On December 24, the Indonesian government announced a major milestone in the implementation of carbon capture and storage (CCS) technology. With a potential CO2 storage capacity of 400 to 600 gigatons in depleted reservoirs and saline aquifers, Indonesia is becoming a pioneer in the era of green industry. With this potential, the country can store national CO2 emissions for 322 to 482 years, with an estimated peak emission of about 1.2 gigatons of CO2 equivalent by 2030.
As a pioneer in ASEAN in the application of CCS regulations and ranked first in Asia by the Global CCS Institute, Indonesia has established a strong regulatory foundation. These include Ministerial Regulation ESDM 2/2023 on CCS in the upstream oil and gas sector, Presidential Regulation 98/2021 on the Economic Value of Carbon, and Financial Services Authority Regulation 14/2023 on carbon trading through IDXCarbon. In addition, stronger CCS regulations are being prepared through a Presidential Regulation.
In an effort to achieve net zero emissions by 2060, Indonesia aims to develop CCS technology and establish a CCS cooperation center. This step will not only address domestic CO2 emissions, but also promote international cooperation.
This marks the beginning of a new phase for Indonesia, where CCS is recognized as a "license to invest" in low carbon emission industries such as blue ammonia, blue hydrogen and advanced petrochemicals. This approach is expected to bring positive changes to Indonesia's economy, open doors to new industrial opportunities, and create a global market for sustainable, low-carbon emission products.
CCS itself requires a significant financial commitment. A recent memorandum of understanding between the Indonesian government and ExxonMobil calls for a $15 billion investment in the development of a carbon-free industry.
To put this in perspective, the CCS Quest project in Canada illustrates that an investment of approximately $1.35 billion is required for a storage capacity of 1.2 million tons of CO2 per year. This information underscores the importance of international investment participation in supporting substantial early funding for CCS projects.
In regional competition with neighboring countries such as Malaysia, Timor-Leste and Australia, which are also seeking to become CCS hubs, Indonesia must seize this opportunity as a strategic and geopolitical center. It is hoped that this initiative will not only help Indonesia meet global environmental goals, but also stimulate innovative and sustainable economic growth. By taking these steps, Indonesia can play a key role in the region's transition to a low-carbon economy.
Source: CNBC
