Both approaches have strengths and different time horizons.
When the vessel is expected to operate for a long time and fuel switching is impractical.
When a fundamental overhaul is due anyway.
Consider technology, timing, ports, residual value, and follow-on costs together.
Onboard Carbon Capture and Storage (OCCS) captures CO2 from the exhaust stream of the existing engine, stores it on board and offloads it in port for further processing or permanent storage. The technology typically relies on amine absorption or membrane processes. Current pilot installations achieve capture rates between 30 and 70 %, depending on system size, available waste heat and vessel type.
The technical challenges are considerable: space requirements for the capture system and intermediate CO2 storage, energy demand for amine regeneration (which can increase overall fuel consumption by 15 to 25 %), corrosion issues from wet CO2 and the logistics of CO2 offloading in port. Moreover, no mature port infrastructure for receiving ship-borne CO2 at scale exists to date.
Fuel switching means transitioning from conventional fossil fuels to alternative options: LNG, methanol, ammonia or biofuels. Each fuel brings its own technical requirements — from cryogenic storage (LNG at -162 °C) through toxicity management (ammonia) to reduced energy density (methanol has approximately half the volumetric energy density of HFO).
The fundamental difference: OCCS treats the symptom (CO2 output), whilst fuel switching addresses the cause (the fossil carbon in the fuel). However, not all alternative fuels are automatically climate-neutral — LNG reduces CO2 by approximately 20 to 25 % compared with HFO but has significant methane slip issues. Only e-fuels from renewable sources achieve near-climate-neutral balances, and even then only under clean well-to-wake assessment.
OCCS can be retrofitted onto existing vessels with conventional engines — this is its greatest operational advantage. An operator need not change the engine or fuel system. However, the vessel loses cargo capacity (due to the space requirements of the OCCS system and CO2 tanks) and consumes more fuel (due to the energy demand of the capture plant).
Fuel switching on existing vessels requires a retrofit — new engine or conversion to dual-fuel, new tanks, modified safety zones, adapted crew training. For newbuilds, the decision is taken and integrated during the design phase. Operating costs depend heavily on the chosen fuel and its availability: green methanol in 2026 costs two to three times more than conventional VLSFO.
For fleet planning, this produces a temporal logic: OCCS can serve as a transitional solution for vessels with a long remaining service life where a full fuel switch is not economically justifiable. Fuel switching is the more robust long-term solution but requires available infrastructure and bearable fuel prices.
The suitability of both approaches varies considerably by vessel type. Large container vessels with a newbuild perspective are better suited to fuel switching — the major carriers have already demonstrated this through orders for methanol dual-fuel vessels. Infrastructure is co-built through their demand.
Bulkers and tankers with a medium remaining service life (8 to 15 years) are potential candidates for OCCS, particularly when deployed on routes with limited alternative fuel availability. However, the economics depend heavily on CO2 offloading costs and certificate prices.
Passenger ferries and short-sea vessels with regular routes and short port stays can benefit from battery-hybrid systems — a third pathway that represents neither OCCS nor classic fuel switching but is becoming increasingly economical for this segment.
The decision between OCCS and fuel switching should be structured around five criteria. First: remaining service life of the vessel — the longer, the more fuel switching is likely to pay off. Second: route profile — are alternative fuels and CO2 offloading infrastructure available on the route?
Third: investment framework — OCCS requires lower initial investment but has higher running costs. Fourth: regulatory requirements — how is OCCS credited under FuelEU and EU ETS? Fifth: residual value of the vessel — a fuel switch can increase resale value, whilst OCCS as a retrofit has less impact on value.
Classification societies treat onboard carbon capture largely as novel technology, which means plan approval runs through a dedicated qualification process rather than an established rule set. Structural integration of capture units and CO2 storage tanks, fire and explosion risk from the amine or solvent system, and the added weight and stability implications all require case-by-case assessment. This adds time and engineering cost to an OCCS retrofit that a straightforward efficiency upgrade would not carry, and owners should budget for a longer approval cycle rather than assuming a standard drydock timeline.
Fuel switching carries its own class and insurance considerations, but they are comparatively well trodden for LNG and increasingly so for methanol, with dedicated rule sets covering tank design, gas detection and hazardous zones. Ammonia remains the least mature from a class and insurance perspective: its toxicity profile changes the risk assessment for crew safety, evacuation procedures and port proximity in ways that go beyond the flammability concerns familiar from LNG or methanol projects.
Insurers and P&I clubs are still calibrating their appetite for both pathways. Hull and machinery underwriters ask pointed questions about redundancy and failure modes for capture systems that have limited operating history, while liability cover for alternative fuel bunkering and handling increasingly depends on demonstrable crew competence and documented safety procedures rather than the fuel choice alone. In both cases, early engagement with class and insurers – before the investment decision rather than after – tends to surface constraints that materially affect the cost comparison between the two pathways.