Indonesia issues presidential regulation on carbon capture and storage

28 February 2024

On 30 January 2024, Indonesia issued Presidential Regulation 14/2024 on Implementation of Carbon Capture and Storage Activities (“Regulation”) which allows carbon capture and storage (“CCS”) operators to designate up to 30% of their storage capacity for carbon dioxide (“CO₂”) originating from outside Indonesia. Such CO₂ could come from emissions by upstream oil and gas activities, refineries, power plants and by industrial activities in Indonesia and overseas. 

The Regulation enables oil and gas contractors to utilise depleted reservoirs for CCS operations, with an estimated potential to store over 400 gigatonnes of CO₂ equivalent. CCS projects may be implemented in existing oil and gas production areas as well as in other areas. For the latter, the Indonesia Government will designate permitted carbon storage areas and CCS operators will be able to tender for the right to explore and operate.

Only entities that have invested in Indonesia or are affiliated with companies that have done so may store CO₂ from outside Indonesia. The Regulation also requires that Indonesia must have in place a bilateral agreement with the country from which the emissions originate. 

The Regulation provides that entities must request approval to implement CCS from the Minister of Energy and Mineral Resources through Indonesia’s oil and gas regulatory body SKK Migas or Aceh Oil and Gas Management as appropriate. The request must be accompanied by a carbon storage capacity certificate. In addition, various permits will need to be obtained, including one for carbon transportation. 

The Indonesia Government is able to collect royalties from storage fees charged by CCS operators.