- The EU has imposed binding CO₂ storage obligations on 44 oil and gas producers under the Net-Zero Industry Act, targeting 50 million tonnes of annual storage by 2030.
- Limited availability of storage sites and exclusion of transport infrastructure from the directive have created a pressing need for LCO₂ shipping solutions.
- With few ships available and shipyard capacity tight, companies must act now to develop CCS and shipping strategies or risk missing 2030 compliance targets.
In a decisive step toward accelerating industrial decarbonisation, the European Commission has enforced a key ruling under Article 23 of the Net-Zero Industry Act (NZIA). This regulation mandates 44 oil and gas producers across the EU to provide carbon storage solutions, linking fossil fuel production directly to carbon management responsibilities. The EU aims to achieve 50 million tonnes of CO₂ injection capacity annually by 2030, increasing to 250 million tonnes by 2040. Though currently under review by the European Parliament and Council, the ruling underscores the critical role of carbon capture and storage (CCS) in Europe’s climate policy.
A Tight Timeline for Compliance
By 30th June 2025, affected companies must submit concrete plans on how they will meet their storage quotas. For many producers unfamiliar with the CCS domain, this represents a significant challenge. New partnership models are expected to emerge as firms collaborate with third-party storage developers to meet the ambitious targets.
Making CCS a Core Responsibility
Kenneth Tveter, Global Head of Green Transition and LCO₂ at Clarksons, views the regulation as a turning point that elevates CCS to a central position in the EU’s decarbonisation strategy. The new obligations place clear responsibility on oil and gas producers to lead storage initiatives and help develop the CCS value chain across Europe.
Intensifying Demand for Limited Storage Sites
With only a few CCS projects like Northern Lights and Project Greensand having reached Final Investment Decision (FID), emitters are now competing for scarce storage space. This competitive pressure could help drive collaboration, reduce project costs, and provide access to storage for emitters located far from storage infrastructure.
Missing Transport Infrastructure Adds Pressure
One critical flaw in the NZIA is its omission of CO₂ transport infrastructure, which remains a major bottleneck. CCS projects are large-scale endeavours that typically require 6–8 years to become operational. With only five years left before the 2030 deadline, there is little time to lose.
LCO₂ Shipping: The Flexible Link in the Chain
Shipping has emerged as the most viable solution for transporting CO₂ to storage sites, especially for inland or remote emitters. Compared to pipelines, LCO₂ shipping offers faster deployment, lower permitting complexity, and greater adaptability. However, the market is nascent, and existing vessels are already booked for the long term.
Shipbuilding Urgency and Market Limitations
Building LCO₂ carriers is no small feat. The process requires 2–3 years just for construction, not counting front-end engineering, design, and negotiation phases. Additionally, only a few shipyards have the expertise and capacity to handle such projects. According to Vebjørn Kjerstad, LCO₂ shipping specialist at Clarksons, shipowners will only commit to vessel construction with long-term contracts in hand, creating a chicken-and-egg dilemma.
The Time to Act is Now
Delays in shipping strategy development will push projects to the back of an already crowded queue. Companies that are not geographically close to storage facilities must immediately begin planning for LCO₂ transport. Starting vessel procurement, securing shipyard slots, and forming technical and commercial strategies are now essential steps to ensure compliance with the EU’s 2030 targets.
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Source: Clarksons
