Cross-border CCS Study

By 2050, Asia Pacific (APAC) is expected to account for 50 per cent of global gross domestic production (GDP) and 50 per cent of the world’s energy use. The ability to capture, transport, store and trade CO₂ will be essential for decarbonisation in APAC, while continuing to meet the growing energy needs of businesses and communities. Carbon capture and storage (CCS) is already proven technically but unlocking APAC’s cross-border CCS potential involves challenges such as disparate access to viable underground geological storage, incomplete domestic regulatory frameworks, and a lack of cross-border CCS policies and infrastructure. 

International agreements like the Paris Agreement or the London Protocol provide building blocks for cross-border CCS projects but do not specify how governments should practically implement such agreements. Nations in Asia Pacific are starting to form bilateral agreements to capture emissions in one country and store them in another, promoting investment in cross-border projects. However, several details, including the distinction between issues to be addressed in bilateral agreements versus commercial ones, remain undefined. APAC countries also do not have common regional regulatory framework, standards, emissions accounting rules, or financial mechanisms to encourage cross-border CCS. To encourage large scale development of CCS in Asia, it is necessary to find a flexible pathway that allows CO₂ to be captured in one country, stored in another and for financial benefits (such as tax breaks, avoided taxes, and carbon credits) to be sought in either country. 

The study does not recommend new standards or framework. The study’s recommendations have been developed through reviewing international standards and regulations – including the Intergovernmental Panel for Climate Change (IPCC) Guidelines, the European Union (EU) CCS Directive and London Protocol – to ensure alignment with these guidelines. The study also examines existing cross-border CCS case studies and has incorporated feedback received through extensive consultation with various stakeholders. 

Recognising that governments and commercial parties in APAC may have different perspectives on how to operationalise CO2 trade, this study provides an overarching set of principles with multiple options for parties to pursue. Therefore, it allows governments to implement national policies and regulations and pursue options reflective of their needs. 

While this study primarily focuses on the emission reduction accounting, accreditation and operationalisation aspects of cross-border CCS projects, it is also imperative for governments to agree on dispute resolution mechanisms given the novelty of the cross-border CCS concept. There are a wide range of other aspects to be considered, which are outlined in the appendix of the study. These include appropriate carbon pricing and financial incentives, assessment of different CCS technologies and review of in-country regulations to recognise and facilitate cross-border CCS. 

With governments in the Asia Pacific actively undertaking discussions about cross-border agreements, ANGEA will continue to engage with stakeholders and share our analysis. Our aim is for this project to support timely and effective establishment of bilateral agreements, which will be essential to the region realising important decarbonisation opportunities prior to 2030.