Is Indonesia’s Ambition to Become an International Carbon Storage Hub Attainable?

Carbon Capture, Utilization, and Storage (CCUS) technology plays a critical role in global climate change mitigation. It remains the only viable solution for reducing emissions from hard-to-abate industries like steel, chemicals, and cement. By capturing CO₂ emissions from these industries and transporting them to designated storage facilities in saline aquifers or depleted reservoirs, CCUS offers a practical pathway for emission reductions.
Under former President Joko Widodo's administration, Indonesia set an ambitious goal to become an international CCUS hub, leveraging its substantial CO₂ storage capacity. This vision involves offering carbon storage services to countries such as Japan, South Korea, China, Taiwan, and Singapore -- nations with limited or no storage capacity.

If executed with a sound business model, Indonesia’s CCUS hub could boost the economic viability of such projects while tapping into the regional carbon market for sustainable profits.
According to a 2024 study conducted by ERIA, Indonesia’s National Research and Innovation Agency (BRIN), and the Research and Development Center for Oil and Gas Technology (Lemigas), Indonesia boasts significant CO₂ storage potential. The country is estimated to have the capacity to store 69 gigatonnes (Gt) of CO₂ in saline aquifers, an additional 680.57 Gt in deep saline aquifers, and 10.14 Gt in depleted petroleum reservoirs.
Two projects stand out as particularly promising for international CCUS development: the Sunda–Asri Basin and the Ubadari Field. The Sunda–Asri Basin, located in the West Java Sea, has a storage capacity of 3 Gt of CO₂, with Pertamina and ExxonMobil currently seeking partners to develop this hub. Meanwhile, the Ubadari CCUS project, part of BP’s Train III Tangguh LNG plant, has already secured $7 billion in investment. With a storage capacity of 1.8 Gt of CO₂, BP is also exploring partnerships for utilizing the facility, although only 35 million tonnes of emissions from LNG plants have been allocated for storage thus far.
Recognizing the enormous potential national benefits, the Indonesian government has worked rigorously to establish a regulatory framework to support CCUS development. The Energy and Mineral Resources Ministry issued Regulation No. 2 of 2023, laying the groundwork for CCUS deployment in oil and gas business activities. Presidential Regulation No. 14 of 2024 provides a framework for CCS and CCUS activities, including provisions for carbon storage and cross-border CO₂ transportation. SKK Migas, Indonesia’s Special Task Force for Upstream Oil and Gas Business Activities, has also published technical guidelines for CCUS project development. Furthermore, Regulation No. 16 of 2024, issued in December, outlines the licensing process and designates special areas for CO₂ storage, with fees imposed on emitters for using these facilities.
Despite these efforts, Indonesia’s ambition to become an international CCUS hub remains far from being realized, at least in the near future. The existing regulatory framework is insufficient to attract overseas partners and lacks competitiveness compared to neighboring countries like Malaysia. For instance, Japan has already announced nine advanced CCS projects for the 2024 fiscal year, three of which are scheduled to be operational in Malaysia by 2030. South Korea also plans to utilize Malaysia’s carbon storage facilities by 2028. Malaysia’s PETRONAS has formal agreements with Japan’s Ministry of Economy, Trade, and Industry (METI) and the Japan Organization for Metals and Energy Security (JOGMEC) to develop cross-border CO₂ storage projects.
Indonesia faces several challenges in attracting international partners. The current regulatory framework primarily addresses technical and site-specific issues but lacks comprehensive coverage for cross-border CCUS projects. Key components, such as integrating CCUS projects into the National Registry System to ensure their participation in Indonesia’s carbon market, remain unresolved. Additionally, Indonesia has yet to establish bilateral agreements or partnerships with other countries to facilitate cross-border CCUS projects. Another major issue lies in the lack of clarity and competitiveness in Indonesia’s incentive mechanisms for CCUS investments.
To transform its CCUS hub ambitions into reality, Indonesia must address these challenges with targeted strategies:
- Strengthening Institutional Capacity: Build robust institutions to effectively enforce CCUS regulations. This includes training skilled personnel, streamlining administrative processes, and enhancing inter-agency coordination.
- Enhancing Incentive Frameworks: Offer clear and attractive incentives, such as tax breaks, subsidies, or carbon credits, to make CCUS projects financially appealing. Integrating these frameworks into the national carbon market is essential, and learning from successful models in other countries can provide valuable insights.
- Ensuring Regulatory Stability: Commit to long-term regulatory stability by minimizing abrupt policy changes and involving stakeholders in policy formulation. A stable regulatory environment fosters investor confidence and encourages long-term planning.
- Promoting International Collaboration: Actively seek bilateral agreements and partnerships with foreign governments, international organizations, and private entities to share best practices, secure funding, and advance technological expertise.
Only with significant efforts to address these issues can Indonesia’s ambition to become a global CCUS hub materialize. Success in this area would not only enhance Indonesia’s role in combating climate change but also solidify its position as a leader in sustainable development.
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Ryan Wiratama Bhaskara and Gusti Sidemen are researchers at the Economic Research Institute for ASEAN and East Asia (ERIA). The views expressed in this article are those of the authors.
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