1.

Why Southeast Asia needs CCS/CCUS ..................................................................................... 2

2.

Specific Drivers ........................................................................................................................... 3
2.1

Singapore ............................................................................................................................ 3

2.2Indonesia............................................................................................................................. 4

2.3

Malaysia .............................................................................................................................. 43.

ESG commitments driving CCS deployment ............................................................................... 44.

Hub and Cluster Networks .......................................................................................................... 4

5.

Conclusion: The way forward ...................................................................................................... 6Page | 1

1.
Carbon capture and storage (CCS) is vital if we are to have any chance of reducing emissions to netzero and achieving global climate change targets. The specific contribution of CCS to emissionsreduction varies across regions, depending on carbon dioxide (CO 2) emission sources and storagesite availability. For the Southeast Asia region, with its power generation fuel mix and rapidly growing
natural gas production, CCS has a unique and critical role to play.
In recent decades, Southeast Asia has been one of fastest growing regions of the world. Its energy
demand has grown more than 80 per cent from 2000.1 Oil, coal and gas provides more than 70 per
cent of its energy (Figure 1).

Figure 1: Southeast Asia energy demand and energy mix 2
Under the IEA Stated Policies Scenario, fossil fuel demand across the region will be more than 800
Mtoe in 2040. Coal and gas combined provide a near equal share of the fuel used for power
generation, and together make up approximately 80 per cent of the total used. A few representative
countries’ energy mix for power generation are listed below:
CountryTypeGas

Coal

Installed capacity 2017

43.0%

30.9%

Indonesia4Electricity generation 2018

22.0%

58.0%

5Singapore

Electricity generation 2019

95.3%

Thailand6

Electricity generation 2019

57.5%

16.9%

7

Electricity generation 201717.8%

34.3%8,93Malaysia

Vietnam

1IEA 2019, Southeast Asia Energy Outlook 2019.
IEA 2019. Southeast Asia Energy Outlook 2019.
3Suruhanjaya Tenaga Energy Commission 2019. Malaysia Energy Statistics Handbook 2019.
4
BP 2019. BP Statistical Review-2019.
5Energy Market Authority 2019. Singapore Energy Statistics 2019.
6
Ministry of Energy 2019. Energy Statistics < http://www.eppo.go.th/index.php/en/en-energystatistics/electricity-statistic>.
7
Vietnam Electricity 2017. Annual Report 2017.
8
Asian-Power 2020. Vietnam keeps grip on coal. < https://asian-power.com/regulation/news/vietnam-keeps-grip-coal>.
917GW coal-fired power station under construction
2Page | 2

Sustainable economic growth requires reliable, clean and low-carbon power. The region’s fossil fuelpower fleets are of relatively young age with decades of economic life 10. The capacity of these fleets
will continue to increase in the foreseeable future and, inevitably, CO 2 emissions will rise. Moreover,coal-fired power stations may have also contributed to air pollution (particulates, sulphur oxides (SOx)and nitrogen oxides (NOx)) in some ASEAN countries. When carbon capture is retrofitted to a coalfired power station, it removes not only CO 2 but also SOx, NOx and particulates from the flue gas.
Deployment of CCS or carbon capture, utilisation and storage (CCUS) in the power sector will
therefore not only reduce CO2 emissions, but also improve air quality for the region.
On the energy supply side, the region has long been a significant oil and gas producer with Malaysia
being the third largest LNG exporter.11 Several oil and gas majors have substantial assets in thisregion. In recent years gas production has been ramping up, due to increasing investment inexploration and development. However, it should be noted that quite a few recent natural gas projects
are developing high CO2 gas fields, both onshore and offshore. Raw natural gas streams from those
fields contain 20 to 70 per cent CO2 by volume.
The natural gas production process (LNG or pipeline natural gas) includes a CO 2 separation unit (AcidGas Removal Unit, ‘AGRU’) where high concentration CO2 (>95 per cent) is produced and vented.
These high concentration CO2 streams offer great opportunities for early mover projects as capture
costs are avoided. Total cost for compression, dehydration, transport and injection may range from
US$15-30/tonne CO2 which is substantially lower than the cost for power station flue gas. This may
likely increase LNG production cost marginally, depending on CO 2 concentration and other factors (fora 7 million tonnes per annum (Mtpa) LNG plant with 2 Mtpa CO2, assuming a $25/t CCS cost and a$3/GJ LNG conventional production cost, LNG unit cost increase is $7.14/t LNG (4.37 per centincrease).
It should also be noted that geological storage resources are plentiful in the region. According to aprevious study, Indonesia, Thailand, the Philippines and, Viet Nam have 54 gigatons of storage
capacity12.

