The Role of Carbon Capture and Storage (CCS) in South East Asia's Carbon Offset Strategy: Some Thoughts

As countries across the globe work to meet their climate targets, carbon capture and storage (CCS) is emerging as a critical tool for achieving greenhouse gas (GHG) emissions reductions, particularly in hard-to-abate industries. In Asia, where the energy mix still heavily relies on fossil fuels, CCS can play a transformative role in the region's overall carbon dioxide removal (CDR) strategy. More importantly, integrating CCS projects into carbon markets, including voluntary carbon markets (VCM), is key to making these projects financially viable and consistent across countries andf regions.

I have been teaching short courses on the development of CCS projects in various countries over the past couple of years, and there are inconsistencies, not onlyn between countries, but also between Government departments within countries.

Why CCS is Critical for South East Asia

Countries in Asia, especially those with limited renewable energy resources or dense industrial bases, face unique challenges when it comes to decarbonization. For many of these countries, transitioning directly to 100% renewable energy is not immediately feasible. CCS offers a solution that allows for the continued use of fossil fuels while capturing the resulting emissions, thus buying time for the development of renewables.

Asia’s CCS potential is vast, with numerous projects already being piloted or in development. However, realizing the full benefits of CCS requires a regional approach, where countries collaborate to standardize carbon offset methodologies, making it easier to trade credits across borders.

Consistent Methodology: The Need for Standardization and Financing

Currently, there is no consistent methodology for incorporating CCS projects into carbon credit systems across Asia. This lack of standardization creates confusion in both compliance and voluntary markets. A unified approach would make it easier for corporations and governments to measure, report, and verify (MRV) the emissions reductions achieved through CCS. This, in turn, would make CCS more attractive as a carbon offset option for organizations looking to meet their net-zero goals.

One promising model that could serve as inspiration for Asia is Saudi Arabia’s Greenhouse Gas Crediting and Offsetting Mechanism (GCOM). Announced during MENA Climate Week 2023, GCOM is designed to generate credits and certificates from emission reduction or removal projects, including CCS, aligning with Article 6 of the Paris Agreement. This mechanism allows industries to register CCS projects that meet specific requirements, and in return, they can sell carbon credits either regionally or globally.

How GCOM Can Finance CCS Projects

One of the key advantages of GCOM is its ability to create a revenue stream for CCS projects. By monetizing emissions reductions in the form of carbon credits, GCOM provides project developers and governments a mechanism to recover investments. This is crucial for large-scale CCS projects that typically require significant upfront capital and long-term operational costs. A fine review of the GCOM can be found at https://www.burohappold.com/news/our-reflections-on-gcom-carbon-offsets-within-saudi-arabia/

By registering CCS projects under GCOM or similar methodologies, governments and corporations can generate tradable credits that have real market value. This not only makes CCS projects more financially viable but can also attract equity investors who are increasingly looking for green investment opportunities. The presence of a robust, standardized mechanism like GCOM gives investors confidence in the legitimacy and reliability of the carbon credits being generated.

Furthermore, as carbon markets grow in sophistication, mechanisms like GCOM can be expanded to integrate with international carbon trading platforms, allowing credits generated from CCS projects in Asia to be sold globally. This cross-border compatibility would further enhance the attractiveness of investing in CCS projects and create a more fluid carbon market in Asia.

The Importance of Collaboration

Developing CCS as a reliable part of Asia's carbon offset strategy requires cooperation at both the governmental and corporate levels. Regional cooperation is essential for creating infrastructure that spans multiple countries, sharing knowledge, and ensuring that regulatory frameworks are consistent across borders. Additionally, partnerships between public and private sectors can accelerate the development of CCS projects and bring down costs through economies of scale.

Countries in the region are starting to show interest in CCUS, but there is a long way to go before it becomes a key part of their carbon offset and trading schemes. Establishing robust legal and regulatory frameworks that address long-term storage liability, site monitoring, and certification standards are critical next steps.

Conclusion

For Asia, where industrial emissions are high and energy systems are often reliant on fossil fuels, CCS offers a viable path to carbon neutrality. By establishing consistent methodologies for carbon credits and offsets, and integrating CCS into regional and voluntary carbon markets, Asia can develop a sustainable approach to emissions reduction. A methodology like GCOM not only ensures consistency but also provides a financial pathway to fund CCS projects, potentially attracting equity investors. As the region continues its economic well-being, CCS provides the opportunity to balance industrial growth with environmental responsibility. In the race to net zero, CCS should not just be an option - it should be a cornerstone of the region's GHG emissions reduction strategy.