Onboard Carbon Capture and Storage (OCCS) and Global Carbon Markets: A Financial Economics Perspective on Technology-Market Co-evolution

Zhe Zheng, Jiangying Niu, Junjie Zong, Zhekai Zhang, Yang Zhou, Kaifan Xue, Zhiqiang Huang and Yujia Pang ()
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Zhe Zheng: Tianjin University
Jiangying Niu: Hebei Agricultural University
Junjie Zong: Tianjin University
Zhekai Zhang: Tianjin University
Yang Zhou: Tianjin Normal University
Kaifan Xue: Tianjin University
Zhiqiang Huang: Tianjin University
Yujia Pang: Tianjin University

A chapter in Proceedings of the 2026 11th International Conference on Financial Innovation and Economic Development (ICFIED 2026), 2026, pp 843-848 from Springer

Abstract: Abstract Maritime shipping faces IMO 2050 mandates and carbon prices of $15-120/ton. This paper analyzes OCCS-carbon market interactions, proposing three corrections to real options theory. First, regulatory ambiguity aversion creates political risk premiums that delay investment beyond standard volatility thresholds. Second, oligopsonistic market structure—where 20 carriers control 70% of tonnage—enables strategic OCCS withholding to extract credit rents. Third, liquidity constraints impose 15-20% transaction costs on early OCCS credits. These modifications reveal that price-based incentives alone may require 40 – 60% public co-investment to achieve optima. Political economy analysis further shows that linked ETS face sovereignty-tradeoff dilemmas, static offset quotas suppress maritime abatement by 70%, and voluntary markets fail due to non-additive baselines. We propose tiered quotas tied to MRV compliance and charter party reforms to resolve shipowner-charterer principal-agent misalignments. Regulators should harmonize monitoring standards (±5% accuracy) and fund price collars through auction revenues; investors should prioritize high-compliance flag portfolios and sovereign-backed liquidity guarantees.

Keywords: Maritime Carbon Markets; Onboard Carbon Capture and Storage; Technology-Market Interaction; Real Options; Carbon Price Dynamics (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-94-6239-642-5_87

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