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Malaysian Reserve
10 hours ago
- Business
- Malaysian Reserve
Carbon capture law needs more guadrails
In Asia, govts are already moving to integrate carbon capture, utilisation and storage into national climate plans through a combination of incentives and regulatory mandates by AUFA MARDHIAH MALAYSIA'S newly introduced carbon capture, utilisation and storage (CCUS) legislation may accelerate investment in low-carbon technologies — but climate experts caution that the country must chart its own course, rather than becoming a repository for foreign emissions. Seen as a key instrument in Malaysia's net-zero roadmap, the CCUS Act is expected to establish a regulatory framework for businesses seeking to invest in carbon capture projects. But its success will depend on how effective it is implemented, and who it truly benefits. An outfit for carbon capture and storage (CCS) has noted that investors are increasingly viewing CCUS as a necessary component of climate risk mitigation rather than a last resort. Investors are investing in CCUS because they recognise it as an essential technology for the mitigation of climate change,' Global CCS Institute strategic advisor for emerging CCS markets Alex Zapantis told The Malaysian Reserve (TMR). Zapantis pointed out that since 2017, global investment in CCUS has grown steadily, supported by stronger policy signals and the need to reduce exposure to future regulatory and market risks. In Asia, governments are already moving to integrate CCUS into national climate plans through a combination of incentives and regulatory mandates. However, Malaysia finds itself in a different position. Although the CCUS Act was passed in early 2025, no operational CCUS projects have been launched to date. Petroliam Nasional Bhd (Petronas), the national oil company and the country's most advanced player in the field, remains focused solely on carbon storage, with no utilisation element in its current commercial ventures. Nationwide, efforts are still concentrated on permanent geological storage, while carbon utilisation remains limited to early-stage studies and pilot-scale initiatives. This places Malaysia behind countries such as Japan and Singapore, which already have mature CCUS roadmaps supported by carbon pricing instruments, bilateral agreements and targeted investment incentives. While the legislative structure is in place, the broader ecosystem — including regulations, pricing mechanisms and industrial readiness — is still under development. The challenge ahead lies not in passing laws, but in establishing the policy, financial and technical frameworks required to enable real-world deployment. There is the need for regulatory readiness and technical capacity before Malaysia begins storing imported CO2 at scale, says Theseira (Source: CCUS Needs More Than Legislation Climate scientist Dr Gary Theseira warned that without strong governance, Malaysia risks repeating past environmental injustices, such as the mismanagement of plastic waste imports. He stressed the need for regulatory readiness and technical capacity before Malaysia begins storing imported CO2 at scale. 'If we import CO2 and we are compressing it, pumping it and transporting it — what happens if there is an accident and we discover toxic gases inside? Do we have the capacity to monitor and investigate this properly?' he said, highlighting the concern during the National Climate Governance Summit (NCGS) 2025. He pointed out that while the act provides a starting point, critical safeguards still need to be enforced — especially regarding cross-border liability, pipeline routing and environmental protection. 'If your governance is good, then I trust the people handling the CO2 pipeline. But if a gas pipe suddenly appears behind someone's house, there will be backlash,' he said, emphasising the importance of land-use planning and biodiversity protection. Theseira also explained the technical complexity of CCS operations, noting that CO2 must be pressurised to nearly 1,000 atmospheres to become a supercritical fluid suitable for injection. This process, he said, requires high levels of engineering expertise, robust infrastructure and strict safety protocols. From a policy standpoint, he warned that many CCS projects worldwide are limited to storage rather than utilisation, and may even be linked to enhanced oil recovery (EOR) — where CO2 is injected into wells to extract additional fossil fuels. He called for corporate accountability at the board level, urging that any special purpose vehicles or joint ventures managing CCS projects must include experts from different fields, such as geology, marine biology, safety engineering and sociology. 