Achieving a net-zero future requires a broad suite of technologies that can profoundly transform how we produce and use energy. Among these is carbon capture, utilisation, and storage (CCUS) – the only group of technologies that can both cut emissions in key sectors directly and remove CO2 to balance emissions that are challenging to avoid.
CCUS involves capturing CO2, generally from large point sources like power plants or industrial facilities that use fossil fuels as fuel. If the captured CO2 is not being used on-site, it is compressed and transported by pipeline, sea or land to be used in a range of applications; or injected into deep geological formations like depleted oil and gas reservoirs.
Preventing CO2 from entering the atmosphere is becoming increasingly important as governments pursue ambitious net-zero targets. Indeed, scientists from the International Energy Agency (IEA) to the International Renewable Energy Agency (IRENA) have all predicted that rapidly expanding CCUS is pivotal for any pathway to reach net-zero by 2050.
As a result, new momentum is building behind CCUS, especially within Southeast Asia – with Malaysia playing a central role in regional developments. By scaling up CCUS implementation, the nation is well-positioned to slash emissions, turbocharge green industries, and cement its status as a regional leader in sustainable energy solutions.
Carbon capture is necessary for a net-zero future
Alongside other climate solutions like electrification, climate experts argue that CCUS technologies are indispensable for decarbonising economically important but hard-to-abate sectors like cement, steel, and fertiliser production. In fact, the International Energy Agency (IEA) highlighted that “reaching net zero will be virtually impossible without CCUS ”.
There are three main methods for capturing CO2: post-combustion, pre-combustion, and oxy-fuel combustion. Post-combustion and oxy-fuel equipment can be fitted to new plants or retrofitted to existing facilities that were originally built without it. Pre-combustion methods require larger modifications and are therefore more suited for new power plants.
Existing power and industrial facilities retrofitted with CCUS can capture around 90% of CO2 emissions – cutting almost 17 years’ worth of annual emissions or 600 billion tonnes of CO2 over the next five decades. Beyond slashing emissions from energy or industrial production, it can also be used for removing CO2 directly from the atmosphere.
While CCUS is a proven technology that has been used in some areas since the 1970s, it remains a work in progress in the very industries that need them the most. According to IEA analysis, CCUS uptake needs to grow at least 100 times by 2050 for countries to reach their net-zero commitments, reaching 7.6 gigatons per annum (GTPA) of CO2 captured per year.
That said, several challenges must be overcome before CCUS can reach scale. Given that CCUS projects are generally first-of-a-kind, policies to enable these projects are complex and still evolving. Meanwhile, the high costs and talent shortage associated with CCUS technologies pose considerable rollout and operational expenses that can potentially affect scalability.
But while the path to scaling CCUS is challenging, the alternative is ongoing emissions and even costlier decarbonisation pathways (138% more expensive based on Intergovernmental Panel on Climate Change estimates ). When scaled collaboratively and strategically, CCUS will be more cost-effective than relying solely on other decarbonisation approaches.
hub
Climate change has no geological boundaries, but CO2 storage does – as it requires deep geological formations, usually at depths of 1km or more. Fortunately, evidence suggests there is more underground storage available (~15,000 gigatonnes of CO2 storage potential) than is needed to meet climate targets (global emissions are currently ~ 40 Gt per year).
Located outside the Pacific Ring of Fire, Malaysia is especially blessed with high-quality geological storage potential along its sedimentary basins, with huge reserves from depleted oil and gas reservoirs and deep saline aquifers. In fact, Malaysia is estimated to have the highest potential in Southeast Asia with around 130 billion tonnes of CO2 storage capacity .
Malaysia’s National Energy Transition Roadmap (NETR) identifies CCUS as one of six key energy transition levers for the country, with plans to develop three CCUS hubs by 2030 and three more by 2050. The NETR estimates that using CCUS in the energy sector will deliver an additional 5% reduction in the nation’s CO2 emissions.
Building on the foundations set by the NETR for long-term project bankability and cross-border carbon flows, Malaysia’s parliament recently passed key legislation for catalysing the nation’s CCUS development. The CCUS Act 2025 – the first of its kind in the region – will guide the way forward to unlock CCUS as a new source of economic growth.
The Ministry of Economy, emphasised that the CCUS Act could add US$250 billion to the economy and hundreds of thousands of new green jobs within 30 years. What’s more, domestic industries could save up to US$130 billion by implementing CCUS, according to a study by Rystad Energy.
By integrating CCUS into the nation’s energy transition and economic development strategy, we can ensure that hard-to-abate industries can continue to thrive while aligning with urgent climate targets. It will also set the stage for Malaysia to act as a regional hub for the import and permanent storage of CO2 as part of broader ASEAN’s decarbonisation pathway.
Building a shared CCUS
The rollout of Malaysia’s CCUS initiative isn’t just an environmental initiative; it is also an economic opportunity that extends to the entire region. Since the 2000s, almost 90% of Southeast Asia’s energy demand growth has been met by fossil fuels, highlighting the necessity of exploring solutions for CO2 storage within the region.
While CCUS includes both CO2 storage and its conversion into useful products, ASEAN’s focus has been primarily on CCS (carbon capture and storage), which concentrates on capturing CO2 and permanently storing it underground. CCS has been a priority of the ASEAN Chairmanship each year since 2022.
Beyond acknowledging the crucial role of CCS, ASEAN has embedded relevant CCS policy frameworks into its regional commitments through the 41st ASEAN Ministers on Energy Meeting (AMEM), ASEAN Carbon Neutrality Strategy 2023 and ASEAN Plan of Action for Energy Cooperation (APAEC) Phase II: 2021 – 2025.
As a member state, Malaysia has tabled CCS projects valued in the billions, with several progressing to implementation. The Kasawari gas field off the Sarawak coast for instance is expected to become operational within this year, capturing 3.3 million tonnes of CO2 annually, making it the world’s biggest offshore CCS facility .
But given the high cost and complexity, the development of both CCS and CCUS projects moving forward would be largely unfeasible without the existence of cross-border collaboration and partnerships. Engagement from the private sector will be critical in moving beyond pilot projects towards commercially viable, region-wide solutions.
To this end, national electricity utility, Tenaga Nasional Berhad (TNB) is collaborating with PETRONAS on joint feasibility studies in hydrogen and carbon management, with a view to potentially unlocking RM10 billion in commercial value up to 2035 . PETRONAS has also signed agreements with ExxonMobil to jointly pursue CCUS activation projects in Malaysia.
With Malaysia’s ongoing development of CCUS hubs, fostering collaboration with regional governments and global energy players will be critical for sharing best practices, coordinating R&D activities, and harmonising regulatory standards across ASEAN – creating a more conducive environment for successful implementation at scale.
Scaling the CCUS industry for a sustainable future
Malaysia is uniquely positioned to become ASEAN’s preferred regional CCUS hub, but this requires early and sustained facilitation to entice global investors, and decades-long commitments to build the billion-dollar infrastructure such solution demands. Any delay could result in the nation losing its competitive edge and early mover position.
With bold policies, strategic investments and strong collaboration, Malaysia can lead the way in carbon management, transforming a global climate challenge into a regional economic opportunity. By embedding CCUS into our energy transition, we can build a greener, more resilient nation, ready to meet the opportunities of a more sustainable future.