Why carbon capture is so essential to Indonesia’s future

– by Paul Everingham

As the importance of carbon capture and storage (CCS) to Asia’s energy future becomes ever-more apparent, so too do the opportunities the technology can provide for Indonesia.

CCS was a major point of interest and discussion at Gastech in Singapore in early September. It’s evident the wide-scale implementation of carbon capture in energy transition is a matter of “when” rather than “if.”

As the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change have made clear, all practical pathways to global net zero involve substantial investment in CCS and carbon capture, utilisation and storage (CCUS).

The technology involved in CCS and CCUS is already proven, so the remaining pieces of the puzzle will involve enabling cost-effective solutions at scale and putting in place regulatory frameworks that allow potential to be realised.

CCS is especially relevant to Asia because of the huge increase in energy demand that will drive economic growth over the next few decades and the prevalence of industrial clusters centred on hard-to-abate sectors. Capturing and then safely, securely and permanently locking away CO2 emissions in deep geological formations will significantly assist progress on climate targets.

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Indonesia, which is targeting net zero by 2060, offers the perfect illustration of why CCS is so critical to Asia’s energy transition. It is already the world’s fourth-most populous country and projected to also have its fourth-biggest economy by 2050, growth that will be matched by a significant increase in energy demand.

Increasing investment in renewables alone won’t meet that demand and, as Indonesia reduces its reliance on coal, domestically-produced natural gas will have a bigger role in its energy mix. By itself gas produces up to 50 per cent less emissions than coal in generating electricity but pairing gas-fired power with CCS can further reduce emissions by at least 90 per cent, and likely even more as technology evolves.

CCS can have an immediate significant impact on emissions reductions in crucial sectors of the Indonesian economy, such as the manufacturing, steel, petrochemical, fertiliser and cement industries.

Jakarta cityThere is also an enormous opportunity for Indonesia to serve as a storage hub for major CO2 producers in Asia which lack storage capacity of their own. Japan and South Korea are two that spring immediately to mind.

There are already some very positive signs that Indonesia is ready to unlock its considerable CCS potential, from geological, industrial and policy standpoints.

The Global CCS Institute has categorised Indonesia as having “high overall storage potential with abundant resources enabling a CCS industry.” Research by ExxonMobil, one of a number of ANGEA member companies involved in CCS collaborations in Indonesia, has suggested the country could store as much as 3 billion metric tonnes of CO2.

More than a dozen CCS projects are currently in the study and preparatory stage in Indonesia, most of which are expected to be operational by 2030.

Policy-wise, Indonesia will need clear legal and regulatory frameworks in which to operate and to attract investment for carbon capture. Pleasingly, the Ministry of Energy and Natural Resources’ (ESDM) announced in March a Ministerial Regulation on CCS and CCUS in upstream oil and gas operations, which was among Asia’s first.

The regulation provides clarity for CCS and CCUS activities in oil and gas fields. It requires carbon emissions to be captured from upstream oil and gas operations, and allows CO2 derived from other industrial activities such as power generation to be used for CCUS activities. Additionally, the regulation encourages CCS/CCUS development by entitling projects to tax incentives.

While the regulation is a step in the right direction for Indonesia, it’s important that a framework is now put in place for storage of CO2 away from oil and gas fields. ANGEA recently hosted a very successful and productive workshop with the ESDM focussed on Indonesia’s ability to become a regional CCS hub and we hope to contribute our knowledge and experience to the development of further regulations and guidelines.

The Indonesian Government’s commitment to deploying and scaling CCS will be essential to the development of the technology at scale. Government support, financially and through policies and regulations, will encourage the adoption of CCS across a range of industries, while access to suitable land and underground geologic storage is crucial to enable safe and effective long-term storage of CO2.

Moreover, the establishment of a carbon market is pivotal to the creation of economic incentives for CCS investments. Given the likelihood that CO2 will need to be move across borders, comprehensive transport considerations are necessary to facilitate smooth and coordinated operations.

All of these factors will be analysed in an extremely detailed study ANGEA will soon be undertaking to develop a CCS framework for the Asia Pacific region.

Collaboration between governments, industries and academics will also accelerate the development and deployment of CCS in Indonesia. Extensive and transparent public outreach and education can foster understanding, build trust and address any concerns the public may hold about CCS.

Whether used with power generation, for point-source capture by industry or as part of oil and gas operations, the possibilities for CCS are really only limited by humanity’s imagination. I am confident that in the coming years CCS will be part of everyday life – in Indonesia and throughout Asia.

To realise that future, however, work to establish the right frameworks for CCS must take place now.

With a policy-enabled environment and significant storage potential, Indonesia is well placed to become one of Asia’s leading investment markets for CCS, creating future industry while tackling one of the greatest environmental challenges of our time.

Paul Everingham is the inaugural CEO of the Asia Natural Gas and Energy Association (ANGEA), which works with governments, society and industry throughout Asia to build effective and integrated energy policies that meet each country’s climate objectives