Economic Potential of DACCS and Global CCS Progress

POLICY AND REGULATORY DEVELOPMENTS Indonesia established a taskforce in mid-2021, coordinated by the Ministry of Energy and Mineral Resources, to draft CCUS regulations. The regulations are expected to be disseminated by the end of 2022. The Presidential Regulation 98/201 on the Instrument for the Economic Value of Carbon for the Achievement of the NDC and Control, a carbon pricing mechanism, was meant to launch in early 2022, but has been delayed several times. The mechanism effectively sets up a legal framework for both domestic pricing and trading of carbon and will operate in conjunction with the carbon tax set to be imposed on coal-fired power plants (at US$2.09 per tonne) of carbon dioxide. AUSTRALIA PROJECTS NEW AND UPDATED - Perhaps the most significant development in the Australian CCS project landscape has been the progress of the Middle Arm Sustainable Development Precinct, a natural gas processing and low-carbon manufacturing hub in the Northern Territory. The Middle Arm hub is now in the early planning phases, having received project commitments from the previous federal government, as well as major natural gas operators INPEX and Santos, in the past 12 months. In November 2021, Santos announced a final investment decision on its Moomba CCS project, which will commence operations in 2024 and inject 1.7 Mtpa (11). Santos entered into the FEED phase in March for the proposed Bayu-Undan CCS project, located offshore from Timor-Leste (12). Bayu-Undan could store up to 10 Mtpa CO2, acting as a regional storage hub (12). In April, ExxonMobil, through Esso Australia, signalled it was undertaking pre-FEED studies to determine the potential for a CCS hub in the Gippsland Basin (13). Woodside, BP, and Japan Australia LNG are undertaking feasibility studies for a CCS network on the Burup Peninsula in North-West Australia. (14) Mitsui E&P Australia is assessing the feasibility of commercialising the Mid-West Modern Energy Hub, a natural gas processing and blue hydrogen facility (15). POLICY AND REGULATORY DEVELOPMENTS Notably, a new Australian Government was elected in May. The Labor Government has pledged to strengthen baselines for major emitters under the existing safeguards mechanism, effectively meaning that companies will be able to emit less each year or else pay for offsets. Significantly for CCS, deployment may be spurred in hard-to-abate industrial sectors as a result. In late 2021, a CCS methodology was included under the Emissions Reduction Fund, allowing projects to generate Australian carbon credit units (ACCU) and thereby generate income (16). In June, the Minister for Climate Change and Energy, Chris Bowen, announced an independent review into the Emissions Reduction Fund, highlighting CCS among several recently adopted methodologies for specific scrutiny. In March, the Western Australian Minister for Mines and Petroleum, Bill Johnston, approved the drafting of the Greenhouse Gas Storage and Transport Bill, which will underpin the regulatory regime for CCS in the state (17). JAPAN A reliance on energy imports and limited CO2 storage capacity, coupled with a net-zero by 2050 commitment and associated decarbonisation targets, has driven Japan to act as a convenor for climate and energy in the region. In line with this, Japan continues to promote bilateral and multilateral CCUS collaboration in the Asia-Pacific region. PROJECTS AND NOTABLE UPDATES Japanese shipping companies are increasingly active in liquefied CO2 transportation for CCS. Japan CCS is working with Kansai Electric Power on a demonstration project to transport CO2 from Kansai Electric Power's coal-fired power complex in Kyoto to the Tomokomai CCS project, commencing operation in 2024 (18). NYK and the Knutsen Group have established a new business for liquefied CO2 transportation and storage; Mitsubishi Shipbuilding is working on the construction of a CO2 demonstration ship; and MOL and Petronas have signed an MOU on liquefied CO2 transportation for CCUS (19-21). [21] GLOBAL CCS INSTITUTE

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