Carbon capture, utilisation and storage (CCUS) can help to put the fast-growing economies of Southeast Asia on the path to net-zero emissions. Since 2000, almost 90% of Southeast Asia’s energy demand growth has been met by fossil fuels and the region is home to major coal and liquefied natural gas (LNG) exporters. While the opportunity for CCUS goes beyond fossil fuel applications, the technology can be an important pillar for helping the region transition from its current energy mix to one that is aligned with future climate goals.

CCUS can contribute to emissions reductions in many parts of the region’s energy systems. The deployment of CCUS can enable some of the more recently built power plants and industrial facilities in Southeast Asia to continue to operate with substantially reduced emissions, contributing to economic development and energy security objectives. CCUS is one of the few scalable solutions available for decarbonising heavy industries like cement and steel, and its deployment could also unlock new economic opportunities associated with low-carbon hydrogen or ammonia production. CCUS can also play a critical role in reducing emissions along the supply chain for natural gas.

Meeting climate goals will require countries to accelerate the deployment of CCUS technology. In pathways consistent with the Paris Agreement’s temperature goals, CCUS would build from a limited base in the region today to 200 million tonnes (Mt) or more of CO₂ capture by 2050. Investment in carbon capture technologies in Southeast Asia would need to reach an average of almost USD 1 billion per year between 2025 and 2030.

Momentum for CCUS is growing in the region. Interest in CCUS in Southeast Asia has been growing in line with international trends. Worldwide, plans for more than 30 commercial CCUS facilities were announced in the first half of 2021 alone. In Southeast Asia, at least seven potential projects have been identified and are in early development – in Indonesia, Malaysia, Singapore and Timor‑Leste. Singapore has identified an important role for CCUS in its long-term emissions-reduction strategy and is actively pursuing research and international partnerships, including with Australia. The establishment of the Asia CCUS Network in June 2021, with the objective of facilitating collaboration and the deployment of CCUS, is another significant milestone and opportunity to advance CCUS in the region.

Targeting industrial clusters will support economies of scale and kick-start deployment CCUS in the region. A hub approach can enable CO₂ capture from multiple industrial and power facilities and promote greater efficiencies in the planning and construction of capital-intensive transport and storage infrastructure. Separating capture from the transport and storage elements of the CCUS supply chain can also facilitate dedicated business models for transport and storage, recognising that the specific skills and expertise needed for large-scale carbon management may not be available in most emissions-intensive sectors. Globally, plans to develop CCUS hubs are progressing in more than 12 locations, with potential to capture more than 50 Mt CO₂ per year. In Southeast Asia, some of the largest industrial clusters can be found in Indonesia, Malaysia, Thailand and Viet Nam.

Regional approaches to CO₂ transport and storage infrastructure can build on international experience. Regional approaches to CO₂ transport and storage infrastructure could enable faster and more widespread uptake of CCUS in Southeast Asia. In particular, the development of large, shared CO₂ storage resources that can be accessed by multiple facilities and countries could support CCUS investment in locations where storage capacity is either limited or where its development faces delays. Such an approach could incorporate offshore CO₂ storage together with CO₂ shipping, providing additional flexibility and contingency in the CCUS value chain where several storage facilities are available. Efforts to develop shared infrastructure in Southeast Asia could be informed by international experience. For example, the Northern Lights CO₂ transport and storage project in Norway will accept CO₂ from facilities across Europe and has sparked plans for several new CCUS projects. 

Identifying and developing CO₂ storage resources in Southeast Asia are key to unlocking the potential of CCUS. Estimates of CO₂ storage capacity in the region are highly uncertain but indicate that the theoretical capacity to store CO₂ would likely far exceed the region’s needs. Most of this capacity is expected to be in deep saline formations. However, depleted oil and gas reservoirs will also provide large-scale storage opportunities. Significant further investigation will be required to adequately identify and assess the region’s CO₂ storage resources, building on studies already undertaken by the Coordinating Committee on Geoscience Programmes (CCOP), the Asian Development Bank (ADB) and others. Given the potentially long lead-times associated with developing CO₂ storage resources, these initial efforts are critical.

Appropriate legal and regulatory frameworks are needed to underpin the safe and effective development of CCUS and to provide certainty for investors. Regulations to facilitate investment in CCUS, in particular CO₂ storage, have yet to be developed in the region, although Indonesia has made significant progress. In some countries, existing oil and gas regulations could serve as a starting point. Existing ISO standards and international examples can also inform the development of CCUS regulations. Key issues to be addressed in the regulations include site selection and permitting requirements, long-term ownership and liability for stored CO₂, property rights (including interactions with other resources) and requirements for financial securities.

Targeted policies and international financial support are essential for CCUS deployment. CCUS faces specific challenges in the early phase of deployment, including the need for co‑ordination across multiple sectors and stakeholders, high capital investment requirements, and untested insurance and financial markets. Targeted policies and government leadership will be critical to successful deployment as will support from international finance entities. Increased access to grants and loans from institutions specialised in development and climate finance – such as the ADB and the Green Climate Fund – alongside sustainable debt and transition financing will be essential to secure the almost USD 1 billion in average annual CCUS investment needed by 2030. 

Four high-level priorities for governments and industry would accelerate the progress of CCUS in the region over the next decade:

1. Increase regional co‑operation and collaboration, including through the Asia CCUS Network, to identify and develop opportunities for shared infrastructure development and to build CCUS capabilities throughout the region.
2. Identify and develop onshore and offshore CO₂ storage resources in parallel with the establishment of robust legal and regulatory frameworks for the safe and secure storage of CO₂. Leverage international programmes to support these efforts, such as the ADB CCUS Trust Fund.
3. Encourage early investment in CCUS projects, including pilot demonstrations and industrial hubs, through targeted policies and integrating CCUS into national energy and climate strategies. Recognising a role for CCUS in energy and climate strategies can improve access to international finance.
4. Build international support and financing for CCUS in the region, particularly increased access to grants and loans from international development and climate finance institutions. Encourage international capital markets to fund a broader range of clean energy investment opportunities, including CCUS, in Southeast Asia.