Work

Investing in carbon transportation under volume uncertainty and scaling flexibility

Year: 2025

Type: article

Abstract: The transition to climate neutrality requires significant expansion of carbon capture and storage (CCS) infrastructure. However, uncertainty in CO 2 volumes and prices creates challenges for transport and storage (T&S) operators in determining optimal investment strategies. This study develops a real options analysis (ROA) framework to evaluate investment decisions in large-scale, open-access T&S infrastructure, comparing flexible ship-based transport with cost-effective trunklines. Our results show that, while net present value analysis favors trunklines, ROA demonstrates that ship-based solutions provide greater value due to scalability and shorter lead times. Investment thresholds remain high (400–600 € /tCO 2 ), underscoring the need for targeted policy measures to reduce uncertainty and accelerate CCS deployment.

Source: Energy Economics

DOI: 10.1016/j.eneco.2025.109064

Authors: Sveinung Andersen, Verena Hagspiel, Carlos Oliveira, Jan Magnus Røsbjørgen

Institutions: Norwegian University of Science and Technology, University of Lisbon, ISEG - Instituto Superior de Economia e Gestão

Language: English

Topic: Capital Investment and Risk Analysis

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Climate action, Affordable and clean energy

Open Access status: hybrid

Estimated APC paid: $4,280