What role will CDR play for shipping?

Cost is one thing, rules are another

Biofuels, onboard CCS, and durable CDR are likely to be the cheapest mitigation solutions for shipping. Electrofuels may play a role, but only if electricity becomes very cheap. Currently, roadmaps and policy favor electrofuels (primarily) and biofuels (secondarily), with a limited role for CDR and an unclear role for CCS. Rules should be tech-agnostic, allowing all sustainable alternatives to compete.

Intro
Using carbon removal where it’s the most cost-effective mitigation option helps us reach net zero faster and more efficiently. Last year, I wrote about durable CDR being cheaper than electrofuels for aviation. Since then, several other papers have come out reaching the same conclusions (Brazzola. et. al. 2025, Gray, N. et al. 2024, Capion, Sörensen, 2025). My initial instinct was that marine shipping would be different, as the types of electrofuels suited for shipping, such as e-ammonia, are cheaper than e-kerosene for aviation and do not require CO₂ as a feedstock. However, fossil heavy fuel oil for shipping is also a lot cheaper than fossil kerosene for aviation, meaning there is more room to pay for CDR.

This post compares the costs of electrofuels and using durable CDR to offset fossil fuel oil, and looks at the costs of biofuels and onboard CCS. I started by examining how electrofuels compare with CDR+BAU, but realized I needed to dive deeper into biofuels and CCS. A detailed online spreadsheet shows calculations, assumptions and sources. Everything in this post is cost in Euro per tonne of CO₂, per GJ fuel, or per MWh electricity. Many details are included in the footnotes.

Fungibility between CDR and sustainable fuels
First, we must establish that, given sufficient guardrails and quality, using sustainable biofuels or electrofuels, or using durable CDR to compensate for fossil fuel use, have equal effects on long-term atmospheric CO₂ levels. For this to be true, biofuels and biobased CDR need genuinely sustainable feedstock; electrofuels and electricity-based CDR need zero-carbon electricity; CDR needs to be permanent, measurable, and time-matched with emissions. If these conditions are met, it does not matter, climate-wise, which solution is used to reach net zero. If this premise is not accepted, there is no long-term role for CDR in net zero¹.

Biofuels and biomass CDR are likely the cheapest options
Biofuels are likely to remain the cheapest form of low-emission shipping and aviation fuel² for at least a share of emissions. In this comparison, we use a midpoint estimate of biomethanol as the primary biofuel contender for shipping, with a fuel cost of €26/GJ (range: €21-32/GJ). At this cost, biofuels carry a €168 green premium³ over today's fossil fuel prices, totalling €345 per tonne of CO₂.

Biofuels or biobased CDR could theoretically meet all fuel or compensation demands from both aviation and shipping. Even conservative estimates put the available sustainable waste biomass at a level higher than or equal to the total expected needs from both sectors ⁴. Despite this, biofuels still do not play a majority role in sector roadmaps and projections. For example, the IEA projects biofuels to account for 19% of fuel use in shipping by 2050 and 33% in aviation. This is likely due to the models assuming scarce sustainable biomass and plentiful, cheap, renewable electricity.

If you have access to sustainable biomass, the cost of durably storing the CO₂ in that biomass may be similar to turning it into biofuel on a per tonne CO₂ mitigated basis. The main driver of the cost of both biofuels and biomass-based CDR methods like biochar and biooil is the price of the feedstock. What ends up being cheapest may be context-dependent. Biofuel production requires large centralized locations, while, for example, biochar can be produced in a decentralized manner very near the biomass source. Some biomass sources may be most affordably converted into biofuel, while others into CDR. A promising pathway is making biomethanol and capturing and storing the CO₂ that is released in the process, producing both biofuel and CDR, potentially making shipping net negative.

Based on availability and cost, standard economic logic tells us that biofuels (and CDR if cheaper)⁵ should dominate shipping and aviation (conditional on net-zero-sufficient climate policy⁶. Even if there is competition from other sectors for biomass, shipping and aviation may be the highest-paying customers, as the difference between biofuels and the next mitigation alternative is likely to be the largest ⁷.

Electrofuels and electricity-based CDR
Electrofuels (or power-to-liquid), as the name implies, are fuels where the energy content originates from electric energy and are thus inherently very electricity-intensive, with their cost highly dependent on power prices. At an optimistic electricity price of €50/MWh and estimates of future, improved capex and efficiency numbers, the leading e-fuel contender e-ammonia⁸ would cost €34/per GJ fuel (€124/MWh). This results in a green premium/abatement cost of €273/tCO₂ at today's fossil fuel prices, €100 higher than for biofuels. To compete with biofuel, e-ammonia requires electricity prices below €35/MWh.

Even if biofuels were in short supply, using CDR to compensate for fossil fuel oil use is relatively likely to be cheaper than e-ammonia. In the €50/MWh example above, CDR+Fossil fuels is favored at today's fossil fuel prices when CDR costs less than €275/t. The ISO chart below compares the interaction between the cost of electricity, fossil fuels, and CDR.