'Safety is most important, and audits must be in place to show there are no leaks. Otherwise, there will be allegations of green-washing,' he said. Moreover, Theseira said the carbon market's credibility depends on companies going beyond basic rules and adopting clear, inclusive governance. 'This has to be something the rakyat is comfortable with. It is about equity and fairness,' he said. Petronas Leads Malaysia's CCS Rollout Several large-scale CCS projects are progressing, with Petronas taking the lead as the primary developer. The company's Kasawari CCS in Sarawak is currently the most advanced, with carbon injection expected to begin by the end of 2025. Designed to store up to 3.3 million tonnes of CO2 annually, it is set to become the world's largest offshore CCS facility by volume. Other developments include the Lang Lebah-Golok CCS project by Thailand's PTTEP plc and the BIGST high-CO2 gas cluster off Terengganu, led by Petronas and JX Nippon Oil & Gas Exploration Corp. Feasibility work is also ongoing for several regional storage hubs aimed at servicing foreign emitters from Japan, Korea and Singapore. There is the Penyu Basin facilities, a joint venture between Petronas, Abu Dhabi National Oil Co (ADNOC) and Storegga Geotechnologies Ltd. There is also the Petronas-Japan Petroleum Exploration Co Ltd (Japex) consortium. Although these initiatives focus primarily on carbon storage, Malaysia currently has no commercial projects that convert captured carbon into usable products. The sole announced CCUS project with a utilisation component is a planned CO2- to-syngas plant in Bintulu, a collaboration between Petronas LNG and US-based HYCO1 Inc, which is expected to become operational by 2029. Petronas is leading Malaysia's efforts in carbon storage, aiming to create a regional CCS hub by 2030. The company is investing in CO2 transport, offshore storage and partnerships with foreign firms, while researching ways to use captured carbon. However, Malaysia's CCUS industry is still in its early stages, with most projects still being planned or studied. Biochar is one of Malaysia's most overlooked tools for carbon management — a low-cost, carbon-rich material produced from biomass that could play a vital role in strengthening climate resilience (pic: Bloomberg) CCUS, Renewables Can Coexist Addressing concerns that CCUS may delay the energy transition or lock in fossil fuel use, Zapantis emphasised that carbon capture technologies can complement, not compete with, renewables. 'Power plants equipped with CCUS can supply flexible low-carbon electricity that complements the variable nature of renewables like solar and wind,' he said. This is especially relevant for energy systems in South-East Asia, which continue to rely on coal and gas for baseload generation. Without CCUS, he said, these plants would continue emitting CO2 at unsustainable rates. Additionally, Theseira highlighted biochar as one of Malaysia's most overlooked tools for carbon management — a low-cost, carbon-rich material produced from biomass that could play a vital role in strengthening climate resilience. When applied to soil or coastal areas, biochar can boost evaporation and trigger the release of natural compounds that promote cloud formation, helping to offset dry spells caused by El Niño. Beyond short-term climate adaptation, Theseira believes biochar could support the growth of future industries built around high-value carbon materials like activated carbon, carbon nanotubes, graphite and graphene. He framed biochar as a practical alternative to costly, infrastructure-heavy CCS technologies — offering a more accessible and scalable option for carbon removal in a country rich in biomass and rural land. 'When it comes to cost per tonne of CO2 equivalent, even with eyes closed, biochar wins,' he said. Building Investor Confidence Through Transparency Zapantis said a key way to boost CCUS investment is by improving how companies report their climate actions and following trusted global standards. He encouraged Malaysian firms to use frameworks like the International Financial Reporting Standards (IFRS) S2 Climate-related Disclosures, which help companies measure carbon reduction, understand climate risks and explain how CCUS fits into their plans to cut emissions. He added that being open and clear is important not just for investors but also to build trust with policymakers, regulators and the public. Clear carbon accounting ensures that emissions reduction claims — particularly those involving carbon capture and storage — are verifiable and credible. 