Publications

During the recent COP26 event held in Glasgow, Indonesia publicly announced its commitment to achieving carbon neutrality by 2060. In response, several State-Owned Enterprises (SOEs), such as Pertamina, Pupuk Indonesia, PLN, and Semen Indonesia Group, have developed their individual roadmaps with the intention of meeting this ambitious target, which include Carbon Capture, Utilization, and Storage (CCUS) schemes. Despite these efforts, the number of CCUS projects currently categorized as late-stage development phase in Indonesia remains limited. At present, BP's Ubadari CCUS project is the only project in a late-stage development phase, highlighting the need for increased action to address the root causes of this shortfall. One of the primary issues contributing to the limited development of CCUS projects in Indonesia is the lack of understanding of the associated business models as well as monetary and commodity flows within the CCUS value chain. This lack of comprehension leads to a range of challenges, including confusion over which facilities should be prioritized, an unclear pathway for integrating the complex value chain, and a lack of regulatory incentives from the Government of Indonesia (GOI) to promote CCUS implementation. Drawing on previous studies and successful CCUS projects around the globe, as well as the achievement of biodiesel blending implementation in Indonesia, this paper proposes a potential solution for a viable CCUS implementation. The most effective strategy for Indonesia may be to act initially as an injection and storage operator for CO2 producers from developed countries. The revenue generated from injection and storage fees could then be utilized by the GOI as a source of funding to incentivize further decarbonization efforts domestically. Additionally, greater involvement from companies’ Engineering, Procurement, and Construction (EPC) process in the development phase of CCUS projects may increase the likelihood of a successful implementation.