The chart shows the break-even lines where the cost of e-ammonia equals the cost of continued fossil fuel use paired with carbon dioxide removal (CDR+Fossil). The three lines represent different CDR prices. Below/to the right of each line, CDR+Fossil is the cheaper option; above/ to the left of each line, e-ammonia is the cheaper option. The horizontal dashed line marks today’s fossil fuel oil price (VLSFO ≈€0.53/L). At high energy prices, both fossil fuel and CDR need to be very high for e-ammonia to compete.

If we have access to vast amounts of cheap power, electrofuels are a fantastic tool. However, with today's electricity prices (average EU industrial price: over 180 €/MWh) and realistic future estimates of costs considering the speed of fossil-free electricity deployment, large-scale electrofuels appear uncompetitive. As can be seen in the graph above, this is true even if fossil prices rise significantly⁹.

Furthermore, using a significant amount of electrofuel would make the task of decarbonizing the power sector even more challenging, as the electricity volumes required are so large. If conversion reaches targeted efficiency numbers,¹⁰ replacing a tonne of heavy fuel oil with e-ammonia would require around 19,800 kWh per tonne of fossil fuel equivalent. Using electrofuels to completely power today's shipping and aviation fuel demand would require around half of today's global electricity consumption ¹¹

Electricity-based CDR, primarily Direct Air Capture with Storage (DACCS), would use significantly less electricity. At a relatively high electricity consumption of 1500 kWh per tCO₂ (many new approaches have lower electricity needs), offsetting all of today’s aviation and shipping would require around 9% of today's electricity demand.

The future cost of CDR is unknown and will likely vary a lot between pathways. Already, biochar CDR credits are routinely sold at around €150/tCO₂, while higher tech solutions like DAC costs well above €500/t today. Unlike electrofuels, the cost of DACCS is mainly capex and cost of capital, not electricity. DACCS prices below €290/t would require significant decreases in capex. Many startups anticipate being able to remove and store carbon at a cost below €200/t, but this remains to be seen. Other approaches, such as Enhanced Rock Weathering and Ocean Alkalinity Enhancement still have some uncertainties to work out but may turn out significantly cheaper¹².

CCS
Onboard CCS (OCCS) is technically feasible for shipping. Small amine plants and CO₂ storage tanks can be integrated on large ships. A few pilots have already captured CO₂ on ships. What makes or breaks the economics of this is ship integration and the port chain to offload the CO₂ into storage. Many studies,¹³ show onboard CCS costs of €80–€200 per tCO₂ avoided, (although some studies show higher costs.) This means it could potentially undercut e-ammonia and electricity-based CDR, but logistics and capture rates will prevent it from covering the large majority of shipping emissions. Note that OCCS can only economically capture a share of emissions, not close to 100% .(I haven’t gone deep on all the assumptions going into CCS costs and will return to this topic.)

Other solutions
Battery-powered ships are also possible and likely to dominate short-distance shipping, but not suited for long-haul trips. Sail-driven ships are another possibility. Wind-assist will likely be used as a fuel saver, but sail-only is unlikely to be competitive for a large share of shipping.

Conclusion
Costs are uncertain, but with realistic energy prices, biofuels, CDR, and CCS look like the prime contenders for net zero shipping. Electrofuels appear to be the least favorable option on cost grounds. Despite the cost differences, electrofuels are often heralded as the main solution for decarbonizing the shipping. For example, the IEA expects e-fuels to cover 66% of shipping fuel use in 2050 (e-ammonia, 44%, hydrogen, 19%, e-methanol 3%). The newly agreed IMO rules for shipping require a 30% decrease in the GHG intensity of shipping fuel by 2035, and the FuelEU Maritime directive demands an 80% reduction in intensity by 2050 for shipping in the EU. Meeting these targets requires new fuels (electro and bio), with currently no room for CDR or CCS (although CCS may be possible with rule updates).

We should be agnostic about which solutions are used to reach net zero shipping. The transition will be a mix, and no solution should be excluded. A clear policy ask is to update FuelEU Maritime and IMO rules to allow durable CDR and onboard CCS to meet the required fuel intensity targets.

This article was made possible in part by support from Stiftelsen Futura. Thank you to Saloni Garg for research assistance.

Assumptions and calculations for e-fuels can be found in this sheet. It also contains updated numbers for aviation: https://docs.google.com/spreadsheets/d/1UvW4AToOilJVjt0JSVD5fW9P8bSUUDzmwH-7wb_a4a8/edit?gid=1321038820#gid=1321038820

In the coming weeks, I will follow up with an article on the current and future volume of CO₂ and CDR needed in the EU.

Updates to the graph and text on price of fossil fuel per tCO2 and therefore green premium were made shortly after publication.

Footnotes

1. CDR is not a must for any CO₂ emission source, every sector has other alternatives. Instead it is a tool to make net zero cheaper, faster and more easily achievable. If it’s not used where it is the cheapest option, there is no role for it in net zero CO₂ other than short-term compensation for lifecycle emissions for emission replacements (like SAF) before they are cleaned up.

