Based on our latest understanding, the Northern Lights project first phase is expected to commission in 2024, with a total capacity of 1.5 mtpa.

One example of a CO₂ handling port in Asia is the Tomakomai Port located in Hokkaido, Japan, which is associated with the Tomakomai CCS Demonstration Project. Here's how this project exemplifies the realisation of a CO₂ handling port:

1. Location: Tomakomai Port was selected as the site for the CO₂ handling facilities due to its proximity to the Tomakomai CCS Demonstration Project's CO₂ capture site at the Tomakomai Thermal Power Station, as well as its access to maritime transportation routes for CO₂ transport and storage.

2. Infrastructure Development: The Tomakomai CCS Demonstration Project involved the construction of CO₂ capture facilities at the Tomakomai Thermal Power Station to capture CO₂ emissions from the power generation process. The captured CO₂ is then transported via pipelines to the Tomakomai Port, where it is compressed, stored, and loaded onto ships for offshore CO₂ storage in geological formations beneath the seabed.

3. Regulatory Approval: The realisation of CO₂ handling facilities at Tomakomai Port required regulatory approval from relevant authorities in Japan, including environmental permits, safety certifications, and compliance with maritime regulations for CO₂ transport and storage activities.

4. Public-Private Partnership: The Tomakomai CCS Demonstration Project involved collaboration between industry partners, government agencies, research institutions, and local communities. Public-private partnerships were established to secure funding, technical expertise, and support for the project's development and implementation.

5. Timeline: The Tomakomai CCS Demonstration Project was initiated in the early 2010s, with various phases of development, construction, and operation. The CO₂ handling facilities at Tomakomai Port were realised as part of the project's overall timeline, with milestones for construction, commissioning, and operation.

In addition to the Tomakomai CCS Demonstration Project in Japan, another example of a CO₂ handling port is the Gorgon Project in Australia. The Gorgon Project, operated by Chevron, involves the capture and storage of CO₂ emissions from a liquefied natural gas (LNG) facility on Barrow Island, Western Australia. The captured CO₂ is transported via pipelines to a CO₂ injection site offshore, where it is injected and stored deep underground in geological formations. While the CO₂ handling facilities for the Gorgon Project are not located at a traditional port, they exemplify the realisation of CO₂ transport and storage infrastructure in a maritime context.

What is the future for carbon capture and will it be something that more ports can benefit from?

The Port of Singapore and other ports in the Asia Pacific can benefit from the carbon capture value chain in several ways:

1. Diversification of Services: Ports can diversify their services by integrating CCUS infrastructure, such as CO₂ handling and bunkering facilities. This allows ports to offer new services to industries involved in carbon capture activities, thus expanding their revenue streams and enhancing their competitiveness.

2. Strategic Positioning: Ports that invest in CCUS infrastructure position themselves as key players in the transition to a low-carbon economy. By providing essential services for CO₂ transport, storage, and utilisation, these ports establish themselves as hubs for sustainable maritime activities, attracting environmentally conscious industries and shipping companies.

3. Economic Growth: The development of CCUS infrastructure creates opportunities for job creation, technology innovation, and economic growth in port regions. Ports can stimulate local economies by attracting investment from CCUS-related industries and fostering collaboration between research institutions, businesses, and government agencies.

4. Environmental Leadership: Ports that support the carbon capture value chain contribute to global efforts to mitigate climate change and reduce greenhouse gas emissions. By facilitating the deployment of CCUS technology, these ports demonstrate environmental leadership and promote sustainable practices in the maritime sector.

5. International Collaboration: Ports in Asia can benefit from international collaboration and partnerships with countries and organisations involved in CCUS initiatives. By sharing knowledge, best practice, and resources, ports can accelerate the development of CCUS infrastructure and maximise the benefits of carbon capture technology and the future carbon trading market.

What are your take home messages for port and terminal operators with regards to these projects?

Embrace the opportunity: position your port for sustainable Growth with CCUS.

In summary, port and terminal operators are encouraged to embrace the opportunity presented by CCUS and position their ports for sustainable growth in the transition to a low-carbon future. By investing in CCUS infrastructure, demonstrating environmental leadership, and fostering collaboration, ports can play a pivotal role in shaping a more sustainable and resilient maritime industry.