'As environmental, social and governance (ESG) reporting frameworks improves, CCUS will gain further recognition as a viable and bankable climate solution,' he said, adding that investors now see it not as a last option, but as an important tool to manage climate risks early. Petronas Positions CCS as New Growth Engine Petronas has emphasised its commitment to responsible management, assuring that Malaysia's carbon storage initiatives will be carefully regulated and subject to strict oversight. During its CCS media dialogue, held recently in conjunction with Energy Asia 2025, the national oil company stressed that any cross-border CO2 storage arrangements would be governed by bilateral agreements and mutual accountability. Beyond its climate role, Petronas sees CCS as an industrial catalyst. The company believes that strong carbon storage infrastructure could attract industries such as blue hydrogen, blue ammonia and low-carbon steel — generating new jobs and investment. Petronas Carbon Management Department senior GM Emry Hisham Yusoff said with CCS infrastructure, Malaysia can attract low-carbon industries. 'That is the new economy,' he said. Still, the company acknowledged that CCS is complex. It involves a full value chain — from carbon capture at the source to pipeline transport, liquefaction, shipping and offshore injection. To support this, Petronas is developing the world's first large-scale liquefied CO2 vessel in partnership with global shipping firms. While the CCUS Act is in place, Petronas continues to call for clearer domestic regulations, particularly regarding environmental impact assessments, cross-border liability and CO2 classification under the Department of Environment (DOE). At present, CO2 is not classified as a scheduled substance, which means environmental impact assessments are not mandatory— a regulatory gap that the company is urging authorities to address. Petronas is also developing key storage sites including Kasawari, Duyong, Lawit and Penyu, each backed by over RM4 billion in investment. These sites are expected to store up to 80 million tonnes of CO2 annually — serving both domestic emitters and regional partners. Apart from that, Petronas has forged strategic partnerships with international players including Mitsui & Co, TotalEnergies SE, Storegga Geotechnologies and a Japan-led consortium, aiming to provide CCS as a commercial service to heavy industries across Asia. Still, the company stressed that CCS is a developing business, not a replacement for its core oil and gas (O&G) operations. 'This is a new business. Whether this is going to be our main (income), I don't think so, but it will be one of the businesses that we will do,' Emry Hisham said. He added that, as seen in the UK and Europe, early CCS projects often rely on government support, a reality Malaysia is also likely to face. Ensuring Fair Transition Theseira highlighted that the growth of green industries, including CCS, must not deepen existing social inequalities. He urged the government to prioritise job creation in these sectors for the unemployed and underemployed, particularly in rural areas, to ensure inclusive economic benefits. 'You have to be sure that the industry does not perpetuate a pattern of socioeconomic influence that ends up pushing the Gini coefficient to greater and greater inequality,' he said. He also believed that the energy transition must be accompanied by educational reform. Schools should evolve into digital hubs offering access to global learning tools, while teachers must be equipped with digital teaching methods. Ultimately, he urged Malaysians to abandon limiting beliefs and imagine bold futures. With its abundance of sunlight, water and land, Malaysia could become a global centre for food, clean energy and climate innovation — if it invests wisely and plans ahead. 'Only we ourselves can put the barriers in our heads,' he said. Theseira even suggested that, in a climate-altered world, underground or undersea living could become necessary — enabled by nuclear energy and advanced technologies. Chance to Lead, Not Blindly Follow As the CCUS legislation takes shape, experts offer contrasting yet complementary views. Zapantis highlighted investor readiness and international momentum while Theseira emphasised equity, environmental justice and long-term credibility. Meanwhile, Petronas aims to respond to growing climate expectations by developing commercially viable solutions, while adapting its business model to support long-term sustainability. If Malaysia is to lead in the carbon management space, it must balance commercial ambition with responsible governance. That means building a CCUS ecosystem that not only stores carbon — but creates value, protects communities, and earns public trust. This article first appeared in The Malaysian Reserve weekly print edition
Barnama
21-05-2025
- Business
- Barnama
Does CCUS Have A Future In Malaysia?
