Northern Territory tests CO2 import case through shipping

Between East Arm and Middle Arm in Darwin Harbour is a favoured CO2 hub (source: CSIRO)

CSIRO sees liquid CO2 shipping emerging in Europe and Asia-Pacific, with Australia’s policy and permitting settings shaping bankable cross-border trade.

Liquid CO2 shipping is moving from small-scale food-and-beverage trades towards early application in carbon capture, utilisation and storage (CCUS) value chains, but its near-term shape is being set as much by fiscal and permitting settings as by thermodynamics and ship design.

Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia’s national science agency, energy group leader Dr Andrew Ross said CSIRO considered ship transport “a viable alternative for pipelines over long distances” because “the costs of shipping over those distances are lower than pipelines”. He added that while capture, liquefaction, terminals and storage infrastructure were fixed, “the vessels are flexible and the number of vessels can grow with demand”.

In CSIRO Futures’ December 2025 report CO2 Utilisation in Australia: State of Play, the organisation linked Australia’s export positioning to “maritime CO2 trade pilots, which are progressing globally”, while also noting that utilisation pathways remained expensive relative to conventional products and were exposed to the limited willingness of customers to pay premiums.

Northern Territory’s Middle Arm Precinct is a proposed CCUS hub that is currently under design. The hub comprises two CO2 storage projects and a liquid CO2 terminal. The terminal is backed by a memorandum of understanding (MoU) for the development of Australia’s first CO2 import terminal, signed by Royal Vopak in 2024.

That combination — a hub concept, storage-project development work and a named import-terminal MoU — helps explain why the Northern Territory keeps reappearing in Australia’s CO2 trade discussions even when most policy focus is focussed on domestic capture and storage.

North Sea, then Asia-Pacific

Dr Ross set out a near-term view in which CO2 shipping develops in two primary regions over the next two to five years.

“The first is movement and storage of CO2 in Europe, initially centred around the North Sea,” he said. In that model, CO2 emissions would be captured and liquefied near existing ports where local subsurface storage did not exist, then shipped to storage sites or to ports operating as part of CCS hubs.

Dr Ross drew a practical distinction that matters for project economics and specification work. In northwest Europe, he said, distances were typically short, enabling liquid CO2 to be shipped at medium pressure, which in turn reduced liquefaction costs and eased CO2 purity requirements.

The second region was Asia-Pacific. Dr Ross noted that several countries in the region lacked sufficient geological storage space to capture and store predicted CO2 volumes from hard-to-abate industries, pushing them to examine cross-border transport by ship to countries with subsurface storage capacity. The distances involved, he said, were often longer than in northwest Europe, shifting the likely technical solution.

“As a result, shipping liquid CO2 at low pressure and low temperature is likely to be adopted to enable higher cargo volumes per vessel, making it more suitable for transport over these distances,” he said, adding that this approach brought higher liquefaction costs and stricter CO2 purity requirements.

The contrast between medium-pressure, shorter-haul moves and low-pressure, longer-haul moves underpins much of the early design divergence in the sector. It is also one reason early Asia-Pacific projects are focused on purity specifications, CO2 conditioning, and how to manage off-spec cargo risk contractually, even when terminal concepts appear straightforward on paper.

Australia’s transport models

In the Australian context, Dr Ross said project concepts were already converging on more than one transport model, rather than a single national template.

“There are a wide range of CO2 transport models being contemplated for Australian CCS projects,” he said. “Many of these projects include both transport of CO2 by pipeline and ship.”

Where pipeline and shipping are combined, he said liquid CO2 shipping supplements existing sources of CO2 within those regions, with the intended effect of diversifying CO2 supply risks. He added that the approach could, in principle, enable greater storage volumes and lower unit costs of storage through economies of scale. He characterised these as CCUS hub projects.

Alongside that, he said ship-only models were also being considered where storage was more remote. In those cases, he noted, project developers aimed to balance the cost of avoiding pipeline infrastructure against the costs associated with floating storage and injection facilities. He added that such projects, which typically considered smaller CO2 volumes, would evolve and be tested over time.

“It is likely that in the future a number of these models will be in operation,” he said.

The operational implication is that shipping does not only compete with pipelines. In hub settings it becomes a flexibility layer, a way to aggregate volumes, sequence ramp-up, and accommodate multiple capture sources without demanding a single, early commitment to dedicated trunklines sized for ultimate capacity.

