Carbon capture, utilisation and storage: the opportunity in Southeast Asia

Introduction

Carbon capture, utilisation and storage (CCUS) technologies can play important and diverse roles in supporting clean energy transitions in the dynamic and fast-growing region of Southeast Asia. CCUS can be deployed to tackle emissions from the region’s existing power and industrial facilities – many of which were only built in the past decade. It can underpin new economic opportunities associated with the production of low-carbon hydrogen and ammonia while substantially reducing emissions from natural gas supply chains. CCUS provides solutions for heavy industry that are cost-competitive, readily scalable and secure, and it can help the region to meet its growing power needs while limiting emissions.

Interest in CCUS is expanding in Southeast Asia and globally. The renewed momentum for CCUS has been driven by strengthened climate commitments from governments and industry, including ambitious net-zero targets. The investment environment for CCUS has also improved: Since early 2020, governments and industry around the world have committed at least USD 12 billion in funding specifically for CCUS projects and programmes. CCUS projects are eligible for a further USD 20 billion in clean energy funding programmes established since early 2020.

The improved investment environment has seen more than 30 new commercial projects announced around the world in the first six months of 2021. Since 2018, a total of almost 60 projects have been announced globally with a potential capture capacity of around 145 million tonnes of carbon dioxide (Mt CO2) a year. Today, 24 commercial CCUS facilities are in operation with a capture capacity of around 40 Mt CO2 per year.

In Southeast Asia, at least seven large-scale CCUS projects have been identified and are in early stages of planning, including several linked to natural gas processing with offshore storage. Singapore and Indonesia have established leading CCUS-related research programmes, including the Institut Teknologi Bandung (ITB) Centre of Excellence for CCU and CCS in Indonesia. The November 2020 Association of Southeast Asian Nations (ASEAN) Plan of Action for Energy Cooperation (APAEC) recognises a role for CCUS in the region, particularly to reduce emissions from coal-fired power plants. In June 2021, the Asia CCUS Network was formally established by Japan’s Ministry of Economy, Trade and Industry (METI) and the Economic Research Institute for ASEAN and East Asia (ERIA), with a mission to facilitate the deployment of CCUS in the region.

These recent developments can provide a foundation from which to grow CCUS capacity and facilitate widespread deployment of CCUS technologies in Southeast Asia. However, many economies in the region have limited experience and preparedness for CCUS: There are no operating commercial or demonstration projects in the region, for example. In most countries, the required legal and regulatory frameworks for CCUS have not yet been developed, nor have the potential resources for CO2 storage been fully investigated. New investment incentives, an enhanced role for international finance and greater regional co‑operation will be key to supporting CCUS and clean energy transitions in the region.

This report explores the opportunities for CCUS in Southeast Asia and identifies priorities to build CCUS capacity and accelerate its deployment. The countries included in this analysis are the ten member countries of ASEAN: Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic (PDR), Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam. A special case study on Indonesia is presented in the final section.  

Recent CCUS developments in Southeast Asia

Government strategies
  • Asia CCUS Network established to support collaboration and co‑operation on the development and deployment of CCUS (June 2021).
  • ASEAN Ministers on Energy Joint Statement reference CCUS as a key technology for addressing emissions from coal (November 2020).
  • ASEAN Plan of Action for Energy Cooperation (APAEC) provides an overarching policy direction for CCUS deployment in the region (November 2020)
  • Brunei Darussalam announces it is investigating the role for CCUS in addressing industrial emissions (November 2020).
  • Australia and Singapore sign MoU to advance co‑operation on low-emission technologies, including CCUS as a priority solution (October 2020).
  • Singapore recognises important role for CCUS in long-term strategy submitted to the UNFCCC (March 2020).

CCUS projects and investment
  • Eni and Santos sign MoU to explore re-purposing the Bayu-Undan offshore gas facilities in Timor-Leste as well as broader CCUS opportunities in Darwin, Australia (May 2021).
  • Mitsubishi with JOGMEC, PAU and Bandung Institute of Technology commence a study on a project to produce low-emission ammonia in Indonesia (March 2021).
  • ExxonMobil announces plans for a CCS hub concept, with a plan to capture CO2 emissions from Singapore manufacturing facilities for storage in the region (February 2021).
  • Petronas is deploying CCUS technology at the Kasawari gas facility in Malaysia, with first injection into a depleted gas field planned in 2025 (February 2021). The project is aligned with Petronas’ ambition to achieve net-zero carbon emissions by 2050, announced in November 2020.
  • Australian and Japanese energy and shipping companies and research organisations sign MoUs to consider the deepC Store Project, an offshore CCUS hub in northern Australia that could store CO2 from around the region (December 2020).
  • J-POWER and Japan NUS Co, in co‑operation with PT Pertamina are exploring a project to demonstrate CO2 storage of up to 300 000 t CO2/year at the Gundih gas field in Central Java, Indonesia (September 2020). The project builds on detailed studies conducted between 2012 and 2019.
  • Repsol SA indicates in 2020 Sustainability Plan for Indonesia that they will carry out a study for a large-scale CCUS project in their Sakakemang Block natural gas development in South Sumatra.
  • Petronas signed a MoU with Japan’s JOGMEC and JX Nippon Oil and Gas Exploration in March 2020 to study the development of Malaysia’s high-CO2 content gas fields with CCUS and the possibility of exporting natural-gas based hydrogen to Japan.
  • Studies are underway for two projects in Indonesia related to enhanced gas recovery (EGR) at Sukowati and Tangguh.

Research and innovation
  • Indonesia - ITB National Centre of Excellence for CCU and CCS established in Indonesia in 2017, with support from ADB.
  • Singapore – Established a SGD 49 million (USD 37 million) Low-Carbon Energy Research Funding Initiative for RD&D projects in low-carbon energy technologies such as hydrogen and CCUS (October 2020).
  • Singapore - Keppel Data Centres, Chevron, Pan-United, and Surbana Jurong, with the support of Singapore’s National Research Foundation, signed a MoU to develop the first end-to-end decarbonisation process and carbon capture system in Singapore (July 2020).

Financial support
  • Japan’s Joint Crediting Mechanism (JCM) scheme supported a feasibility study for the Gundih CCUS Project and Sukowati Field in Indonesia (2020). There is potential for the proposed CCUS project at the Gundih gas field to access JCM.
  • ADB CCS Fund supported updated feasibility study for Gundih pilot CCS project, including risk assessments and project management plans, as well as the development of CCUS legal and regulatory frameworks in Indonesia (2019).
  • 2019 Joint Report on Multilateral Development Banks’ Climate Finance confirms CCS (including related to fossil fuel use in power generation and process emissions in other industries) as eligible for classification as climate mitigation finance.
  • GIC (Singapore’s sovereign wealth fund) has made a strategic investment in Storegga, an independent United Kingdom company pioneering low emission technologies including the Acorn CCUS project.