ASEAN’s total final energy consumption (TFEC) is estimated to increase three times, rising from 654 million tons of oil equivalent (Mtoe) in 2020 to 2.6 billion in 2050. To meet these escalating demands, a four times increase in total primary energy supply (TPES) by 2050 will be required. Consequently, ASEAN Member States (AMS) have submitted national commitments for emissions reduction through accelerating energy transition efforts. In 2023, the region announced a first carbon neutrality strategy aligned with the Paris Agreement commitments that could unlock a US$5.3 trillion economic opportunity. Pursuing carbon neutrality is projected to raise a Gross Domestic Product (GDP) value-add of US$5.3 trillion, green investments worth US$6.7 trillion, and generate 66 million additional jobs by 2050. To achieve its carbon-neutrality goals, ASEAN must clear a 2.6 gigatons CO2 gap targeted in several key sectors. CCUS is included as one of the decarbonization measures to be applied to power sector in ASEAN. Furthermore, the region also aims to create a CCUS hub as a key strategy for the creation of green value chain integration in the region.  Significantly, the International Energy Agency (IEA) has acknowledged the encouraging prospects of CCUS technology within ASEAN. Furthermore, the ASEAN region is making strides toward achieving self-sufficiency, with an estimated 130 gigatons (Gt) of CO2 storage potential for carbon capture. Projections suggest that by 2030, the technology could capture a minimum of 35 megatons of carbon dioxide. Furthermore, the significance of CCUS extends to applications in challenging sectors like iron, steel, or chemicals, which collectively contribute to almost 20 percent of ASEAN energy-related emissions. This emphasizes the crucial role of CCUS in facilitating the transition towards a low-carbon future in ASEAN.  

Under the National Energy Transition Roadmap (NETR), Malaysia aims to establish three CCUS hubs by 2030, strategically located in Peninsular Malaysia and Sarawak, with a shared storage capacity of up to 15 Mtpa. Looking ahead to 2050, the goal is to further develop three carbon capture hubs, featuring a broader storage capacity ranging from 40 to 80 Mtpa. This forward-looking vision, aligning with the New Industrial Master Plan (NIMP) 2030 aims to promote green manufacturing practices and transition towards net-zero emissions, Crucially, both strategic plans underscore the pivotal role of CCUS in Malaysia’s energy transition, reflecting the nation’s commitment to addressing environmental challenges, fostering innovation, and positioning Malaysia as a regional leader in advancing a low-carbon and resilient energy future. Furthermore, ongoing pilot projects actively exploring CCUS in Malaysia’s offshore oil and gas fields are in concord with the strategic vision outlined in the NETR. The recent investment approval for a significant CCUS project in Malaysia, represented by collaborative initiatives between Malaysia and international entities like Petronas and Shell, underscores the nation’s steadfast dedication to advancing sustainable practices and strengthening Malaysia’s pivotal role in global efforts toward decarbonization and environmental responsibility.  

In Malaysia, the impetus for the commercialization of CCUS technologies is growing with a significant challenge lies in the early-stage development of these technologies. The nascent nature of CCUS development poses hurdles in terms of technological readiness and potentially slowing down the establishment of an extensive carbon transport and storage infrastructure. Another challenge arises as concerns have emerged due to the absence of a specific and clear regulatory framework relating to legal compliance, liability issues, and the establishment of operational protocols. Additionally, an additional challenge emerges in the realm of numerical targets and planning. Notably, discussions between the Japanese government and Malaysia’s state oil firm, Petronas, underscore the lack of specific numerical targets for the amount of CO2 to be transported.  Despite its potential role in helping achieve global net-zero goals, the International Energy Agency (IEA) has observed a high failure rate in the development of CCUS projects. High capital costs, unclear revenue streams, and limited technological readiness are among the key factors that cause a high failure rate of CCUS projects.   

To address the current challenges and gaps in CCUS in Malaysia and the broader ASEAN context, several actions can be considered. To tackle the limited technological readiness of CCUS, Malaysia should forge partnerships with countries and international stakeholders that have successfully implemented CCUS projects, as this collaboration could provide valuable insights and guidance. Concurrently, the Malaysian government should prioritize the development of a robust regulatory framework specific to CCUS, encompassing legal compliance, liability issues, and operational protocols. Developing a roadmap with clear milestones and a target for CO2 emission reduction will guide the progress of CCUS initiatives and ensure its accountability. These strategic measures, coupled with the emphasis on CCUS by key industry leaders, could send a strong signal to the business communities. The CEO of Energy Commission Malaysia and Chairman of the ASEAN Forum on Coal (AFOC) underscored the critical need to discover innovative approaches to address climate change. The importance of adopting and executing Carbon Capture, Utilization, and Storage (CCUS) technology across ASEAN nations as a means to propel the region towards decarbonization, thereby fostering greater sustainability in the region.  

As a part of its national energy transition roadmap, Malaysia plans to incentivize private sector involvement through financial mechanisms and policy support in mitigating the high capital costs associated with CCUS projects. In the ASEAN context, fostering regional collaboration on the CCUS hub and initiatives can enhance collective efforts towards meeting the development and minimizing the high failure rate of the CCUS project. Under the CCUS hub, sharing best practices, coordinating research and development activities, and harmonizing regulatory standards across ASEAN member states will potentially create a conducive environment for the successful implementation of CCUS projects at a regional level. Finally, a well interconnected with key upstream and downstream industries of CCUS technologies would also minimize the high failure rate and its sustainability.