Carbon capture heats up in Asia: Will it cool down the planet?

Extreme weather events, from floods to wildfires, are stark reminders of the urgency to reduce carbon emissions. For business leaders and policymakers, the challenge is twofold: how to accelerate decarbonisation without undermining competitiveness or energy security. While industries with viable electrified alternatives or low capital barriers to transition are making good progress, hard-to-abate sectors face tougher choices.  Traditional approaches like carbon trading and transition fuels have helped, but they’re not delivering the scale or speed needed.

As Asia-Pacific nations seek scalable, credible decarbonisation solutions, Carbon Capture and Storage (CCS) is emerging as a serious contender for hard-to-abate sectors. It’s not the only answer, but it is increasingly viewed as a practical complement to other pathways. For companies and governments alike, the question is not just whether CCS works, but how to make it viable within policy, infrastructure, and financial constraints. This article explores how Singapore and its regional peers are developing their CCS strategies – and what’s needed to accelerate its uptake.

Why CCS is gaining traction

In the race to net zero, the early tools designed as stepping stones to cleaner technologies aren’t delivering the pace or scale of change needed.

Voluntary carbon markets, once heralded for their simplicity, have come under scrutiny for greenwashing and lack of accountability. Compliance markets like the EU ETS offer more rigour, but they too face challenges, especially as the AI-driven economy accelerates demand for clean power.

Transition fuels such as biodiesel, biomethane, and hydrogen-based e-fuels have found niche applications, but scalability remains elusive. Biofuel feedstocks are constrained, and e-fuels have  yet to achieve cost parity with renewables like solar.

In contrast, CCS is emerging as one option among several for hard-to-abate sectors, complementing other decarbonisation strategies. 

Around the world, confidence in CCS is growing. In the UK, projects like Liverpool Bay and Norway’s Northern Lights demonstrate the technical feasibility of CCS, albeit at high costs, currently over $100 per tonne of CO₂. However, as the technology matures, costs are expected to fall. Insurance markets are beginning to offer coverage, and rising carbon prices may soon tip the economics in favour of CCS. With premiums for biofuels such as SAF running at more than $500/tonne of CO2 equivalent, CCS is well positioned as an economic route to decarbonisation. 

In our recent report, Unlocking Private Capital: Scaling Investment in the CCS Sector, we explored the growth of capital deployment in CCS. Commissioned by the CEOs of 10 global banks through His Majesty King Charles’ Sustainable Markets Initiative, the report shows CCS is coming of age as an asset class. We explore the successful final investment decisions in Europe and North America, which carry helpful lessons for the deployment of CCS accross the Asia-Pacific region.

As confidence grows in CCS as a scalable solution, the Asia-Pacific CCS market is projected to grow from USD1.17 billion in 2024 to USD4.05 billion by 2032, reflecting a compound annual growth rate of 16.8%.

For businesses and policymakers, these figures highlight opportunity but also complexity. Evaluating these numbers against your own investment horizon and regulatory environment is essential, and that’s where expert modelling and risk analysis become critical.

A key plank in Singapore’s decarbonisation strategy

This is good news for Singapore, where geography limits the Garden City’s ability to deploy large-scale renewables. With little land for solar, no wind and no hydro resources, Singapore’s decarbonisation strategy is both molecule- and electron-based, with carbon capture technology expected to be among its most effective medium-term decarbonisation measures. 

In 2022, Singapore emitted 58,590 kilotonnes of CO₂, with emissions expected to peak in 2028 and gradually decline. CCS could contribute up to 20% of total reductions by 2030, becoming a central part of the country’s climate strategy.
Singapore’s town gas network already reformulates LNG into hydrogen and carbon dioxide (CO₂). The hydrogen is blended into the gas supply, while the CO₂ is repurposed for industrial use. This process not only reduces emissions but also enhances safety and delivers a concentrated CO₂ stream that is cost-effective to capture.

Looking ahead, Singapore could expand this model, importing LNG, reforming it locally, and exporting the CO₂ for permanent storage. This avoids the need for costly infrastructure for new fuels like green ammonia and aligns with the country’s strategic and financial constraints.

For decision-makers, this means weighing up technology pathways, timing, and partnerships carefully. Policy clarity and investment sequencing will ultimately determine success. We work with governments and businesses to model these scenarios, design incentives, and build risk frameworks that support confident decisions.

Regional momentum and cross-border collaboration 

Across Asia, many countries are already assessing the logistics and economics of CCS, and Singapore is looking to partner with them to jointly capture carbon or share best practices and technology. 

In Japan, which faces similar geographic constraints to Singapore, trading houses and government entities like the Japan Organization for Metals and Energy Security are building end-to-end CCS capabilities, from capture to transport and storage. Other avenues being explored include saline aquifers for CO₂ storage and developing dedicated CO₂ carrier ships.

Nations like Thailand, Indonesia, Malaysia and Australia have mature oil and gas assets that can be repurposed for CO₂ storage, deferring decommissioning costs and accelerating decarbonisation.

In Australia, recent amendments to the federal London Protocol pave the way for companies to participate in cross-border carbon transport and storage networks. This allows regional trade partners to benefit from Australia’s ample geological storage resources for carbon transport and storage projects. 

Since 2020, Singapore has been cooperating with Australia to develop low-emissions solutions, including exploring emerging carbon capture, utilisation and storage technologies.

Singapore was also the first country to sign a letter of intent with Indonesia to collaborate on a cross-border CCS project that should allow local companies to ship their carbon to be stored there. However, offshore storage is not a silver bullet – and it comes with additional transport and monitoring costs. Most CCS processes are mature, but large-volume CO₂ transport is not. Today’s ships are built for small loads. Singapore may need to work with countries like Japan to produce larger-capacity vessels.

How Singapore can lead in CCS investment

Singapore already has a number of CCS projects and initiatives in play, including R&D grants and work with S-Hub  (a consortium appointed by the Singapore government to develop a cross-border carbon capture and storage network) to evaluate the technical and economic feasibility of cross-border carbon capture projects. A 2026 pilot is planned to test the viability of carbon capture technologies at waste-to-energy plants, and the Energy Market Authority has issued grant calls to select power generation companies and industry partners to conduct feasibility studies for post-combustion and pre-combustion carbon capture. A 2026 pilot is planned to test the viability of carbon capture technologies at waste-to-energy plants. 

An important next step will be to accelerate the development of other projects. In particular, investors will need to understand current and future policy in detail to underpin commercial strategy at the pre-feasibility stage. Government underwriting will be especially important for hard-to-mitigate risks around timing of investment in capture and storage initiatives.

Energy leaders, regulators and policymakers must work together to create the right incentives, update regulatory frameworks and de-risk investment. By doing so, Singapore can help to lead the next wave of climate innovation in the region, turning carbon liabilities into strategic opportunities.

How we can help

At Baringa, we help governments to design CSS markets, develop incentives and establish risk transfer mechanisms. We also help organisations to assess the economics of CCS for their business models and evaluate how it stacks up against alternative paths to decarbonisation.

If you’re exploring CCS or alternative decarbonisation pathways, we can help you evaluate options, model costs, and design strategies that align with your long-term goals. Get in touch with our team today. 

This topic was also explored in a recent radio interview with Baringa’s Chris Thackeray, discussing whether carbon capture, utilisation and storage (CCUS) represents a breakthrough solution or a bottleneck for decarbonisation, and what it will take for CCS projects to become commercially viable. Listen here.