Part of an ongoing article series on renewable energy / climate crisis in Southeast Asia.
Indonesia’s Energy Trilemma
Indonesia’s dependency on fossil fuel is deeply ingrained in the nation’s economic and infrastructural fabric. With its large population also comes a high demand for energy, which continues to be extracted from non-renewable sources.
Due to this, Indonesia continues to grapple with its reliance on non-renewables, despite global efforts to reduce carbon emissions and shift towards renewable energy.
Fossil fuels still dominate the country’s energy mix, accounting for a significant portion of its greenhouse gas (GHG) emissions.
The prevalence of fossil fuels in Indonesia’s energy sector can be attributed to several factors, including the country’s abundant natural resources, existing infrastructure and the economic benefits derived from fossil fuel industries.
Transitioning from fossil fuels to renewable energy sources is a critical step toward achieving the Net Zero Emissions (NZE) target for Indonesia. However, an abrupt shift could pose significant risks to the country’s energy security, economic stability and social welfare—key components of the energy trilemma. This could manifest in energy shortages, economic disruption and social challenges, given the nation’s current infrastructure and economic dependence on these resources, as stated above.
As a country that ranks among the top 10 GHG emitters globally – contributing approximately 728.9 MtCO2 in 2022 to the world’s total emissions – Indonesia faces heightened pressure to reduce its carbon footprint.
Carbon capture and storage (CCS) offers a practical solution during these transitional periods. By capturing carbon emissions from industrial facilities – or even directly from the atmosphere – and securely storing them underground, CCS enables Indonesia to utilize its abundant energy supply while reducing the environmental impacts of energy consumption.
According to the Intergovernmental Panel on Climate Change (IPCC), without CCS, it would be challenging to achieve the NZE target by 2050. Therefore, the CCS approach allows Indonesia to attain its environmental goals without compromising the reliability of its energy supply or the health of its economy, while also supporting other decarbonization initiatives in Indonesia.
The Full Potential of CCS Technology
From an environmental perspective, CCS is a critical technology for reducing GHG emissions, complementing nature-based solutions like reforestation.
However, the scale of land required for tree planting is immense; for example, a single CCS project in Tangguh that can store 33 million tons of CO2 over 15 years is equivalent to planting between 54,000 and 94,000 hectares of trees.
This comparison highlights the substantial impact CCS can have in mitigating carbon emissions and combating climate change alongside nature-based solutions.
Moreover, integrating CCS with renewable energy projects, such as biomass energy, can further enhance its effectiveness by creating negative emissions technologies that actively remove CO2 from the atmosphere, making it a vital component of a comprehensive climate strategy.
CCS offers significant economic benefits as an emerging industry. It can generate up to 53,000 jobs annually in Indonesia through various stages, from engineering to maintenance, until 2050. Beyond job creation, CCS can stimulate growth in related sectors like transportation, manufacturing and research.
Additionally, CCS could boost Indonesia’s GDP by about US$478 billion by attracting foreign investment and fostering innovation. The growth of the CCS sector could potentially position Indonesia as a regional leader in carbon management as well as promote opportunities for bilateral and multilateral collaborations.
Despite the significant benefits of CCS, Indonesia faces notable challenges, such as public acceptance and regulatory weaknesses. The success of CCS projects hinges on widespread support and robust legal frameworks.
Public acceptance can be challenging due to concerns about safety and environmental impacts, while weak regulations may hinder the development and deployment of CCS technologies.
To overcome these obstacles, Indonesia must proactively address these issues by engaging with stakeholders, enhancing public awareness and strengthening its regulatory environment. This approach will be crucial for Indonesia’s journey to becoming a regional CCS hub and ensuring the effective integration of CCS into its climate strategy.
Indonesia’s Journey to Becoming Regional’s CCS Hub
In early 2024, Indonesia introduced Presidential Regulation 14/2024, a key policy for CCS. This regulation highlights the government’s commitment to cutting carbon emissions as well as outlines procedures for CO2 injection, monitoring as well as verification.
Notably, it enables the use of CCS not only in the oil and gas sector but also across other industries, broadening its impact and helping to address emissions from various sources. The regulation establishes a national CCS task force and offers financial incentives as well as technical support to attract private sector investment.
Additionally, it supports cross-border CCS projects, positioning Indonesia as a regional leader in carbon storage and fostering international climate collaboration. Article 45 mandates that cross-border carbon transport relies on bilateral agreements, while the regulation also limits foreign carbon storage to 30% of available capacity to prioritize domestic needs.
