Southeast Asia’s climate fight was never going to be easy. As the region’s energy transition continues to lag and planet-cooking emissions skyrocket, governments are pinning their hopes on carbon capture, utilisation and storage (CCUS) technologies to help hit climate targets.
Speaking at a virtual dialogue held by the Asean Centre for Energy, a Jakarta-based energy think tank, experts and officials from Malaysia, Indonesia and the Philippines said last week that amid persistent concerns over the costs and intermittency of renewable energy, CCUS was critical to achieving energy security objectives while curbing emissions.
Southeast Asia’s growth in energy demand has been among the fastest in the world, at an average of 6 per cent per year, second only to China. Yet adverse policies, political inertia and a lack of finance have seen renewables struggle to keep pace with the bloc’s ballooning energy needs, and fossil fuels have met almost 90 per cent of the demand increase since 2000.
Dirty energy is set to remain a mainstay of supply for decades to come, with installed coal capacity to increase from 103 gigawatts (GW) in 2020 to 207 GW in 2040, and gas capacity to rise from 90 GW last year to 154 GW in 2040, according to the 6th Asean Energy Outlook’s targets scenario, which assumes that states do what is required to fully achieve their current climate commitments and national energy efficiency and clean energy targets.
As a result, emissions from power generation could more than double by 2040, and industrial emissions could grow by 75 per cent.
Technological optimism
“We need new tools to combat climate change,” said Abdul Razib Dawood, chief executive officer of Malaysia’s Energy Commission, a regulator of the energy industry, and chairman of the Asean Forum on Coal, a regional working group that advocates for less-polluting coal technology. “CCUS is one of the many tools at our disposal.”
Carbon capture technologies allow high-emitting industries such as fossil fuel extraction plants or cement manufacturers, for instance, to siphon off carbon dioxide before it is emitted into the atmosphere. The greenhouse gas is then either stuffed away in geological formations deep underground or used as a resource to create different products such as carbonated drinks, concrete, fertilisers, and fuels.
Tutuka Ariadji, director-general of oil and gas at Indonesia’s energy and natural resources ministry, said while Indonesia deemed renewables and energy efficiency measures central to emissions cuts, CCUS was key to achieving “energy sovereignty” in an affordable, sustainable, and competitive manner. Indonesia plans to retire its last coal-fired power plant as late as 2056.
Adam Baylin-Stern, an energy analyst at the CCUS unit of the International Energy Agency (IEA), a Paris-headquartered intergovernmental organisation, stated that without CCUS, Southeast Asia’s carbon emissions would be tough to rein in, and meeting the Paris Agreement’s temperature goals would be “virtually impossible”.
According to a recent IEA report, CCUS could help put the bloc on a path to net-zero emissions by limiting emissions from existing power and industrial assets while underpinning new economic opportunities associated with low-carbon hydrogen production ammonia.
CCUS is also one of the few scalable, cost-competitive solutions available to decarbonise challenging heavy industries such as cement production, iron and steel manufacturing and chemicals, which account for almost 20 per cent of Southeast Asia’s energy-related emissions today, said Baylin-Stern.
Policy action and money needed
CCUS development has moved at a snail’s pace globally, consistently making up less than 0.5 of total investment in clean energy and efficiency technologies, according to the IEA. High costs remain one of the biggest obstacles facing the industry, particularly as those of solar, wind, and batteries continue to drop.
But the sector has gathered momentum amid increasingly dire warnings of climate change ahead of COP26, a United Nations climate change conference in November. Since early 2020, governments and industry around the globe have committed at least US$12 billion in funding for CCUS projects and programmes.
Interest in CCUS has been on the rise in Southeast Asia, with at least seven CCUS projects at present in early development across Indonesia, Malaysia, Singapore and Timor-Leste. Several countries are also exploring potential uses for waste carbon dioxide, including as a feedstock to produce synthetic fuels, chemicals, and building materials.
Under the IEA’s sustainable development scenario, which would see the world achieve net-zero emissions by 2070, CCUS in Southeast Asia could reach at least 35 megatons of carbon dioxide per year by 2030, roughly equal to the current level of carbon dioxide captured globally. This includes retrofit opportunities in industry, capture opportunities in fuel supply sectors, and retrofitting of coal power plants.
Achieving this level of CCUS deployment in the region will require about US$1 billion of investment a year between 2025 and 2030, according to the IEA.
“This investment can’t fall on governments of the region alone. There has to be a role for international public finance institutions,” said Baylin-Stern. “There’s a lot of money available and intended to be used for clean energy technologies. But it’s not necessarily finding its way to the countries and sectors where it’s needed most.”
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Various technical, economic, societal and political challenges will need to be addressed for CCUS technologies to be deployed at scale.
Abdul Razib Dawood, chief executive officer, Energy Commission, Malaysia, chairman, Asean Forum on Coal
Southeast Asia’s ability to deploy CCUS at scale will hinge on governments’ ability to collaborate and introduce international technology standards, said Ariadji. Policymakers will also need to establish robust regulatory frameworks and develop carbon storage sites to bring certainty to investors and make projects more viable.
Last month, all member states of the Association of Southeast Asian Nations announced their intention to join the Asia CCUS Network Forum, a new platform that aims to boost knowledge sharing and spur CCUS investment.
But while Singapore, Malaysia and Indonesia all recognise that CCUS must play an essential role in long-term emissions-reduction strategies, the fiscal incentives needed to attract private capital are lacking.
Governments could also introduce carbon taxes to push firms to have their emissions sequestered, experts have said. In Southeast Asia, Singapore remains the only nation with carbon pricing in place, although Thailand, Vietnam and Indonesia are mulling the implementation of such schemes.
CCUS’ growing pains
CCUS projects on the ground continue to yield mixed results, further stalling its progress as a viable technology to cut emissions.
New research by Cornell University in New York casts doubt on the green credentials of blue hydrogen, an energy carrier that is widely considered a key technology in a future decarbonised world, where it could be used to power industry and transport, heat buildings, and generate electricity.
Today, most hydrogen is classified as “grey” hydrogen because it is supplied through steam reforming of methane in natural gas, with high emissions. But industry experts call for CCUS to be used to reduce these emissions and create a low-carbon alternative called “blue” hydrogen.
However, the study, the first analysis to examine the lifecycle greenhouse gas emissions of blue hydrogen, finds total carbon dioxide equivalent emissions are only around 10 per cent less than grey hydrogen. It also stresses that the assumption that captured carbon can be stored indefinitely is “optimistic and unproven”.
Another study, released in 2019 by Stanford University in California, found that a carbon capture technology used in a coal power station only slashed emissions by roughly 10 per cent. Spending on carbon capture instead of renewables increases the social cost of energy substantially, the analysis concluded.
Until now, most CCUS projects around the globe have also relied on revenue from the sale of carbon dioxide to oil companies who inject the gas into wells to squeeze out more oil.
The recent controversy surrounding Chevron’s Gorgon project, a US$54 billion liquefied natural gas plant equipped with one of the world’s biggest CCUS facilities in Western Australia, is likely to further tarnish the industry’s image.
Touting the venture as a standard-bearer for carbon capture technologies, Chevron promised a decade ago to store 100 million tonnes of greenhouse gas emissions. But the energy giant recently admitted it had failed to meet the Australian government’s requirement to lock away 80 per cent of emissions generated within its first five years of operation, blaming “technical challenges”.
“CCUS can help Asean member states to transition to a low-carbon economy, but various technical, economic, societal and political challenges will need to be addressed for CCUS technologies to be deployed at scale,” said Dawood.
