Indonesia remains steadfast in trying to deploy carbon capture, utilisation, and storage (CCUS) technologies whilst ensuring their affordability. At the helm of the Group of Twenty (G20) 2022 Summit, Indonesia is making headway in carbon-neutral technologies, demonstrating the potential of emerging energy markets as Southeast Asia forges ahead to meet its net-zero emissions target.

The Economic Research Institute for ASEAN and East Asia (ERIA) co-hosted the G20 Side Event Series, Making CCS/CCUS Affordable: Enabling CCUS Deployment in G20 and Beyond, on 13 April 2022. As the main host, the Directorate General of Oil and Gas of Indonesia’s Ministry of Energy and Mineral Resources (MEMR) gathered a group of prominent industry leaders and policymakers to discuss the progress and future of CCUS in developing countries.

In his welcome address, Mr Yudo Dwinanda Priaadi, Chairperson of the G20 Energy Transition Working Group, focused on the obstacles ASEAN faces in deploying carbon capture technology and the means to overcome them. The G20 members all agree that the priorities in energy transition are accessibility, technology, and financing, underscoring the importance of international cooperation. For the global community to meet the Paris Agreement goals, carbon dioxide (CO₂) emissions must be reduced by 40 million tonnes (MT)–5.6 billion tonnes (BT) within the next 30 years, mainly through CCUS and carbon, capture, storage (CCS) applications in the iron, steel, chemicals, refineries, and power plant industries. ASEAN alone will require $1 billion per annum for CCUS investment by 2030. To meet CCUS deployment targets by 2030, research and innovation, combined with support from the government as well as public and private sectors, can establish the first steps towards commercialising CCUS.

In his keynote speech, Mr Tutuka Ariadji, Director-General of Oil and Gas of Indonesia’s MEMR, focused on his country’s green energy transition progress. ‘To achieve net-zero emissions, the development of CCS and CCUS technologies will be very important for Indonesia to achieve its target,’ he explained. The International Energy Agency (IEA) estimates that Southeast Asia must capture 25 MT of CO₂ by 2030 and more than 200 MT by mid-century if the region is to meet its Paris Agreement commitments. Mr Ariadji emphasised the crucial role of supporting policies, investments, and collaboration with all parties to facilitate CCS and CCUS deployment and accessibility.

Mr Jun Arima, Senior Policy Fellow of ERIA and Co-Chair of G20 2022, shared insights about the state of carbon neutrality in ASEAN and Asia. Globally, the amount of captured CO₂ using CCUS will need to increase from 40 MT per year to 5.6 by 2050 to attain the Paris Agreement goals. However, to achieve the 1.5°C , more than 6 GT of CO₂ must be captured per year by 2050. Countries must explore all measures—from hydrogen energy to renewables to nuclear energy and CCUS—to make carbon neutrality feasible.

With substantial differences in approaches, emissions profiles, and economic development between ASEAN Member States, regional collaboration will be imperative to achieve economies of scale to reduce costs. Large investments must be accelerated to remove the barriers hindering industrial-scale CCUS from being achieved. Mr Arima explained how today’s geopolitical tension will renew discussions on the role of fossil fuels in global energy security, thus deepening the importance of CCUS technologies.

Ms Kikuko Sinchi, Manager and Senior Researcher of Mitsubishi Research Institute, introduced her company’s research study findings on CCUS value-chain costs. The study selected Blora Regency in Indonesia’s Central Java for a retrofitted coal-fired power plant and found that capture costs comprised the highest proportion of CCUS expenditures, reaching over 70%. As MRI’s finding is in line with other studies, Ms Sinchi called for further technological innovation and business models to drive down costs.

Dr Han Phoumin, Senior Energy Economist of ERIA, moderated the first panel discussion on making CCUS affordable by scaling up and technology innovation. Ms Samantha McCulloch, head of ERIA’s CCUS Unit, underlined how there is no single cost for CCUS given the range of applications available. Nonetheless, it is the most mature and competitive option available to substantially reduce emissions close to zero, particularly for heavy industries. Given that commercialising CCUS applications in heavy industries is in its early stages, the potential for significant cost reduction is promising.

Mr Juho Lipponen, Coordinator of the Clean Energy Ministerial CCUS Initiative, cited five points regarding the feasibility of CCUS and CCS: (1) recognise and specify that CCUS is an option ready for deployment, (2) there is no single cost to CCUS, (3) enhanced technology development facilitates cost reduction, (4) governments should kickstart CCUS, and (5) international cooperation is vital. He recommended the Netherlands and the United Kingdom incentive system, which pays the difference between the price of CO₂ capture per tonne and the carbon price.

Ms Emily Grubert, Deputy Assistant Secretary to the Office of Carbon Management in the Office of Fossil Energy and Carbon Management, joined via a pre-recorded video, covering the United States’ decarbonisation plans and approaching carbon management technologies from a justice perspective. ‘We know that CO₂ removal is expensive today, but we believe that by focusing on sustainability and justice and really trying to understand where these technologies and pathways could fit into future decarbonisation, we have a large role to play in overall decarbonisation,’ she said.

Ms Guloren Turan, General Manager for Advocacy and Communication of the Global CCS Institute, remarked that a business model is a key driver of CCS growth. Developing economies of scale, including the establishment of clusters and networks, would further facilitate CCS advancements thus such business models have emerged as the preferred type for relevant stakeholders. The networks involved in the operation of CCS minimise risks, help sustain local businesses and economies, and create jobs. To meet climate targets, CCS capacity must increase by a hundredfold by 2050, requiring nearly $1 trillion over the next 3 decades. Stronger policies to incentivise investment, clarify crucial legal and regulatory issues, and define the role of CCS in meeting national climate goals are necessary to achieve net-zero emissions. To ease regional regulatory challenges, Ms Turan encouraged the ratification of a 2019 amendment of the London Protocol that would allow cross-border CO₂ transport.

