In recent years, carbon capture utilisation and storage (CCUS) discussions have gained traction in Southeast Asia (SEA). The strategic value of CCUS lies in its ability to retrofit existing assets and hard-to-abate sectors. The young fleet of coal and gas power plants in SEA suggests the region may present the right fit for CCUS applications. The Institute for Energy Economics and Financial Analysis (IEEFA) released a report titled “Carbon Capture in the Southeast Asian Market Context: Sorting Out the Myths and Realities in Cost-Sensitive Markets.”

This report is the first of a two-part series covering CCUS in the SEA region. The report focuses on the preconditions for CCUS adoption, the predominance of gas processing CCUS in SEA, and the context of CCUS in power generation. Excerpts…

Which CCUS drivers would be present in SEA?

With its high associated costs, both in capital investment and ongoing operations, CCUS essentially represents a “tax” to continue emitting carbon. Someone in the value chain will need to internalise the costs. Ultimately, that added cost will fall on either consumers – in the form of higher tariffs – or taxpayers – due to the need for governments to fund subsidies or credits.Therefore, attaching a high value to carbon emissions is necessary for CCUS projects to proceed – whether through a carbon tax and credit market, premium low-carbon product prices, or other policy-based incentives.

The United States’ CCUS establishments were supported by the availability of CO2 pipeline and CO2 demand for EOR, but most notably, through generous tax credit incentives and government funding. Globally, the lack of supporting policy, legal, and regulatory frameworks is often touted as the primary barrier to CCUS applications. Sometimes, what this simply means is that supportive regulations should recognise CCUS. Most of the time, however, this statement alludes to a lack of sufficient price attached to carbon emissions, and more specifically, that substantial public funding support is likely to be required for CCUS to take off.

CCUS leadership in Asia

With the technology-intensive nature of CCUS, several countries could provide reference points for the CCUS potential in Asia: China, Japan, and South Korea. All three countries have a long history of technology leadership and energy investments in the region. Their experiences with CCUS can provide a glimpse into the future path of CCUS in SEA.


China has been slow in the development and uptake of CCUS. Most of China’s existing CCUS is considered small-scale, with the estimated aggregated capacity ranging from 2 to 4 MTPA CO2, spread over dozens of small-scale facilities. Compare this with the 7 MTPA CO2 capacity (in a single plant) at the Shute Creek treating plant in the US. It is clear that China has a lot of catching up to do. Although most are still in their early stages, potential projects are being proposed and prepared.

Notable project plans, such as the CNOOC CCUS in the South China Sea (1.5 MTPA CO2) and the recently established Sinopec’s Jiangsu CCUS (0.2 MTPA CO2), have been primarily led by Chinese oil and gas companies. It is estimated that more than 70 per cent of the national capacity is operated by Sinopec, CNPC and the CNOOC Group. In terms of innovations, it is worth noting that between 2020 and 2021, 81 per cent of patents in CCUS filed with the World Intellectual Property Organization (WIPO) were of Chinese origin.

While the development of CCUS in China remains to be seen, it is not likely to escape the basic tenet of the CCUS discussion – that attaching a high price to carbon emissions is necessary. A recent report from Shell China suggested that a carbon price of $47/tCO2 by 2030 and $205 by 2060 is likely to be required to achieve China’s 2060 carbon-neutral target, which includes the widespread adoption of CCUS. With China’s Emission Trading Scheme’s (ETS) carbon price projected to hover around $10/tCO2 in 2022, there is still some catching up to do.


With Mitsubishi Heavy Industry (MHI) already playing a prominent role in certain CCUS applications, Japan is likely to want to pursue a leading role in CCUS development in Asia. This trend has been displayed in Japan’s leadership in a number of CCUS feasibility studies, and in the establishment of the Asia CCUS Network Forum, with member states from Southeast Asia, US, Australia, and India. While Japan has supported many CCUS initiatives, the plan for CCUS is somewhat less ambitious at home. This is potentially due to the conservative approach in assessing storage in the earthquake-prone region. A longterm CCS trial of 0.2 MTPA capacity was completed between 2016 and 2019, with further demonstrations planned in power generation applications.

