Regional spotlight: Carbon capture, utilization & storage (CCUS) in Southeast Asia — what's different and why it matters

Southeast Asia contributes roughly 5% of global CO2 emissions, yet it holds some of the most geologically favorable conditions for carbon storage on Earth. The region's depleted oil and gas reservoirs, deep saline aquifers, and extensive offshore geology offer an estimated 54 gigatons of CO2 storage capacity, enough to absorb decades of regional emissions. Despite this potential, only a handful of CCUS projects have moved beyond the feasibility stage. The gap between geological promise and operational reality defines the CCUS landscape in Southeast Asia, shaped by regulatory fragmentation, sovereign resource concerns, cross-border legal uncertainties, and the economics of capturing carbon from industries that often operate on razor-thin margins.

Why It Matters

ASEAN member states collectively emitted approximately 1.9 billion metric tons of CO2 in 2024, driven primarily by coal-fired power generation, cement production, petrochemical refining, and palm oil processing. Under current trajectories, the International Energy Agency projects that Southeast Asian emissions will grow 25-35% by 2040, making the region one of the few areas globally where fossil fuel consumption continues to accelerate. This trajectory conflicts directly with the Paris Agreement commitments that every ASEAN nation has ratified, creating an urgent need for technologies that can decarbonize existing industrial assets without requiring their immediate retirement.

CCUS occupies a unique position in Southeast Asia's decarbonization strategy because the region's industrial base depends heavily on sectors where electrification or fuel switching offers limited near-term solutions. Cement kilns, for instance, release CO2 as a chemical byproduct of limestone calcination regardless of the energy source used to heat them. Natural gas processing plants across Malaysia, Indonesia, and Thailand produce high-purity CO2 streams that represent the lowest-cost capture opportunities globally, with costs as low as $15-25 per ton compared to $50-120 per ton for power sector applications.

The strategic significance extends beyond emissions reduction. Several ASEAN governments view CCUS infrastructure as a pathway to sustain revenues from their hydrocarbon sectors while meeting climate targets. Indonesia and Malaysia, both major natural gas exporters, see carbon storage services as a potential new export product: accepting and permanently sequestering CO2 from neighboring countries or international shippers in exchange for storage fees. This emerging concept of "carbon storage as a service" could generate $2-5 billion annually across the region by 2035, according to estimates from the Asian Development Bank.

Regional Policy Landscape

Southeast Asia's regulatory environment for CCUS is fragmented and rapidly evolving. Unlike Europe (where the EU CCS Directive provides a unified legal framework) or Australia (where the Offshore Petroleum and Greenhouse Gas Storage Act covers storage permitting), ASEAN has no harmonized regional CCUS regulation. Each country is developing its own approach at different speeds.

Indonesia has moved furthest. The government issued Presidential Regulation No. 14 of 2024 establishing a legal framework for CCS and CCU activities, clarifying subsurface pore space ownership, CO2 injection permitting, and long-term liability provisions. Indonesia's Ministry of Energy and Mineral Resources has identified 27 potential storage sites with an estimated combined capacity of 20 gigatons. The country's Nationally Determined Contribution under the Paris Agreement explicitly includes CCUS as a mitigation pathway, targeting 38 million tons of CO2 captured annually by 2030. Fiscal incentives include tax holidays of up to 20 years for qualifying CCUS investments and a planned carbon pricing mechanism that would credit captured emissions.

Malaysia has leveraged Petronas's technical expertise to advance offshore storage projects, but the legal framework remains incomplete. The country's existing Petroleum Development Act does not explicitly cover CO2 injection for permanent storage, creating regulatory uncertainty around pore space access, monitoring obligations, and post-closure liability. The government announced in late 2025 that a dedicated CCS Bill would be tabled in Parliament, but the timeline remains unclear.

Thailand has adopted a more cautious approach, with the Thailand Greenhouse Gas Management Organization (TGO) exploring CCUS within the broader context of its carbon credit framework. Thailand's focus has been on CO2 utilization rather than geological storage, with pilot projects exploring enhanced oil recovery and carbonation of construction materials. The absence of offshore storage regulations reflects both geological limitations (Thailand's storage potential is more modest) and political concerns about subsurface injection in earthquake-prone zones.

Singapore plays a distinctive role as a regional hub rather than a storage destination. With negligible geological storage capacity but substantial refining and petrochemical emissions (approximately 50 million tons annually), Singapore has invested in building CCUS knowledge, financing capability, and logistics infrastructure. The city-state's 2023 National Hydrogen Strategy and Carbon Capture Framework position it as a coordination point for cross-border CO2 transport, connecting emitters across the region with storage sites in Indonesia and Malaysia.

