Indonesia has recently introduced new regulations regarding carbon capture and storage (CCS), allowing foreign contractors to access the country’s CO2 storage capacity. Under the new regulations, CCS operators are permitted to allocate up to 30 percent of their total storage space for imported carbon dioxide that meets certain conditions.
The presidential regulation applies to oil and gas contractors, allowing them to utilize depleted reservoirs or aquifers within their assets for CCS operations.
The new rules provide an opportunity for foreign contractors to ease their decarbonization pathways, contribute to Indonesia’s climate efforts, and provide the country with benefits from the initiative, as the government is entitled to royalties on the storage fees imposed.
While this is a meaningful step towards global cooperation in the fight against emissions, it comes with certain conditions that need to be fulfilled in order to take advantage of this opportunity.
The new regulations stipulate that CO2 storage is only permitted for emitters who have already invested in Indonesia or are affiliated with companies that have done so. Additionally, there must be a bilateral agreement in place between Indonesia and the government of the country where the carbon emissions originated in order for the storage to be allowed.
With an estimated potential to store over 400 gigatons of CO2 equivalent, Indonesia’s new regulations make way for foreign entities to reduce emissions generated through oil and gas activities, refineries, power plants, and industrial processes.
Indonesia, as a developing country with a significant reliance on fossil fuels, sees CCS and CCUS as essential in its attempts to decrease harmful emissions and address climate issues.
Last year, energy ministry senior official Tutuka Ariadji announced that there are 15 CCS and CCUS projects in various stages of preparation with a combined investment of nearly $8 billion, including BP’s Tangguh CCUS project.
These projects illustrate the country’s commitment to reducing its carbon footprint and taking part in global efforts towards a more sustainable and environmentally conscious future.