2. Multiple studies point to that biofuels are likely to be the lowest-cost low-carbon fuels for shipping. BloombergNEF (2024) estimates biomethanol via biomass gasification at $450–700 per tonne methanol, or roughly €75–115/MWh of fuel energy. In the graph we use the central value €95/MWh. It’s consistent with IRENA (2020), which reported $320–770/t (€55–140/MWh). Biomethane (bio-LNG) can be cheaper on a cost-per-energy-unit basis, but is less practical to use as a shipping fuel. Biodiesel made from fat can also be somewhat cheaper, but is very limited by feedstock. Also see this IEA comparison showing biofuels are the cheapest projected option.

3. Green premium means the extra cost one has to pay compared to fossil fuels. If CDR costs are lower than the green premium, CDR is the cheapest option.

4. The total sustainably available biomass is expected to be 50-100 exajoules (EJ) by midcentury (Becken, 2023). IEA expects shipping to use 256 Mt of shipping fuel by 2050, which would require 18 EJ of biomass at 55% conversion efficiency. The median fuel use scenario for aviation in 2050 is 426 Mt of aviation fuel which is around 18 EJ (42 GJ per Mt of jet fuel). If biofuel were to cover that, 32.5 EJ of biomass would be needed at a standard conversion efficiency of 55%. Total biomass needs for shipping and aviation would then be roughly 50 EJ (32+18 EJ) which is within the 50-100 EJ range for sustainable available biomass. Although note that large parts of this biomass may not be economically usable.
If CDR was used, the compensation needs of 426+256 Mt fuel would be 2.15 Gt CO₂/yr. 50 EJ biomass would be enough for around 2 Gt (biochar) to 4 Gt (BECCS) CO₂ removed depending on method. Biofuel production can also be combined with CDR capturing CO₂ released in the production process.

5. Other CDR approaches, such as enhanced rock weathering (ERW) and ocean alkalinity enhancement (OAE), may prove to be cheaper than both biomass-based and electricity-based CDR.

6. Like the EU ETS going to zero allowances, or a Carbon takeback obligation. A carbon tax is unlikely to be sufficient in itself to achieve net zero for all CO₂ emissions unless set very high.

7. Most other candidates for using the biomass can electrify or use CCS at a lower cost. Only niche cases in other sectors will likely have a larger ability to pay for biomass than aviation and shipping.

8. In the calculations, I use e-ammonia since it's viewed as the leading e-fuel contender for shipping by the IEA and others. The nearest alternative, e-methanol, is more complex and expensive to produce as it requires CO₂ as a feedstock. E-ammonia only requires hydrogen and nitrogen. It should be noted that ammonia is corrosive and hazardous, which comes with other issues. Directly using hydrogen as a fuel is also possible, but requires significantly larger tanks, which sacrifices cargo space and necessitates extensive retrofits of ships and harbors.

9. The future price of fossil fuels is likely to fall if most road transport shifts to EVs. The remaining demand would mainly come from kerosene (aviation), heavy fuel oil (shipping), the chemical industry, and products such as asphalt. Lower demand for gasoline and diesel would raise refinery costs for the fuels still needed, but this effect may be more than offset by the overall decline in demand.

10. 74% for H2, and 79% for H2 to ammonia, although note these are targets; today, these conversion efficiency numbers are lower.

11. Electrofuel energy demand to cover all of today’s aviation and shipping:
Aviation: 28782 kWh per tonne of fuel, incl electricity for DAC to get CO₂ feedstock. Global aviation fuel demand today around 300 Mt fuel = 8634 TWh
Shipping:19,800 kWh per tonne of fuel (lower than aviation since no CO₂ needed), global fuel demand today around 300 Mt fuel = 5940 TWh
Total 8634+5940 = 14,634 TWh.
Total global electricity demand 2023, 29,471 TWh = 49.5% from aviation and shipping

Offsetting the same with CDR:
600 Mt Fuel would emit around 1.8 Gt CO₂. With DACCS electricity consumption of 1,500 kWh it would require 2,700 TWh, around 9% of today’s electricity consumption.
See calculation sheet for electricity needs of aviation and shipping.

12. Frontier just announced a large OAE offtake with Planetery priced at $269/tCO₂, but project the method will cost $50-160/t.

13. For example:
Visona et al (2024) 64-149 €/t of CO2 avoided. For very-large ships. https://www.researchgate.net/publication/378470071_Techno-economic_analysis_of_onboard_CO2_capture_for_ultra-large_container_ships

Luo, X. and Wang, M. (2017), 77-163 €/ton CO₂ captured https://eprints.whiterose.ac.uk/id/eprint/114402/1/2017_03_01_XiaoBo_Ship_CCS_V18_MW_NotMarked.pdf

Feenstra et al (2019) €98–€389/t captured https://www.researchgate.net/publication/333537472_Ship-based_carbon_capture_onboard_of_diesel_or_LNG-fuelled_ships