This is an extract from a recent report “8th ASEAN Energy Outlook” by ASEAN Centre for Energy. This extract specifically focuses on carbon capture and storage (CCS).
Fossil fuels have dominated the total energy supply of ASEAN. They are projected to account for approximately 88% of TPES in the region by 2050. The high regional dependency on fossil fuels raises significant concerns about its environmental impacts, such as GHG emissions, air quality, and public health. ASEAN’s total GHG emissions in 2050 are projected to surpass 5,000 MtCO2 -eq in the BAS, which is 4.4 times the 2022 level. In 2023, the region announced the ASEAN Strategy for Carbon Neutrality as its commitment to strengthening energy transition efforts towards carbon neutrality (CN). Amongst the key measures to meet the CN target by 2050, carbon capture and storage (CCS) technologies are expected to play a crucial role in ensuring energy security and gradually reducing the region’s dependency on fossil fuels. In particular, the CCS technologies are expected to reduce the speed of emission growth in power and heavy industries like cement, iron, and steel in ASEAN. In line with this effort, the deployment of CCS technologies is projected to bring spillover effects on accelerating hydrogen and ammonia production. In 2019, the emissions caused by power and heavy industries accounted for approximately 40% of ASEAN’s total emissions. Thus, emission reduction efforts in these sectors would be crucial for meeting the regional CN target.
The CCS technologies are projected to account for approximately 8% of the electricity supply in the region by 2050. To accelerate the deployment of CCS technologies, the region aims to also strengthen the ongoing initiatives and policies toward the deployment of CCS technologies and hub infrastructure by 2050. ASEAN is seen as able to be self-sufficient in storage capacity, and the CCS hubs are viewed as one of the alternative low-cost economic options for the region to accelerate the deployment of CCS technologies. The region is estimated to be self-sufficient in CCS storage with a fully utilised total of 130 Gt of storage potential, of which approximately 62% is located in Malaysia and 17% is located in the Philippines. Based on research, at least eight out of ten ASEAN countries have identified geological storage potential up to an effective level, which is one step beyond the preliminary theoretical assessment, for saline aquifers and hydrocarbon fields. The potential storage capacity of the major basins in ASEAN is detailed in Table 4.4. Whilst these estimates are still uncertain and require further evaluation, they indicate a substantial preliminary capacity that could potentially exceed the needs of each country.
CCS Hub Potential in ASEAN
CCS projects are costly, and they might not yield much income in the absence of utilisation plans. Approximately USD 1 billion is required as an average annual investment for CCS technologies in ASEAN through 2030. Considering that most of the AMS are still developing, relying on individual national economic capacity would put the development of CCS technologies in the region at high risk. ASEAN nations have the chance to create shared networks and infrastructure for Carbon Capture and Storage Hubs (CCS Hubs) because of Southeast Asia’s compact geographic size and the presence of oil and gas infrastructure close to favorable geological locations. Hub-and-cluster networks for CCS offer economies of scale and significantly lower CO2 transportation and storage unit costs. A network is more suited to draw capital and lower individual investors’ financial risk. By generating multiple operators and customers, a network also improves operational flexibility by allowing storage sites to switch in the event of planned or unplanned outages. Additionally, the area can grow into a significant offshore operations supplier of CCS services for its member nations or even those that are adjacent. To connect capture and storage clusters amongst ASEAN countries, there is a plan to build an extensive hydrocarbon pipeline connecting Brunei Darussalam, Cambodia, Indonesia, Malaysia, Singapore, Thailand, and Vietnam. Under certain conditions, carbon shipping via maritime routes may also have potential for development. Several recommendations for CCS hubs and network schemes within the ASEAN region are summarised in Table 4.5.
Indonesia, Malaysia and Singapore are indeed ambitious in becoming CCS hubs in ASEAN. Singapore is aiming for a capture hub, whilst Indonesia and Malaysia are aiming for a capture and storage hub. Indonesia is establishing itself as a potential regional centre for carbon capture and storage (CCS) due to its abundance of sedimentary basins, vast saline aquifers, and oil and gas reservoirs, all of which are supported by rapidly advancing CCS programmes and infrastructure. Indonesia is also the most advanced country for the legal and regulatory frameworks related to CCS. The most recent updates permit CCS operators in Indonesia to reserve 30% of their storage capacity for CO2 imports, and are noteworthy for being the first in the region to enable cross-border CCS, demonstrating Indonesia’s leadership for the regional CCS initiative. Currently, there are 15 CCS/CCUS projects in the country, expected to be operational by 2030. Malaysia is forming international collaborations to establish a regional hub for CCS, catering to the country’s industries with high emissions along with those of other Asian countries, especially those that are ASEAN members. Their state-run corporation, Petronas, is spearheading the initiative. They have agreement outlines in place to pursue CCS activation projects in Malaysia, with several leading private companies.