Other regulations have also been introduced. The Ministry of Energy and Mineral Resources Regulation 2/2023 provides comprehensive guidelines for CCS and Carbon Capture, Utilization, and Storage (CCUS) in the oil and gas sector, including stringent monitoring and economic provisions. In this particular regulation, the carbon can be utilized as one of the drivers to enhance the oil or gas production so that it gives economic benefit value to the field.
Recognizing past concerns about weak regulatory enforcement, Indonesia has taken significant steps to minimize the risk of CO2 leakage. This includes robust Monitoring, Reporting, and Verification (MRV) frameworks and the adoption of international standards like ISO/TC 265 into national regulations, ensuring best practices in geological storage.
These measures reflect Indonesia’s commitment to strengthening its regulatory framework and enhancing its role as a leader in CCS, advancing both domestic and regional efforts.
Indonesia is currently working on at least 15 CCS/CCUS pre-projects, with the first expected to become operational by 2026. These sites will be strategically distributed throughout the archipelago to maximize efficiency and impact. The development of these sites will involve significant investment in infrastructure and technology, ensuring that they meet international standards for safety and effectiveness. The planned CCS sites are expected to serve as hubs for regional CO2 storage, accommodating emissions from various industrial sources and power plants.
In line with this vision, Indonesia hosted its second International and Indonesia CCS (IICCS) Forum 2024 from 31 July to 1 August 2024. This event – organized by the Indonesia CCS (ICCS) Center and supported by the Coordinating Ministry of Maritime and Investment Affairs – demonstrated the country’s commitment to advancing CCS technologies.
Several MoUs were signed during the forum, highlighting the collaboration among various stakeholders to implement CCS effectively in Indonesia. This collective effort is a significant step towards achieving NZE by 2060, reinforcing Indonesia’s role as a regional leader in CCS.
In addition to domestic efforts, Indonesia aims to become a CCS hub for the entire Asia region. This vision includes the development of cross-border CCS projects and the establishment of partnerships with neighboring countries.
By positioning itself as a regional leader in CCS, Indonesia can facilitate large-scale CCS initiatives, promoting regional cooperation in tackling climate change. The potential for CCS to achieve such level of prominence is comparable to Indonesia’s liquefied natural gas (LNG) campaign in the 1970s, thus highlighting its strategic importance. It would also contribute towards attracting international expertise and funding, further accelerating the development and deployment of CCS technologies.
Indonesia’s leadership in CCS can boost its geopolitical influence, particularly within the Global South, by offering carbon storage solutions to nations that lack sufficient storage capacity. As many developing countries face challenges in reducing emissions due to limited geological space for CO2 storage, Indonesia’s vast storage capacity presents an opportunity for cross-border CCS collaborations. By storing CO2 emissions from other nations, Indonesia not only helps them meet their climate goals but also strengthens international partnerships and creates economic opportunities.
However, with Malaysia, Timor-Leste and Thailand also pursuing CCS leadership, Indonesia must accelerate its CCS efforts to maintain a competitive edge. For example, Malaysia has made several preparations to become a regional CCS Hub. However, unlike Indonesia, Malaysia is lagging in certain aspects, including regulations. For instance, Malaysia does not yet have regulations that permit cross-border CCS. Despite this, Indonesia must remain vigilant and prepare as thoroughly as possible.
Summary
Indonesia’s journey to achieving NZE by 2060 is challenging, primarily due to its reliance on fossil fuels and the high costs of transitioning to cleaner energy. The high cost of CCS technology is a key barrier, but advances in technology and the development of CCS hubs for cost and risk-sharing across industries offer a viable path to making it more affordable and scalable.
Additionally, the lack of domestic awareness and the absence of carbon pricing mechanisms (such as carbon taxes or incentives) are obstacles to the wider adoption of CCS and other decarbonization efforts. To overcome this, Indonesia is working on establishing the first market-driven CCS hub, which would support developing countries with carbon taxes but limited storage capacity, fostering regional collaboration and shared solutions.
With ample storage capacity, a strategic location, and a strong regulatory framework, Indonesia is well-positioned to emerge as a regional CCS leader. The country’s proactive efforts in promoting its competitive advantage in CCS technology are attracting international investment and collaboration, helping to combat climate change while strengthening its economic future.
In conclusion, while challenges remain, CCS technology is a promising solution for Indonesia. Backed by a strong regulatory framework, strategic investments and CCS hub development, Indonesia is poised to play a crucial role in global climate action. By balancing economic growth with environmental sustainability, Indonesia is well-equipped to meet its climate goals and set a powerful example for other nations to follow.