2.
As discussed above, there are general mandates and good opportunities for low cost CCS projects inthe region. It is necessary to further examine the specific drivers for developing CCS projects.
Countries in this region are developing CCS at vastly different paces. Three representative countries’
efforts in CCS are listed below:

CCS and CCUS has gained much momentum in both public and private sectors in Singapore. Suchstrong interest is well justified. In 2017, Singapore’s greenhouse gas emissions were 52 million tonnes
CO2e with 39 per cent primary emission from power stations (mostly gas-based) and 46 per cent fromindustry. For those industrial emissions, unlike electricity, it is difficult to find alternative or replacement
technology to reduce emissions. Singapore recently published its Long-Term Low-Emissions
Development Strategy (LEDS), stating:“There are three thrusts in our strategy. First, we need to transform our industry, economyand society. Second, we will have to draw on technologies, which are not yet mature such ascarbon capture, utilisation and storage (CCUS), and low-carbon fuels. Third, we will needinternational collaboration in areas such as well-functioning carbon markets, carbon storage,
and regional electricity grids.”13This document paves the way for CCUS development in Singapore and it also provides a foundation
for industry to seek international collaboration on CCUS, especially storage, either in neighbouring
countries or countries slightly further away, such as Australia which has abundant CO 2 storage space

10IEA 2019, Southeast Asia Energy Outlook 2019
Australian Government 2018. ASEAN Oil and Gas Market Overview.
12ADB 2013. Prospects for Carbon capture and storage in Southeast Asia.
13National Climate Change Secretariat, Strategy Group, Prime Minister’s Office 2020. Charting Singapore’s Low Carbon andClimate Resilient Future.
11Page | 3

and mature legal framework for CCS. For companies operating in Singapore, the Singaporean carbontax, though at a relatively low value now, provides another driver to develop and implement adecarbonisation strategy.

Indonesia is home to several large gas development projects with high CO 2 concentrations. Various
studies and pilot studies have been conducted with international funding support. The Indonesianoil/gas authority has been discussing CO2-EOR/EGR14 and its potential to increase Indonesian oil/gas
production. A draft legal framework has been proposed, though further efforts are needed to codify
the CCS legal framework. A Japan-Indonesia Joint Credit Mechanism (JCM) agreement may provide
project developers alternative access to project finance and CCS regulation is needed in order toutilise these credits for CCS projects. Additionally, deployment of CCS in the power sector will reduce
pollutants and help improve air quality for major Indonesian cities.

Malaysia’s power and oil/gas sectors have been considering CCS for quite some time. Some of thecountry’s gas fields have very high (more than 70 per cent) CO 2 content. Development of those highCO2 gas fields may only be justified by combining them with CO 2 storage. One disadvantage is thatmost of those fields are offshore, and offshore operations (drilling, injection and monitoring) tend tohave higher costs. Malaysia continues to progress towards CCS with significant activities over the past
few years. These CCS activities have included, but are not limited to, capacity development, storage
assessments and legal and regulatory workshops.

