Clean electrification will be the backbone of the energy transition, with projections indicating that it will contribute to at least 70% of total greenhouse gas (GHG) abatement by 2050. But in certain heavy industries like cement, emissions cannot be abated through renewables or efficiency savings alone. Carbon Capture and Storage (CCS) stands out as a cornerstone decarbonisation technology. This was emphasised at the recent Energy Asia conference in Kuala Lumpur. Without CCS, our path to net-zero emissions is not just challenging, it’s unattainable.
CCS is especially important for regions such as APAC with young, urbanising populations, in that it can provide a means to deliver economic growth and development without compromising on climate commitments.
CCS is not an untested concept. For over 40 years, CO2 has been stored underground, with a track record of safe and effective implementation. Like any energy technology, it carries risks, but these are manageable; the risks of leakage are extremely low, and where they do arise, can be identified and addressed quickly. Consensus on this point and the essential role of CCS in the energy transition is reflected in policy recommendations from expert institutions and many governments globally. However, unlocking carbon management’s potential in the Asia-Pacific requires overcoming distinct challenges and seizing opportunities that are specific to the region.
Unlike other markets, Asia’s CCS model hinges on cross-border trade in CO2. Whereas in North America, the Middle East and to some extent Europe, large emitters are frequently co-located with storage sites, in the Asia Pacific region, there exists a geographical mismatch between emissions and storage capacity. Emitters such as Japan, South Korea, Singapore or Taiwan are not endowed with the geological formations necessary for storing CO2 at a commercial scale. However, such formations are found in places like Malaysia, Indonesia, Thailand, and Australia. This means that, once captured, most of the CO2 will need to be shipped over long distances from one country to another (not unlike the current LNG market). Countries with suitable storage capabilities can partner with those lacking them, turning CO2 into a tradable commodity that drives decarbonisation.
Key Steps Essential to Enable CCS to Take Off
- The first step towards realising this goal is to establish a clear, stable legal and regulatory framework setting out legal definitions and industry standards. Malaysia’s Carbon Capture, Utilisation and Storage (CCUS) Act, which recently received royal assent, is a good example of this.
- Second, but no less important, are government-level trade agreements and legal frameworks enabling cross-border CO2 shipping, creating a cooperative framework for carbon management. Several agreements of this nature are already being developed across Asia: earlier this year, Singapore and Indonesia signed a letter of intent to cooperate on cross-border CCS. South Korea has taken similar steps through deals with Australia and Malaysia.
- Finally, governments must create the right environment for investment. To date, the majority of CCS projects have relied on some form of direct government support. That’s appropriate for where the industry is today; first-of-a-kind projects which demonstrate the technology at commercial scale are necessary for getting down the cost curve, but difficult to deliver through private finance alone. Of course, reliance on government subsidy cannot go on indefinitely. Unlocking private capital requires banks to innovate in the way they lend.
Sustainability-linked loans and green bonds are mature solutions and offer an effective means of channelling corporate borrowing. Blended finance solutions can lower the cost of non-recourse debt models. Some banks are even leveraging their own networks to help craft offtake agreements, providing clear revenue visibility for low-carbon end products, and enabling project finance. Ultimately, attracting private capital will depend upon a clear carbon price signal which incentivises investment.
This model is not just practical—it’s transformative. It promises economic growth through new supply chains, job creation, and infrastructure development, while enabling the decarbonisation of domestic and international industries. Countries that import and store CO2 in particular stand to gain more than others, since the cost of decarbonising their own heavy industries is shared with CO2 exporters.
However, misinformation and scepticism about carbon storage remain real hurdles, and overcoming them requires proactive engagement with communities, businesses, and civil society. Governments and industry must communicate the tangible benefits of CCS: cleaner air, sustainable jobs, and a stronger regional economy while addressing concerns head-on, with clear evidence of the technology’s safety and long-term viability.
Many governments in the Asia Pacific region have already taken steps to enable CO2 trade, but more must be done to formalise and expand these frameworks, with the backing of the financial industry. Prioritising cross-border agreements, investing in robust regulatory systems, and fostering public trust are key to enabling finance and unlocking the full potential of CCS in the region. This is no longer a technical challenge—it is a socio-political question. Governments and industry must work together to develop clear, stable regulatory structures which incentivise investment whilst sharing the risks equitably.
