Impact of financing cost on large-scale multi-modal CO2 transport cost: a European long-term perspective

Abstract

During the last decade, there have been numerous pledges to reduce emissions. Europe has pledged to reach Net Zero in 2050: every projection to reach the target includes carbon capture technologies. A critical issue for the contribution of these technologies to achieve net zero targets is the transport of CO2 from sources to sinks, wherefore the development of an extensive European carbon transport infrastructure is required due to the scarce geographical availability of sinks. Since CO2 transport is capital intensive, this research proposal focuses on the identification of potential options of finance for the different CO2 transport assets and how these affect the cost of capital, as well as the implications for the overall cost of carbon transport. The research takes a mixed methods approach, combining a thorough literature review, financial modelling and semi-structured interviews with experts. The research focuses on a large-distance route in Europe, with an assumed time horizon starting from 2030 onwards. The results show that depending on the transport asset, distance and quantity transported the financing costs can play a key role and different financing structures can change the merit order in terms of costs. Future research should focus on developing this model for a European transport network.