Cross-Border Challenges

The most distinctive feature of Southeast Asian CCUS is its inherent cross-border nature. Unlike North America or Europe, where large emitters often sit within jurisdictions that also contain suitable storage geology, Southeast Asia's geography creates a fundamental mismatch. Singapore's refineries, Thai industrial zones, and Vietnamese power plants generate concentrated CO2 streams with no domestic storage options, while Indonesia and Malaysia possess vast storage capacity but different legal traditions, environmental standards, and liability frameworks.

This mismatch raises questions that no other region has had to resolve at this scale. Who bears liability if CO2 injected under Indonesian waters by a Singaporean company leaks after 50 years? Under what legal regime are disputes adjudicated? How do monitoring obligations transfer across national jurisdictions? The London Protocol, which was amended in 2009 to permit cross-border CO2 transport for sub-seabed storage, has been ratified by only a fraction of ASEAN states, leaving bilateral agreements as the primary governance mechanism.

In 2024, Indonesia and Singapore signed a bilateral agreement on CCS cooperation that established preliminary frameworks for cross-border CO2 transport and storage. This agreement covers liability allocation, environmental monitoring standards, and dispute resolution. While the agreement represents a breakthrough, it applies only to those two nations. Replicating such agreements across the full matrix of ASEAN emitter-to-storage relationships will require years of diplomatic negotiation.

What's Working

Petronas CCS Projects in Malaysia

Petronas has committed to developing Southeast Asia's first large-scale offshore CCS hub in the Kasawari gas field off Sarawak. The project, which reached final investment decision in 2023, will capture approximately 3.3 million tons of CO2 annually from natural gas processing and inject it into a nearby depleted reservoir. Kasawari benefits from an unusually high CO2 content in the raw gas stream (roughly 37%), making capture economically compelling even without carbon pricing. Petronas has committed $2 billion to the project, with first injection expected in 2027. The company has also proposed expanding the site to accept CO2 from third-party emitters, potentially creating the region's first commercial storage hub.

Indonesia's Tangguh CCS Integration

BP's Tangguh LNG facility in Papua province has integrated CCS into its operations, re-injecting CO2 separated during natural gas processing into a dedicated storage formation. The project stores approximately 0.5 million tons annually and has operated since 2004, making it one of Asia's longest-running carbon storage operations. The Tangguh experience has provided critical data on reservoir behavior, monitoring techniques, and regulatory interaction that has informed Indonesia's broader CCS regulatory development.

Singapore's Low-Carbon Solutions Ecosystem

Singapore has invested over $100 million through its Low-Carbon Energy Research program to develop CCUS technologies tailored to regional conditions. The National University of Singapore and Nanyang Technological University operate pilot-scale capture facilities testing novel solvents and membrane systems designed for tropical climatic conditions, where high ambient temperatures and humidity reduce the efficiency of conventional amine-based capture systems. Singapore's Economic Development Board has also attracted multinational CCUS technology companies to establish regional headquarters, creating a cluster of engineering, project development, and financing expertise.

What's Not Working

Regulatory Fragmentation and Timeline Uncertainty

The absence of a harmonized ASEAN CCUS framework forces project developers to navigate each country's regulatory system independently, increasing transaction costs and project timelines. A CCS project spanning Singapore (emitter), Malaysia (transit), and Indonesia (storage) must satisfy three distinct regulatory regimes, each evolving on its own schedule. Developers report that regulatory uncertainty adds 2-4 years to project timelines and increases development costs by 15-30%.

Financing Gaps

CCUS projects in Southeast Asia face a fundamental financing challenge: they require capital-intensive infrastructure with 20-40 year payback periods in countries where carbon prices remain low or nonexistent. Indonesia's planned carbon tax has been delayed multiple times. Malaysia and Thailand have voluntary carbon markets but no compliance mechanisms that would create sustained demand for captured carbon. Without predictable revenue streams from carbon pricing, project developers must rely on concessional finance, bilateral aid, and voluntary offtake agreements with multinational corporations pursuing Scope 3 targets.

Limited Monitoring and Verification Infrastructure

Robust CCUS requires sophisticated monitoring of underground CO2 plume behavior, wellbore integrity, and potential leakage pathways. Southeast Asia currently lacks the specialized service companies, regulatory inspectorates, and independent verification bodies that mature CCUS markets rely upon. Indonesia's mining inspectorate, which will oversee CCS projects, has limited experience with subsurface CO2 management. Building institutional capacity for long-term stewardship of stored CO2 is as critical as developing the physical infrastructure.