Mr Kim Bye Bruun, Communications and Government Relations Director of the Northern Lights CCS Project, provided a glimpse into the project poised to become the world’s first cross-border open-source CO₂ transport and storage infrastructure network when it starts operations in 2024. The first phase will be completed in mid-2024 with a CO₂ capture capacity of 1.5 MT per annum, with the company looking to expand it to 5 MT–7 MT per annum in the third phase towards 2030. He added that since Europe requires 600 MT of stored CO₂ annually, assistance from policymakers, industries, and organisations are fundamental to speed up project development.

This notable CCS project received 80% support from the Norwegian government during phase one. The second phase will comprise funding from the owners and excludes the capture side. According to Mr Bruun, the most significant legislation concerning CCS is the European Union Emissions Trading System, which saw captured CO₂ incentives rise from €20 to €100 per tonne in early 2022.

Closing the first panel discussion session, Dr Phoumin noted the significance of the discussions given how ASEAN stakeholders ‘really want to understand CCUS costs, what needs to be done, what policies need to be in place, and what infrastructure investment’ is necessary for further dialogue and policy formulation.

The second panel discussion was moderated by Mr Saleh Abdurachman, a Committee Member of Oil and Gas Downstream Regulatory Agency of Indonesia’s MEMR, who concentrated on how developing countries can implement CCUS and learn from Indonesia’s best practices. Mr Tim Dixon, Director and General Manager of Greenhouse Gas R&D Programme, offered four activities that developing countries should implement to promote CCUS: (1) understand their national potential, (2) promote capacity building, (3) establish a centre of excellence in CCUS, and (4) share experiences with other developing countries and learn from them.

During the question and answer (Q&A) session concerning ways to enhance collaboration, Mr Dixon suggested that Indonesia work with large oil and gas companies whilst upholding independent expertise. Centres of excellence, working groups, universities, and governments can help support knowledge-sharing initiatives.

Mr Rachmat Sule, lecturer at the Faculty of Mining and Mining Engineering at the Bandung Institute of Technology, and Mr Usman Pasarai, Senior Researcher at the Business Development Unit of Lemigas, spoke on the role of centres of excellence for CCS and CCUS. Mr Sule stated that his centre of excellence has cooperated with industry and international partners numerous times to conduct studies and projects, including a CCUS feasibility study at Tangguh Field. Mr Sule explained that his team with communities in Europe, Japan, Australia, the Republic of Korea, the United States, and Canada regarding CCS and CCUS regulations in Indonesia.

Mr Pasarai provided insights into CO₂ enhanced oil recovery (EOR), which has been proven effective for increasing overall production whilst permanently storing injected CO₂. Several studies have been conducted by his centre and Pertamina and supported by the Asian Development Bank (ADB) and Indonesia’s Ministry of Economy, Trade and Industry to assess CO₂-EOR potential. A critical next step for Indonesia is to launch a pilot project which, if successful, can realise a commercial-scale CO₂-EOR project that can store 14 BT of CO₂ over a lifetime of 15 years and increase the oil recovery rate by 14%. During the Q&A, Mr Sule shared how coordination was the most challenging aspect for a CCS and CCUS centre of excellence. Mr Pasarai added that since CCUS matters in Indonesia involve numerous agencies, ministries, and sectors, understanding the role of each party is essential to forging fruitful collaborations.

Mr Oki Muraza, Senior Vice President of Research and Technology Innovation at Pertamina, explained his company’s part in accelerating CCUS deployment in Indonesia. Pertamina takes a multifaceted approach to unlocking the potential of CCS and CCUS fields in Indonesia, participating in the selection of injection sites, initiating collaboration on feasibility studies, and exploring CO₂ utilisation possibilities. The company has received wide-ranging support from Indonesia’s Ministry of Education, Culture, Research, and Technology in addition to the Indonesia Endowment Funds for Education and the Ministry of Finance. Mr Muraza is optimistic that technological advancements can reduce capital expenditures (CAPEX) and operational costs, thus improving the affordability of CCS and CCUS. When asked by Mr Abdurachman about the progress that can be shared with developing countries, Mr Muraza explained some pathways to reduce CAPEX. These include forming clusters or hubs with neighbouring industries, partnering with technology providers, and prioritising CO₂-EOR before storage to generate additional revenue from oil sales.  

Mr Darshak Mehta, Senior CCUS specialist at ADB, praised Indonesia’s ongoing efforts in advancing CCUS since the country began its journey 20 years ago. Indonesia has learnt from other countries and has established a centre of excellence and retrained its workforce to cope with future CCUS deployment. Mr Mehta complimented Indonesia’s decision to generate and direct resources towards streams that require money and Indonesia’s efforts to work with the public and private sectors to reach the country’s goals. During the Q&A, he expressed ADB’s readiness to assist developing countries with CO₂ storage, common CO₂ infrastructure, e-fuels, and business models. Although ADB has made clear that it will support various CCUS-related activities, however, EOR is excluded from the institution’s pipeline.

In his closing remarks, Mr Koji Hachiyama, Chief Operating Officer of ERIA, underscored the need for continuous technological innovation, policy instruments, and government support to make CCUS and CCS scalable, affordable, and cost-competitive. Capacity building and knowledge sharing are equally critical as they enable policymakers to understand the elements of CCUS to facilitate required policies that ‘best fit into each country’s circumstance’. Through platforms such as the G20 Summit and the Asia CCUS Network, key stakeholders can join forces, share good practices, and avoid potential mistakes, thus accelerating CCUS deployment and affordability.