A s nations race toward net-zero targets amid a narrowing window to address climate change, Carbon Capture, Utilisation and Storage (CCUS) is emerging both as a promising technological solution and a focal point of environmental debate. CCUS is a technology designed to capture carbon dioxide (CO2) from point sources such as factories or directly from the atmosphere. The captured CO₂ is then either stored permanently underground or utilised as a feedstock in various industrial processes. By physically reducing emissions, CCUS enables the creation of value-added products and services that are increasingly accepted in global markets—potentially offsetting the costs of adopting the technology. According to the International Energy Agency (IEA), CCUS is considered a critical tool in achieving global energy and climate goals, particularly for emissions that are technically challenging or prohibitively expensive to eliminate. In Malaysia, the recent passage of the CCUS Bill in March marks a significant policy shift, paving the way for the large-scale deployment of carbon capture initiatives across key industrial sectors. While many local experts acknowledge that the bill leaves important questions unanswered—especially regarding CCUS's long-term role in meeting Malaysia's climate commitments—it is nevertheless seen as a step forward. It represents a flagship catalyst project and a vital component of the National Energy Transition Roadmap (NETR), aimed at serving countries that seek to use CCUS to lower their carbon emissions. As the bill awaits further development of implementation guidelines, the debate is intensifying—between supporters who view CCUS as essential for addressing hard-to-abate emissions, and critics who highlight its substantial financial and environmental costs. CRITICAL FOR NET ZERO Global CCS Institute Strategic Adviser for Emerging CCS (Carbon Capture and Storage) Markets, Alex Zapantis, said while CCUS is not a one-size-fits-all solution, it remains a vital component in the global push toward net-zero emissions—particularly in Southeast Asia. He stressed that CCUS should not be viewed as a substitute for renewable energy, nuclear power, or energy efficiency improvements. However, it is a crucial technology for industrial sectors where alternative solutions are currently not yet viable. 'Most international reports and analyses show that we need to use every tool at our disposal to reach net zero. If we remove any of them from the equation, it becomes more difficult, more expensive, and possibly even impossible,' he told Bernama in an exclusive interview recently. While hydrogen has been touted as a cleaner alternative for processes like steel production via direct reduced iron (DRI), Zapantis pointed out that clean hydrogen production at commercial scale still often relies on CCS. 'To produce low-emission hydrogen, CCS remains the most cost-effective and scalable method available today,' he said. On the energy front, Zapantis also addressed a common misconception: that CCS competes with renewable energy. He argued that in Southeast Asia's context, the two should be seen as complementary. 'We need as much renewable energy as we can deploy, but there are limits to what the grid can handle due to the intermittent nature of these sources. CCS complements renewables — it's not in competition with them,' he added. NATURE-BASED SOLUTIONS When asked whether nature-based solutions (NbS)—such as forests and green carbon sinks—could replace CCUS in absorbing carbon dioxide, Zapantis said these approaches, while important, have inherent limitations. 'NbS play a vital role in addressing climate change, but they cannot replace CCUS. They are limited by land availability and offer far less security compared to underground carbon storage through CCS,' he explained. Citing findings from the United States National Academies of Sciences, Engineering, and Medicine, Zapantis noted that the upper limit of effective carbon dioxide abatement through NbS globally is estimated at just five to seven gigatonnes per year. 'Beyond that threshold, NbS begin to compete with essential needs such as food production, fibre, water, and biodiversity. When you consider that global emissions stand at around 40 gigatonnes annually, NbS can only provide a fraction of what's required,' he said. Zapantis said that another key challenge with NbS is permanence — the durability of carbon storage over time. 'CCS offers a more secure form of storage. Thanks to over a century of oil and gas operations and decades of geological research, we know that carbon dioxide, when stored in a properly selected underground reservoir, remains there. "Even if leakage occurs, it can be detected and remedied with existing oil and gas technologies,' he said. In contrast, carbon stored in trees or soil is vulnerable to natural and human-induced risks such as wildfires, pests, droughts, and land-use changes. 'If those trees are lost—whether due to fire, disease, or logging—the carbon is released back into the atmosphere. The risk of reversal is significantly higher compared to CCS,' he added. Zapantis argued that the most effective strategy is to prevent emissions from entering the atmosphere in the first place. 'CCUS achieves this by capturing carbon dioxide directly at the source—be it a power plant or industrial facility—and storing it securely. That's far more effective than emitting carbon and trying to remove or offset it later,' he said. When asked whether CCUS could be misused as a licence to prolong fossil fuel use, Zapantis was firm in his response. 