Indonesia has issued a new presidential regulation on carbon capture and storage (CCS). This regulation, which went into effect on Tuesday, allows CCS operators to reserve 30% of their storage capacity for imported carbon dioxide (CO2).
Through the new regulation, oil and gas contractors could utilize depleted reservoirs or aquifers in their blocks for CCS operations. The government has estimated that these operations have the potential to store over 400 gigatonnes of CO2 equivalent. Moreover, the Indonesian government would collect royalties from storage fees charged by CCS operators.
The CO2 stored for CCS operations could come from various sources, including emissions from upstream oil and gas activities, refineries, power plants, and industrial activities both in Indonesia and overseas. The regulation also allows companies operating CCS to allocate 30% of their total carbon storage capacity to storing carbon from abroad.
However, in order to store carbon from abroad, the emitter must have invested in Indonesia or be affiliated with a company that has done so. Furthermore, the Indonesian government must have a bilateral agreement with the government where the emission originated from.
This new regulation has already attracted the attention of major players in the energy industry. In November, BP announced the launch of a carbon capture, utilization, and storage project in West Papua province. Indonesia’s state energy firm Pertamina has also agreed to discuss investment in CCS projects with US oil majors Exxon Mobil and Chevron.
According to data from the energy ministry, there are currently 15 CCS and CCUS projects in various stages of preparation in Indonesia, with a combined investment of nearly $8 billion, including BP’s project.