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To provide a legal basis and certainty in emission reduction efforts through Carbon Capture and Storage (CCS), the preparation of CCS regulations involved benchmarking existing CCS regulations from other countries, drawing lessons from global existing CCS projects, as well as performing intensive discussions with CCS stakeholders. Cross-border CO2 implementation has become a dynamic topic to be regulated. While some parties consider importing CO2 for CCS as waste, which could increase the local emission inventory, it has been agreed that a cross-border CO2 mechanism, treated as a processed product, is important to enable CCS investment in Indonesia and will be treated as a joint global action to reduce emissions.

Global parties, in response to climate change, have set national emissions reduction targets under the Paris Agreement. By ratifying the agreement, Indonesia has continuously strengthened its commitments with a more ambitious emission reduction target to 31.89% unconditionally and to 43.20% conditionally by 2030 and net-zero emission by 2060. To achieve these targets, currently nineteen Carbon Capture and Storage (CCS) and Carbon Capture Utilization and Storage (CCUS) projects are under study. Considering the result of an Indonesian basin study by LEMIGAS (oil and gas evaluation center), the potential storage capacity in depleted oil and gas reservoirs is approximately 4.85 giga tons while saline aquifers offer around 572 giga tons. Indonesia has the potential to become a national and regional carbon storage hub. However, current regulations still have some limitation to develop CCS in Indonesia at such level. Hence, a more comprehensive regulatory framework is required.

This study has resulted in a regulatory framework under Presidential Regulation no.14/2024 and Ministerial of Energy and Mineral Resources Regulation no.16/2024, covering the CCS full-chain business process, investment opportunities, cross-border CCS, and monetization schemes. These regulations introduce two forms of CCS implementation: as a license with royalty or as unitization within petroleum operations under a production sharing contract. Based on economic studies, it was also found that carbon injection volume, capital costs, and storage fees are factors that have the highest sensitivity in determining the economics of CCS projects, so it is very important in the early stages of CCS development in Indonesia to enable cross-border carbon transportation to get opportunities from foreign emitters who have large volumes and are able to pay economical storage fees. With these CCS schemes the government hopes Indonesia can embark on a transformative journey towards a more sustainable, resilient, and low-carbon future as a collective effort with other countries, especially in the East Asian region.