3.
In the corporate world, with ever increasing Environmental, Social and Governance (ESG) pressure
on corporations, particularly in regard to climate change ambitions, more companies have establishednet-zero targets by 2050. Corporations operating in the Southeast Asian region are no exception, andmany have taken actions to reduce their operational emissions. Corporate sustainability and climatechange targets are a key driver for emissions reductions measures. From industry observations, a “noCCS, no development” stance appears to be becoming more common in the development of high CO 2
gas projects.

4.
Due to the compact geographical area of Southeast Asia and the existence of oil/gas infrastructure
close to suitable geological sites, the region is well positioned to build a CCS hub to provide CO 2
storage solutions for its countries, and nearby jurisdictions.
A CCS hub-and-cluster network delivers economies of scale and substantially reduces unit costs of
CO2 transportation and storage.15 A network is better suited to attract investment and to reduce
financial risks for individual investors. Another advantage of a network is that it would improve
operational flexibility by creating multiple operators and customers, which enables storage sites
switching in the event of planned or unplanned outages.16
This region has strong technical capabilities and it could develop a strong CCS services industry,targeting offshore operations. This region has already built up an extensive infrastructure plan foroil/gas pipelines connecting Indonesia, Singapore, Malaysia, Thailand, Vietnam, Brunei andCambodia (Figure 2). For the development of a future CO 2 pipeline network, the ASEAN Memorandumof Understanding (MoU) on the Trans-ASEAN Gas Pipeline (TAGP) may provide parties valuable
precedents/lessons learned in developing a multilateral agreement for transporting commercial
commodity via pipeline.

14

Enhanced Oil Recovery/Enhanced Gas Recovery
Global CCS Institute 2019. The Global Status of CCS 2019.
16 Global CCS Institute 2019. Policy priorities to incentivise large scale deployment of CCS.
15Page | 4

Figure 2 ASEAN gas pipelines infrastructure plan17

Figure 3 Potential CO2 transport to Australia for storage
Depending on economic and other factors, such a network may well expand outside this region toinclude northern Australia, where offshore storage resources with great potential have been
discovered and assessed (Figure 3). Existing Australian CCS regulatory frameworks provide
developers with additional confidence. Carbon dioxide shipping infrastructure may also offer
opportunities to be connected to a potential domestic CO 2 network in northern Australia.
It is nevertheless recognised that early mover projects tend to adopt point-to-point source-sink models
due to the risks for the large infrastructure investment required to establish a hub; such as over-scaled
pipeline and pumping stations. However, preliminary assessments of some early mover projects
indicate that it is highly likely those projects may have very similar investment horizon for their oil/gas
projects, and hence collaboration on building a network may be well timed.

17P Roberts et al. Building the Trans-ASEAN gas pipeline. Asia Pacific Review 2003.

Page | 5

5.
Deploying CCS in the Southeast Asia region will not be without significant challenges. The following
key points may stimulate the thinking of public and private stakeholders when developing their CCS
plan and strategy:
•
•

•
•

•

18

Governments have a critical role to play in supporting a regional hub and cluster network.
This may be in the form of direct investment, establishing a regulatory framework for CO 2
storage and other policy frameworks.
Production Supply Contracts (PSC) are commonly employed to stimulate investment inoil/gas production and regulate profit sharing between private corporations andgovernments. Governments may examine the feasibility of incorporating CCS into their PSC
schemes.
Regional collaboration is vital, especially for early mover projects. Public and private
stakeholders may benefit from collaborative discussions to identify areas for joint work, suchas storage sites and pipeline/shipping facilities, at early stages of project development.
As most countries in the region are developing nations, international collaboration may beparticularly important. International climate finance (including climate funds, developmentbanks) and foreign aid may provide the financial resources to support capacity development,
early stage pilot and demonstration projects.
Market mechanisms under Article 6, or other mechanisms, may be very valuable tools toincentivise CCS investment. Recently, Australia and Singapore announced their intentions
to develop a memorandum of understanding (MoU) which includes CCUS.18 This may pave
the way for specific collaborations on CCUS projects and initiatives.

The Prime Minister of Australia. Media Statement, 23 March 2020.

Page | 6

Page | 7