Decarbonization Strategies in Asia-Pacific: A Shift Towards Carbon Storage Hubs

Carbon capture and storage (CCUS) projects are expanding in Asia-Pacific. Several countries are stepping up efforts to create regional hubs despite regulatory complexities and financial challenges.

Partagez:

Carbon capture, utilization, and storage (CCUS) is becoming a key technology for Asian countries seeking to reduce CO2 emissions while supporting the growth of their energy industry. However, the development of these infrastructures remains in its early stages due to uneven regulatory frameworks and limited incentives compared to the United States or Europe. Several countries in the region, including Australia, China, Indonesia, and Malaysia, have adopted strategies to accelerate storage and carbon transport projects by focusing on international collaborations and multi-industrial hub models.

Governments are strengthening their decarbonization policies, but funding is insufficient to support costly capture technologies. Ongoing projects are structured around regional hubs capable of consolidating emissions from multiple sectors and ensuring secure storage. Unlike Europe, where CCUS hubs are encouraged by dedicated infrastructures, Asia-Pacific is developing a more fragmented approach, relying heavily on bilateral agreements for cross-border CO2 transportation.

Australia: A Comprehensive Regulatory Framework for CO2 Storage

Australia has a structured legislative framework, with major ongoing projects. The Gorgon carbon capture project, led by **Chevron Corporation**, has already injected more than 7 million tons of CO2 into saline aquifers. At the same time, the country has implemented a carbon credit system (Australia Carbon Credit Unit), offering 25-year credit periods for eligible projects. This system has unlocked investments in projects like Moomba, operated by **Santos**, which aims to inject up to 1.7 million tons of CO2 per year into depleted fields.

However, offshore projects face delays due to land rights complications and storage permit regulations. Australia has also set up an exploration permit system to evaluate storage potential in the North West Shelf region, a strategic basin for developing future multi-industrial hubs.

China: Expanding Assisted Recovery Projects

China is positioning itself as a regional leader in terms of the number of pilot projects, primarily focused on enhanced oil recovery (EOR). Major state-owned enterprises, **China National Petroleum Corporation (CNPC)**, **CNOOC**, and **Sinopec**, have incorporated CCUS into their energy transition plans, with strategic collaborations such as those with **Shell** and **ExxonMobil** to set up hubs in key industrial areas.

In 2021, China launched its National Emission Trading Scheme, initially limited to the power sector, and plans to expand it to other high-emission industries by 2025. Meanwhile, companies are assessing the feasibility of storage hubs in regions such as Guangdong, where joint ventures with **CNOOC** aim to capture up to 10 million tons of CO2 per year.

Indonesia and Malaysia: Storage and Cross-Border Cooperation

Indonesia, rich in mature basins, recently adopted two CCUS-friendly regulations, positioning itself as a potential regional storage player. **Pertamina** leads several assisted recovery projects, while **BP** plans to integrate CCUS into the Tangguh gas project, aiming to re-inject up to 25 million tons of CO2 into gas reservoirs. The government has established a framework allowing operators to allocate up to 30% of their storage capacity to imported CO2 under specific conditions.

Malaysia is turning to CCUS to extend the life of its high-CO2 oil and gas fields. The Kasawari project, led by **Petronas**, which aims to store 3 million tons of CO2 annually, is crucial for maintaining the country’s liquefied natural gas capacity. Amendments to the Petroleum Income Tax Act in 2023 are expected to facilitate the integration of new fiscal incentives for investment in capture technologies.

Towards Regional Hubs and Cross-Border CO2 Transport

Cross-border CO2 transportation is emerging as a solution to overcome storage capacity limitations in countries such as Japan and South Korea. Both countries, with limited storage capacity, have started discussions with Australia and Malaysia to import CO2 by sea. Japan has signed an agreement with Malaysia to explore cross-border CO2 transportation to offshore reservoirs, while Indonesia has entered a partnership with Singapore to develop joint storage infrastructures.

These initiatives indicate a shift towards regional cooperation, with centralized hubs capable of connecting multiple industrial emission clusters. Australia, with its legislative amendments to allow cross-border CO2 transportation, could serve as a model for other countries in the region.

Frontier Infrastructure Holdings has signed an offtake agreement with manager Wild Assets for up to 120 000 tonnes of BECCS credits, underscoring the voluntary market’s growing appetite for traceable, high-permanence carbon removals.
Global carbon capture and offset credit markets could exceed $1.35 trillion by 2050, driven by private investment, technological advances, and regulatory developments, according to analysis published by Wood Mackenzie.
The Australian carbon credit market is experiencing temporary price stabilization, while the emergence of new alternative financial instruments gradually attracts corporate attention, subtly altering the commercial and financial dynamics of the sector.
Norway has launched a major industrial project aimed at capturing, maritime transport, and geological storage of CO₂, mobilizing key energy players and significant public subsidies to ensure economic viability.
A €21mn European grant, managed by EIB Global, will fund Egyptian projects aimed at cutting industrial emissions and boosting recycling, while a related €135mn loan is expected to raise additional climate investments.
Stockholm Exergi begins construction of a CO₂ capture facility in Stockholm, integrated with the expansion of Northern Lights in Norway, reaching a total storage capacity of 5 million tonnes per year by 2028.
Global emissions coverage by carbon pricing systems reaches 28%, driven by expanding compliance markets, where demand nearly tripled within one year, according to a World Bank report.
Vietnam initiates a pilot carbon market targeting steel, cement, and thermal energy industries to prepare for nationwide regulation starting in 2029.
The U.S. Environmental Protection Agency (EPA) proposes granting Texas direct authority to issue carbon dioxide injection permits, potentially accelerating the commercial expansion of geological CO₂ storage projects.
Höegh Evi and Aker BP received Approval in Principle from DNV for a maritime carrier designed to transport liquefied CO₂ to offshore storage sites in Norway.
Norne and the Port of Aalborg begin construction of a 15 mn tonne per year CO2 terminal, supported by an EU grant.
The Lagos State government has launched a programme to deploy 80 million improved cookstoves, generating up to 1.2 billion tonnes of tradable carbon credits.
The US Department of Energy has cancelled 24 projects funded under the Biden administration, citing their lack of profitability and alignment with national energy priorities.
In the United States, the carbon black market faces unprecedented fluctuations in the first half of 2025, driven by declining industrial demand and persistent raw material volatility, casting doubts over the sector's future stability.
European and UK carbon markets paused this week as participants await clarity on future integration of both emissions trading systems.
A consortium led by European Energy has secured prequalification for a Danish carbon capture and storage project in Næstved, aiming to remove 150,000 tons of CO₂ per year under a national subsidy programme.
The joint project by Copenhagen Infrastructure Partners and Vestforbrænding is among ten initiatives selected by the Danish Energy Agency for public carbon capture and storage funding.
Canadian broker One Exchange partners with Stephen Avenue Marketing to create OX CO₂, a carbon trading platform combining digital technology and human expertise.
Russia has filed a complaint with the World Trade Organization (WTO) challenging the European Union's Carbon Border Adjustment Mechanism (CBAM), deeming it discriminatory and protectionist towards its strategic commodity exports.
BP recommends extending the UK emissions trading system through 2042 and calls for alignment with the European market while supporting the inclusion of carbon removals in the scheme.