The Kasawari gas field, off the coast of Malaysian Borneo, was discovered in 2011 and has been seen as a lifeline for the country’s energy dreams. Malaysia has long depended on oil and gas exports for economic expansion and government revenue, and this new field promised to allow state-owned oil company Petronas and its partners to continue fossil gas and petroleum production.

But this time, Malaysia is seeking to harness the discovery for more than just oil and gas. The government and Petronas have announced plans to make the Kasawari field the world’s largest offshore carbon capture and sequestration (CCS) project, storing CO₂ from around the world as soon as 2028.

The plan is to build a fixed offshore platform 200 kilometers (120 miles) from the coast, where compressed CO₂ will be reinjected into a depleted reservoir via a 138-km (86-mi) subsea pipeline. It’s part of an ambitious plan to make CCS central to Malaysia’s energy transition, after its inclusion in the National Energy Transition Roadmap, and the March passage of a Carbon Capture, Utilisation, and Storage (“CCUS”) Bill, which sets guidelines for CO₂ storage and transport.

The Kasawari CCS project is one of several proposed and planned across Southeast Asia, including in Indonesia and Thailand. Proponents argue that, due to the young age of the region’s existing coal and gas-fired power plants and expected growth in energy demand, renewables like wind and solar won’t be enough to meet climate and regional net-zero targets.

“There is intensive discussion among Government and industry for developing CCS in the region,” said I Gusti Suarnaya Sidemen, who leads CCS work at the Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA), a Japan-funded think tank.

Proponents see CCS as increasingly viable economically too.

“During the last 10 years, the cost of capturing CO₂ … has halved due to the success of the development of more efficient capture technology,” Gusti said.

But critics say this is not enough. Despite ERIA’s assertion that costs have fallen, CCS for climate mitigation is only operational in a few projects around the world, where it captures less carbon than promised and remains expensive, costing more than $200 per metric ton of CO₂, far above the $10-$15 generally seen as commercially viable. Moreover, in Southeast Asia, carbon pricing is low and governments are reluctant to commit financial resources to unproven technologies.

“We do not see a viable path toward its commercialization in Malaysia,” said Meenakshi Raman, president of Sahabat Alam Malaysia, a local nonprofit.

Japan’s role

Many point to the 2021 launch of the Asia CCUS Network, a regional network led by Japan, as the start of the CCS push in Southeast Asia. Since then, there have been numerous regional meetings and an expanded push, through groups like ERIA, for Southeast Asian countries to include CCS in their energy plans.

From 2016-2019, the Japanese government operated a demonstration CCS project near the city of Tomakomai in Hokkaido. This project has been promoted to Southeast Asian governments as a model for the technology across the region. Because Japan lacks suitable storage sites, exporting captured and liquefied CO₂ to Southeast Asia via specially designed ships is a key part of the country’s plans.

In 2023, signed an agreement to accept CO₂ from Japan, where it will be stored underground at Kasawari and other oil and gas fields. Indonesia is also exploring CCS, passing initial regulations in 2024, with a new industry-led CCS Center playing a key role.

In Thailand, the National Committee on Climate Change Policy has been tasked with leading CCS policy, and the state-owned oil company, PTTEP, is initiating its first CCS project at the Arthit gas field in the Gulf of Thailand.

Japanese companies are involved in all three countries. In Malaysia, Petronas has signed a joint study agreement with Japan’s largest electricity utility, JERA, and Japanese oil, gas and heavy industry companies ENEOS, JX Nippon and Mitsubishi are also involved in CO₂ shipping plans. Indonesia’s state-owned oil and gas company, Pertamina, is working with Japanese government agency JOGMEC and industry heavyweights J-Power, Mitsubishi Research Institute (MRI) and Mitsui to explore CCS potential at the Sukowati and Jatibarang oil and gas fields. Meanwhile, PTTEP is working with INPEX, Japan’s biggest oil and gas company.

“We found that Southeast Asia has great potential for CCS,” said Kikuko Shinchi, research director at MRI’s Environmental Innovation Group, who conducted a feasibility study for CCS released earlier this year. “If these initiatives can get the proper financing, we believe starting commercial operation after 2030 is within reach.”