'CCUS should be seen as one element of a broader climate strategy that includes renewables, energy efficiency, and nature-based solutions. It's not about extending the life of fossil fuels. It's about managing emissions from hard-to-abate sectors. 'In Southeast Asia, where energy demand continues to rise and fossil fuels still dominate the energy mix, CCUS is essential to achieving emissions targets,' he said. SAFETY MATTERS While CCUS is being promoted as a key technology to help Malaysia and Southeast Asia achieve their net-zero targets, concerns persist—particularly around the safety and reliability of offshore carbon storage. Climate policy expert Dr Gary Theseira warned that current monitoring technologies are not yet mature enough to guarantee the secure containment of carbon dioxide injected beneath the seabed. This raises serious questions about the risk of undetected leaks and the long-term liabilities associated with such storage. 'At present, there is no existing technology capable of effectively monitoring the seabed once CO₂ is injected offshore. 'If a leak occurs, the gas dissolves into seawater almost immediately, making it virtually untraceable,' he told Bernama. Theseira, who also serves as Chair of the Climate Governance Malaysia Council, noted that NbS are already playing an active role in carbon sequestration. 'We already have forests and natural carbon sinks doing the job. Perhaps we should be channelling more investment and attention into enhancing these systems,' he said. He cited biomass waste—such as pruned branches and deadwood—as a valuable resource that could be transformed into biochar, a more stable and potentially safer method of carbon sequestration. 'For me, the most promising alternative is biochar. It's a form of CCUS, just with a different, more grounded approach—and potentially less risky,' he said. (Biochar is a charcoal-like substance produced by burning organic material from agricultural or forestry waste (biomass) in a controlled process known as pyrolysis. Although it resembles common charcoal, biochar is made using a method designed to minimise contamination and securely store carbon over the long term). NEEDS A COHERENT POLICY FRAMEWORK Theseira said the government should consider passing the long-delayed National Climate Change Bill (RUUPIN) before advancing the CCUS Bill or implementing a carbon tax. He warned that without a coherent legal and policy framework, efforts to combat climate change—through mechanisms like CCUS and carbon pricing—risk becoming fragmented or even counterproductive. 'All of these mechanisms—CCUS, carbon tax, and broader emissions regulations—must align toward the same outcome,' he said. 'Otherwise, we risk different sectors lobbying for conflicting interests, as we've already seen in the automotive sector,' he said. On Feb 5, Minister of Natural Resources and Environmental Sustainability Nik Nazmi Nik Ahmad said the government is in the process of drafting RUUPIN as part of its broader strategy to achieve net-zero emissions by 2050. He noted that meeting this target would require radical transformations across government, industry, and society. Frustration intensified when Minister of Economy Datuk Seri Rafizi Ramli announced that the government aimed to enforce CCUS legislation by March 31 to attract long-term investment opportunities. The accelerated timeline sparked concern that the push for CCUS is being driven more by economic incentives than environmental integrity. This has led to criticism from environmental NGOs, who argue that Malaysia may be prioritising foreign investment over safety and sustainability. Concerns have also been raised about the country's readiness to manage potential risks—such as leaks—especially if Malaysia begins importing carbon waste for storage. RISK OF LEAKAGE Sahabat Alam Malaysia president Meenakshi Raman has urged the government to address the risk of water contamination from potential leakage at CCUS sites into adjacent geological formations. She argued that the current CCUS Bill lacks adequate safeguards to protect the environment and public health, and called for urgent improvements before Malaysia proceeds with any CCUS project bids. 'CCUS projects have been associated with high rates of failure and cancellation. They are also susceptible to significant cost overruns and may result in stranded assets,' she said. Meenakshi referred to a report by a United Nations Special Rapporteur on the toxic impacts of proposed climate change solutions, which highlighted the chemical intensity of the carbon capture process. According to the report, this process can release substantial quantities of hazardous substances—including highly toxic ammonia—into surrounding communities. 'At high concentrations, carbon dioxide itself is a toxic gas and an asphyxiant. It can cause circulatory insufficiency, coma, and even death,' she warned. She also raised concerns about the lack of inclusive representation in the decision-making process for CCUS implementation. 'To date, civil society and community-based groups have not been included in CCUS agency meetings. All appointments are made at the ministry's discretion, which limits transparency, accountability, and the diversity of perspectives—especially those that may challenge government or industry priorities,' she added.