Technical risk is manageable

Dr Ross said that, in his view, “there do not appear to be any technical showstoppers for LCO2 shipping”. He pointed out that small-scale CO2 shipping had occurred “for several decades” in supply chains serving food and beverage and fertiliser production.

He referenced Northern Lights and Project Longship as the first large-scale CO2 shipping project for CCS, and noted that it had recently started shipping liquid CO2 in the North Sea at medium pressure.

The more revealing point is how he expected early CCS-linked shipping chains to handle uncertainty. He noted that early projects demonstrating the value chain, and especially low-pressure liquid CO2 shipping, were likely to adopt greater engineering tolerances and higher required CO2 purity, and therefore incur higher costs, as a way to manage technical risks.

“Over time, with experience, these are anticipated to be refined and costs optimised,” he said, adding that learnings from demonstration shipping projects and detailed risk research would be important in lowering costs.

On regulatory foundations, he noted that the shipping of cryogenic gaseous cargoes was routine and covered by existing IMO codes and classification rules, adding that there was also substantial experience in dealing with liabilities. In his view, those frameworks and operating practices could be adapted, or directly applied, to liquid CO2 shipping.

“A more significant constraint on CO2 shipping is likely to be the fiscal policies adopted by governments across the region,” he said. “In particular, the extent to which these policies incentivise CO2 shipping as an effective mechanism for enabling global decarbonisation will be critical.”

That observation aligns with CSIRO Futures’ broader argument that commercial scale-up depends on linking capture, transport, energy supply, specifications and end markets into investable chains. The report said scaling up utilisation was capital-intensive and required integration of upstream and downstream factors, including capture infrastructure and downstream customers.

Cross-border trade

For cross-border CO2 shipping, Dr Ross said countries would need the appropriate regulations in place to export and accept CO2. He added that this would need to include mechanisms to manage country-level emissions reporting, purity requirements, volume measurement, and assurance of secure storage.

He said Australia had a well-developed regulatory system for CCS, acknowledging CSIRO’s foundational role in the nation’s CCS development and capabilities, adding that this was not the case for all countries in the region.

On bankability, his response suggested an architecture that separates public and private responsibilities. Improved bankability, he noted, could be achieved if governments established sufficient regulatory frameworks to enable cross-border movements, while allowing companies to negotiate other transaction elements through commercial contracts. He described this as consistent with existing arrangements for trade in other liquefied gases and as a way to preserve flexibility as the industry learns.

The combination of permitting symmetry and measurement credibility is also where the Northern Territory’s “import node” language begins to make commercial sense. A port may be physically capable of receiving liquid CO2, but an import chain requires legal acceptance, accounting treatment, and an agreed basis for measurement, reporting and verification across borders. Without that, early projects either remain domestic or adopt bespoke structures that are hard to replicate.

Indicators for 2026–28

Dr Ross said: “Key indicators of the development of CO2 shipping will be the sanction of CO2 export and importation facilities across the region and within Australia, and / or monitoring the number of projects undertaking front-end engineering design of import and export terminals.”

He added that projects developing CO2 specifications suitable for shipping would indicate whether developers were embedding shipping in their long-term designs. That is a practical test. Specifications work tends to be costly, politically unglamorous, and hard to reverse once a concept design matures, so its presence can signal seriousness beyond public positioning.

Dr Ross noted that there had been a significant increase in the number of medium-pressure liquid CO2 vessels on order with shipyards, with eight vessels contracted to date, adding that vessel scale was increasing and reflected growing confidence in CO2 shipping as an emerging market. He said close attention should be paid to orders, especially designs required for low-pressure shipping, as confirmation of an emerging market in the region and globally.

He concluded that progress in bilateral agreements and arrangements for cross-border shipment, and associated policies, would provide further indications of maturing CO2 shipping opportunities across the region.

Dr Ross noted that shipping capacity is visible and countable, but without permitted import and export terminals, and without cross-border arrangements on accounting and secure storage, ship orders do not translate into bankable transport revenue. In that framing, the Northern Territory’s repeated appearance in CSIRO’s documentation reflects the fact that import-terminal concepts and hub precinct work can be progressed domestically, even while regional policy alignment remains incomplete.

source: riviera news