Key Players

Petronas (Malaysia) is the region's most technically capable CCUS operator, with expertise in offshore gas processing and subsurface characterization developed across decades of upstream oil and gas operations.

Pertamina (Indonesia) leads the national oil company's CCS ambitions, with multiple proposed storage sites across the Java Sea and Kalimantan, supported by government policy alignment.

ExxonMobil operates significant LNG and refining assets across the region and has proposed a large-scale CCS hub concept for Indonesian waters, leveraging its global CCUS portfolio experience.

The Asian Development Bank provides concessional financing and technical assistance for CCUS project development, including the Energy Transition Mechanism which could channel $4.5 billion toward early retirement of coal plants with CCUS components.

Japan's Ministry of Economy, Trade and Industry (METI) funds bilateral CCS cooperation with ASEAN through the Asia CCUS Network, supporting feasibility studies and capacity building across the region.

Action Checklist

• Map your organization's Southeast Asian emission sources against proximity to identified geological storage formations in Indonesia and Malaysia
• Monitor Indonesia's Presidential Regulation implementation timeline for CCS permitting requirements
• Assess eligibility for Asian Development Bank concessional financing for CCUS feasibility studies
• Engage with Singapore's CCUS research institutions for technology partnerships suited to tropical operating conditions
• Track bilateral CCS cooperation agreements between ASEAN states for cross-border transport regulatory clarity
• Evaluate internal carbon pricing scenarios ($25, $50, $75 per ton) against CCUS project economics to determine investment trigger points
• Identify natural gas processing or high-purity industrial CO2 streams as lowest-cost early capture opportunities

FAQ

Q: How does CCUS cost in Southeast Asia compare to global benchmarks? A: Capture costs for natural gas processing applications (which dominate the regional pipeline) range from $15-30 per ton, well below the $50-120 per ton typical of power sector applications in North America and Europe. However, total project costs including offshore transport and storage infrastructure are higher due to the region's early-stage supply chain and limited specialized contractors. All-in costs for first-of-a-kind projects are estimated at $45-80 per ton.

Q: Is cross-border CO2 transport legally permitted under current frameworks? A: Only between countries with specific bilateral agreements. Indonesia and Singapore signed such an agreement in 2024. Other ASEAN pairs lack formal legal frameworks, creating uncertainty that inhibits project development. Ratification of the London Protocol amendment by more ASEAN states would provide an international legal foundation.

Q: What role does enhanced oil recovery play in regional CCUS economics? A: Enhanced oil recovery (EOR) using CO2 injection offers potential revenue offsets but faces limitations in Southeast Asia. Most regional reservoirs are offshore (increasing injection costs) and many are mature fields with complex geology. EOR is more likely to feature in onshore projects in Thailand and Myanmar than in the large offshore storage concepts dominating Indonesia and Malaysia.

Q: How does carbon pricing affect CCUS viability in the region? A: At current carbon prices (below $5 per ton in most ASEAN voluntary markets), CCUS requires concessional finance or regulatory mandates to be economically viable. Most project economic models require carbon prices of $30-50 per ton for natural gas processing CCUS and $60-100 per ton for industrial and power sector applications. Indonesia's evolving carbon pricing framework is the most critical policy signal for regional CCUS investment.

Q: What are the main geological risks specific to Southeast Asia? A: The region sits on the Pacific Ring of Fire, introducing seismic risks that do not apply in geologically stable storage regions like the North Sea or Alberta. While seismicity does not preclude storage, it requires more rigorous site characterization, monitoring protocols, and contingency planning. Offshore storage in stable sedimentary basins (such as those off Sarawak and West Papua) mitigates this risk significantly compared to onshore sites near active fault zones.

Sources

• International Energy Agency. (2025). CCUS in Southeast Asia: Regional Assessment and Outlook. Paris: IEA Publications.
• Asian Development Bank. (2024). Carbon Capture and Storage in ASEAN: Policy, Finance, and Infrastructure Needs. Manila: ADB.
• Global CCS Institute. (2025). Global Status of CCS: 2025 Report. Melbourne: Global CCS Institute.
• Republic of Indonesia. (2024). Presidential Regulation No. 14 of 2024 on Carbon Capture and Storage. Jakarta: State Secretariat.
• Petronas. (2024). Kasawari CCS Project: Environmental Impact Assessment Summary. Kuala Lumpur: Petronas.
• National University of Singapore, Energy Studies Institute. (2025). Cross-Border CO2 Transport in ASEAN: Legal and Regulatory Analysis. Singapore: NUS.
• Ministry of Economy, Trade and Industry, Japan. (2025). Asia CCUS Network: Progress Report and Regional Cooperation Framework. Tokyo: METI.