Petronas’s Malaysian Petroleum Management has identified 46 trillion cubic feet of potential carbon storage capacity across 16 depleted fields, exceeding Malaysia’s upstream CO2 emissions forecast. This opens the possibility of serving as storage sites for imported emissions from neighbouring countries. For example, the Kasawari project, for which Petronas has finalised its investment decision, is the world’s largest offshore carbon capture project by volume, capable of capturing up to 3.3 million tonnes of CO2 annually, and being the world’s largest offshore platform for carbon capture and storage. Singapore is actively exploring the feasibility of establishing a cross-border CCS project. Singapore via S Hub, a consortium including Shell and ExxonMobil, aims to investigate potential CO2 storage sites in cooperation with foreign partners. Recently, Singapore and Indonesia also signed a Letter of Intent (LOI) on Cross-Border CCS, paving the way for a workgroup to discuss CCS cooperation.
Key Challenges
• The technical assessment of capture, storage, and practical capacity, including potential projections
• Data availability
• Comprehensive risk assessment
• Limited technicalities under the existing regulations
• Limited knowledge sharing platform
• High upfront cost
Conclusion and Ways Forward
The region must implement several key action plans to mitigate the primary challenges hindering CCS development. ASEAN needs to focus on key factors for CCS deployment: policy development, legal and regulatory frameworks, and storage capacity assessment. A significant factor contributing to the challenge of financial and economic viability in the region is the high cost of CCS projects. This is particularly pressing in emerging economies within ASEAN, where financial resources are constrained. To enhance financial and economic viability, ASEAN must take immediate actions, including providing financial support through the acceleration of carbon pricing mechanisms, subsidies, and the establishment of favourable contracts and procurement processes. These measures are crucial to reducing the overall cost of CCS projects, thereby making them more competitive compared to other carbon reduction technologies. Additionally, leveraging existing financial instruments and introducing new ones can help to attract private sector investment and reduce the perceived risk associated with CCS projects. The readiness of supportive policy and regulatory frameworks for CCS projects in ASEAN remains limited. Currently, only Indonesia and Malaysia (Sarawak) have established specific regulations governing CCS projects. These existing frameworks provide valuable examples for other AMS in developing their own legal and regulatory structures for CCS.
However, even in Indonesia and Malaysia (Sarawak), the frameworks can be enhanced by addressing additional parameters that are currently overlooked. These include industrial regulations, environmental impact assessments, carbon storage assessment methodologies, transboundary emissions, and the classification and purification of CO2 . Moreover, the interaction with pressure fronts across international borders and the transition from CO2 – enhanced oil recovery (EOR) to dedicated storage are also critical issues that need to be incorporated into the legal frameworks. The method applied for assessing potential CO2 sources and sinks requires urgent attention. Most current assessments are limited to theoretical and effective capacities, which do not fully capture the practical challenges associated with CCS deployment. A shift towards practical capacity assessment models is needed, which would consider technical, legal, regulatory, infrastructure, and economic barriers. This approach would enable a more accurate estimation of the volume of CO2 that can be economically stored within a geological formation. Additionally, this effort should be complemented by the establishment of a comprehensive and open storage database. Such a database would list all potential storage sites in ASEAN, including detailed seismic data, well logs, and other geological information, facilitating collaboration among AMS for the development of CCS hub infrastructure across the region. The involvement of state-owned and private companies operating in closely related sectors, such as oil and gas, is essential to ensuring the robustness and comprehensiveness of this database.
The establishment of a CCS Working Group consisting of relevant stakeholders from across ASEAN is a timely and crucial step towards accelerating CCS deployment in the region. This Working Group would play a pivotal role in fostering regional collaboration, knowledge sharing, and capacity building. It would also be responsible for coordinating efforts to develop a robust legal and regulatory framework, ensuring alignment with international standards and best practices. Furthermore, the Working Group would work on establishing a platform for multi-level cooperation among governments, private sectors, research institutions, and universities, facilitating the smooth implementation of CCS projects. The Group would also play a key role in securing international support from dialogue partners, ensuring that the region has access to the latest technological innovations and best practices. The establishment of this Working Group would significantly contribute to the transition of CCS projects in ASEAN from the early stage to mature, commercial-scale operations, ultimately helping the region achieve its carbon neutrality goals.
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