Japan’s CCUS goal is likely to have been spurred by both its significant coal and gas power fleet, as well as an anticipation of the future potential of the hydrogen/ammonia value chain. The country, which is likely to leverage its experience in the power and LNG sectors, has also shown particular interest in “carbon recycling”. This is the utilisation of captured carbon, with the ambition to secure 30 per cent of the global market by 2050.

South Korea

South Korea has outlined plans to invest in CCUS, both domestically and overseas.It has been reported that South Korea is exploring a CCUS collaboration with Malaysia, specifically involving its steel giant POSCO and Petronas. In 2021, South Korea’s utility KEPCO and its six subsidiaries announced an exit from coal by 2050. The company announced plans to commercialise CCUS technology for 500 MW of coal power and 150 MW of gas power by 2030. The company’s current CCUS utilisation is largely limited to small-scale pilot installations.

Traditionally, the export of technologies and concessionary financing from these three countries has been vital in promoting various technology applications in SEA. As it stands, all of them significantly lag behind in terms of CCUS applications compared to establishments in North America. Despite the growing need to implement CCUS to mitigate emissions, none has yet developed a commercially viable model for widespread CCUS adoption. It is also notable that these three countries have varying degrees of CCUS drivers, with South Korea exhibiting the most mature carbon pricing system.

Japan has some form of regulatory emissions control, but the country’s carbon pricing remains paltry at best, with a carbon tax of around $3/tCO2e. This is despite actively promoting CCUS in SEA. With announced government commitments from all three countries to support net zero targets, the CCUS development in these countries is likely to shape the outlook for Asia. This is particularly salient with the US (which is home to most of the CCUS’ current fleet) rapidly departing from coal.Along with this, so will their focus on coal power CCUS, a dominant part of SEA power mix. Stakeholders in SEA should remain cautious of CCUS’ progress in these countries, while also paying attention to specific policies and public financing support that is attached to such developments.

Where would the path of CCUS in Southeast Asia lead?

The establishment and growth of CCUS in the Southeast Asian market within the next several decades is likely to be limited around gas processing and some standalone industrial applications. This could be supported by concessionary financing or bilateral initiatives. The ongoing CCUS plans are evidence that the region is playing catch up to mature CCUS technologies in the gas sector, potentially anticipating possible changes in market attitudes towards CO2-rich gas in the future. Host countries would be well-served to understand the implications of internal carbon pricing for investing companies in finding a fair share of cost allocations, if and when, CCUS is deployed.

The widespread adoption of CCUS in SEA’s power sector remains highly unlikely within the next several decades. The development of affordable coal power CCUS remains elusive; this is probably even more so for gas power. Even at a cost of capture of $40/tCO2, the effective total cost of $50 to $60/tCO2, inclusive of transport and storage, will be beyond reach for most countries in the region. In assessing the full costs of CCUS in SEA against the alternatives, a multitude of factors will need to be considered, including the predominance of subcritical coal plants, and the costs of flue gas pre-treatment facilities.

Further, costs of CO2 avoided should be the main focus to avoid neglecting the emissions resulting from the energy intensive CCUS process. The establishment of CCUS hubs in locations such as Singapore remains a possibility, given the concentrated industrial base and less cost-sensitive, export-based nature of the market. CCUS will undoubtedly remain key for some hard-to-abate sectors. It is nevertheless important for stakeholders to note that many of the existing and upcoming CCUS projects in the US and EU lean heavily on public funding support, which may not be readily available in SEA countries.

SEA countries can use CCUS as a stepping stone to “learn the ropes” of the technology and to anticipate future developments of carbon-capture based export products and other technologies. However, it should not deviate from the adoption of other lower-cost options in renewable energy and grid integrations. This should remain at the centre of SEA’s attention toward decarbonisation.