Cost challenge

To do that, investment will be needed. The latest report from the Asia CCUS Network estimates that Southeast Asia needs $40 billion a year between now and 2065 to build enough CCS infrastructure to meet net-zero targets. Where that funding will come from remains uncertain.

“Governments are reluctant to finance CCS because there are competing sectors that need funding, such as health care and education, and subsidies for low-income households,” Gusti said.

Gusti and Shinchi said regional governments have a key role to play, to pass policies that incentivize investment. They also called for multilateral institutions like the World Bank and the Asian Development Bank to play a role. Regional carbon pricing is also key, they said.

MRI’s own analysis estimates that adding CCS to existing coal-fired power plants, such as the Jawa-7 facility in Indonesia or the Van Phong power station in Vietnam, could capture 95% of emissions at a cost of $70-$80 per metric ton of CO₂, for capture, transport and storage.

To Grant Hauber, an energy finance adviser at the nonprofit Institute for Energy Economics and Financial Analysis (IEEFA), these estimates seem overly optimistic. In other parts of the world CCS has regularly proven to be more expensive and less effective than promised. In Australia, the A$3.1 billion ($2 billion) Gorgon CCS project, promised A$70 ($45) per metric ton, but ended up costing about A$200 ($129). And unlike projects planned in Asia, Gorgon doesn’t involve distant transportation of CO₂.

Moreover, according to an analysis by IEEFA, none of the 16 existing CCS projects in Europe, Australia, the United States and Algeria has even been able to capture 80% of CO₂ — already below the industry claim of 95% — with many only achieving 20-60% capture rates. All continue to rely on government or taxpayer subsidies. Hauber said he can’t see how CCS in Asia would be any different, and pointed to gaps in existing financial studies and analyses.

“Where’s the revenue stream coming from? Who is paying for it? How certain is that stream? Is it sufficient to cover the capital costs and operating costs?” Hauber asked. “These are questions that remain unanswered, particularly for the East Asia value chain for CO₂.”

Greenwashing oil and gas

For Hauber and Raman, there’s another side to the CCS push in Southeast Asia: the expansion of oil and gas production. The Kawasari field was left untouched due to its high CO₂ content, and CCS could be used to capture some of this CO₂ and store it underground, making the gas viable globally. Similarly, the PTTEP project in Thailand is also focused not only on storing captured CO₂, but also using CCS to expand oil and gas production. And while CCS can reduce emissions compared to regular oil and gas production, it’s not enough.

“Kasawari is estimated to reduce the field’s emissions by only about 14.6%, less than 1% of Petronas’s total emissions, making its climate impact negligible,” Raman said, adding that she sees. CCS as a way for oil and gas companies like Petronas to “greenwash their oil and gas production and extend the extraction of fossil fuels.” (Petronas had not responded to a request for comment by the time this article was published.)

In Indonesia, activists say plans to add CCS to coal-fired power plants like Jawa-7 have another purpose: allowing those projects to continue to operate.

“CCS is diverting the conversation from actually reducing emissions into capturing and storing it somewhere,” said Sisilia Dewi, a campaigner with 350.org Indonesia. “That’s a greenwashing and perpetuating strategy of fossil fuel companies.”

Despite studies, meetings and plans, it’s not clear if commercial CCS is any more viable today than when the Asia CCUS Network launched in 2021. Hauber said it’s highly unlikely we’ll see much progress between now and 2030.

“These projects are complex, really, a series of projects; capture, transportation, wells, injection, and that creates project on project on project on project risk,” Hauber said. “It takes incredible coordination, and if you aren’t building the ships, infrastructure, the ports on both ends and wellheads now, you’re not going to hit 2030.”

Banner image: Representatives from several organizations and associations submit an open letter to the UNFCCC, stating that climate finance must adhere to the principle of historical responsibility for the climate change by wealthy industrialized countries by repaying the ‘ecological debt’ to developing countries in the Global South. Image © Chittawan Limcharoen / Greenpeace.

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