Unlocking the Potential of Carbon Capture Storage (CCS) in Indonesia

Abstract

Carbon Capture and Storage (CCS) is increasingly recognized as a deep decarbonization solution for hard-to-abate sectors, particularly in developing economies where rapid structural transformation may be difficult. Indonesia has recently emerged as one of the most active CCS developers within the Asia-Pacific region, supported by high geological storage potential, increasing regional markets, and policy ambitions as the future regional hub. However, CCS implementation remains uncertain due to complex technological, governance, and socio-political challenges, raising questions about whether developing regulations and institutional learning are sufficient to scale CCS.

This study develops an integrated diagnostic approach to assess governance readiness for CCS by combining socio-technical transition analysis, governance readiness assessment, and diagnostic intervention design. Applied to Indonesia, the approach examines how governance conditions interact with technological, institutional, political, economic, and organizational dynamics to shape CCS deployment.

The findings show that Indonesia has established a relatively developed formal governance foundation for early CCS deployment, but governance readiness remains uneven. Key weaknesses concern long-term stewardship, operational and cross-border governance, institutional coordination, knowledge development, and societal legitimacy. More broadly, CCS development remains embedded within the existing oil and gas regime. While this path dependency facilitates early deployment by leveraging established expertise, infrastructure, and business capabilities, it constrains cross-sectoral diffusion and risks positioning CCS primarily as an extension of the oil and gas business rather than a nationally integrated decarbonization pathway. Weak domestic decarbonization pressure and reliance on regional carbon markets further limit incentives for broader industrial adoption.

The diagnostic assessment identifies interconnected vision disruptors, short-term implementation barriers, and long-term risks. These include fragmented institutional direction, political discontinuity, weak economic incentives, limited institutional learning, operational governance uncertainty, and risks to long-term stewardship and societal legitimacy. To address these barriers, the study proposes strategic interventions at both national and corporate levels. At the national level, the strategies focus on creating long-term low-carbon development ecosystems through strengthening motivation, incentives, political commitment, institutional learning, and public participation. At the corporate level, interventions focus on strengthening organizational cultures, knowledge development, and management commitment for low-carbon projects.

The study contributes by demonstrating how governance readiness can be integrated with socio-technical analysis to diagnose not only existing CCS barriers but also their interactions and corresponding intervention priorities. The framework provides a transferable analytical approach for emerging low-carbon technologies, while the Indonesian case offers empirical insights relevant to other developing economies pursuing CCS under evolving institutional, market, and infrastructure conditions.