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Capturing the Future: Japan’s Leadership and Asia’s Evolving CCUS Landscape16 September 2025

In our previous article, we examined key climate policy and compliance developments across Asia, including Thailand’s draft Climate Change Act, Vietnam’s phased carbon market rollout, Singapore’s carbon tax and disclosure regime, and regulatory shifts in Indonesia, Hong Kong and Japan.

In this latest update, we turn our focus to the growing role of carbon capture, utilisation and storage (“CCUS”) in the region’s energy transition. CCUS is entering the mainstream, particularly in heavy industries where electrification and renewables alone cannot deliver sufficient emissions reductions. Japan’s pioneering CCUS framework is setting the pace, while Thailand, Vietnam, Singapore, Indonesia, ASEAN and Hong Kong/China are each shaping their own approaches. The result is a landscape defined by diverse strategies, regulatory experimentation and increasing cross-border collaboration, all of which signal Asia’s accelerating momentum toward climate compliance and carbon opportunity.

Japan: Building a Robust CCUS Legal Framework

"Japan’s combination of legal certainty, financing mechanisms and international collaboration sets a transferable model for CCUS deployment across Asia."

Japan’s commitment to achieve carbon neutrality by 2050 is ambitious, given its industrial base and reliance on imported fossil fuels. Recognising that renewable energy and efficiency measures alone cannot close the gap, the government has placed CCUS at the heart of its Green Transformation (“GX”) Strategy.

The Ministry of Economy, Trade and Industry (“METI”) has set a target of storing 120–240 million tonnes of CO₂ storage per year by 2050, by some estimates equivalent to roughly 10–20% of Japan’s current emissions. Commercialisation is targeted for 2030, with interim milestones of 6–12 million tonnes annually through early deployment projects.

Early Demonstration and Learning Curve

Japan began developing CCUS technology in the early 2000s. The Nagaoka pilot project in Niigata Prefecture injected CO₂ into a depleted gas field between 2003 and 2005. This project laid the groundwork for more ambitious efforts, most notably the Tomakomai project in Hokkaido (2016–2019) captured and injected around 300,000 tonnes of CO₂ from a coastal oil refinery into offshore geological formations.

The Tomakomai project was Japan’s first “full-chain” CCS demonstration, covering separation, capture, transportation, injection, monitoring and storage. Its success provided crucial evidence that CCUS could be safely implemented in Japanese conditions.

Legislative Milestone: The CCS Business Act

A turning point came in May 2024 with the passage of the Act on Carbon Dioxide Storage Business (the “CCS Business Act”). Phased into effect in August 2024, the CCS Business Act provides the legal foundation for private sector CCUS businesses to operate securely and at scale.

Key features include:

  • licensing regime: exploratory drilling (“prospecting”) and storage operations require approval from METI, with licences conferring exclusive rights over designated reservoirs;
  • property rights: licences are treated as property rights, providing investors with security of tenure. Prospecting licences run for four years (extendable by two), while storage licences continue until conditions expire or are rescinded;
  • safety and environmental safeguards: operators must comply with stringent standards to protect public safety and the marine environment, including oversight by the Ministry of the Environment for offshore reservoirs; and
  • CO₂ transport regulation: pipeline transportation of CO₂ is regulated, including export to foreign reservoirs. Even transport by pipeline to shipping terminals falls under the regime.

This legal framework is widely redegarded as one of the most advanced in Asia and addresses investor concerns around liability, tenure and cross-border operations.

Advanced CCS Projects and Financial Support

Japan is pairing legal reform with financial and technical support. Under the Advanced CCS Projects initiative, the government is backing a portfolio of domestic and international projects. METI’s budget has allocated significant funds, administered by the Japan Organization for Metals and Energy Security (“JOGMEC”), to provide:

  • direct investment and guarantees for project finance;
  • geological surveys and R&D support; and
  • prioritised backing for large-scale demonstration projects.

The Advanced CCS Projects selected will aim to start operations by 2030 and serve as models for wider CCUS business development. The FY2024 projects are expected to store approximately 20 million tonnes per annum of storage capacity by 2030. Five involve domestic storage and four rely on overseas reservoirs in the Asia-Pacific. The Japanese government is expected to take additional steps to legalise CCUS projects involving CO₂ export from Japan and sub-seabed storage abroad.

JOGMEC has also been empowered through 2022 statute amendments to invest directly in CCUS businesses, reflecting a broader government commitment to scaling the industry.

The International Dimension: Joint Crediting Mechanism

Japan’s Joint Crediting Mechanism (“JCM”) traditionally used to finance renewable energy and energy efficiency projects abroad is being adapted for CCUS. Under the JCM, METI and the Ministry of Environment co-finance up to 50% of project costs in partner countries and in return claims part of the emissions reductions.

While still in early stages, Japan sees the JCM as a way to develop overseas CCUS projects while also meeting its own emissions targets. Countries such as Indonesia and Vietnam are potential partners, linking Japan’s technical and financial expertise with their vast geological storage potential.

Building a Business Environment

Japan’s CCUS policy is not only about demonstration, it is about building a market. METI has emphasised that private-sector leadership is crucial to scaling CCUS. Its role is to create a “bankable business environment” by:

  • ensuring legal clarity (via the CCS Business Act);
  • providing initial financial support (via JOGMEC and METI funding);
  • coordinating international partnerships; and
  • investing in public outreach to build societal acceptance.

This combination of law, finance and policy provides the certainty developers and investors require to commit capital-intensive projects that often span decades.

Remaining Challenges

Despite progress, Japan faces hurdles:

  • cost competitiveness: CCUS remains expensive relative to alternatives such as renewables. Japan is working on cost reduction through R&D;
  • public perception: past projects have raised safety and environmental concerns; transparency and engagement will be critical;
  • cross-border operations: while the CCS Business Act covers exports, Japan must secure bilateral agreements with host states to ensure alignment on liability and environmental standards; and
  • scalability: moving from demonstration to commercial scale by 2030 will require significant acceleration in permitting and investment.
Why Japan Matters for Asia

Japan’s approach matters beyond its borders. By establishing legal certainty and financing models, Japan provides a template for other Asian jurisdictions still developing their frameworks. Its willingness to finance and co-invest abroad also makes it a catalyst for regional CCUS ecosystems, particularly in Southeast Asia where geological storage capacity far exceeds domestic demand.

WFW insight: Japan’s combination of legal certainty, financing mechanisms and international collaboration sets a transferable model for CCUS deployment across Asia.

Thailand: Policy Ambition, Legal Gaps

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Theo Cleminson

Theo
Cleminson

Senior Associate (Foreign Qualified Lawyer) Hanoi

"Thailand is at a crossroads: ambition and projects are advancing, but legal clarity remains the decisive next step."

National Policy and Roadmap

Thailand has committed to reaching net-zero emissions by 2065, with CCUS positioned as an essential technology in its environmental policy frameworks. The government, through the Climate Change Committee and its Greenhouse Gas Reduction Steering Subcommittee, has endorsed a national CCUS framework that spans technical requirements, regulatory measures, commercial incentives and stakeholder engagement.

The framework anticipates a geological feasibility study by 2030, full-scale deployment by 2040, and the reduction of 38.8 million tonnes of CO₂ annually. This roadmap reflects Thailand’s recognition that CCUS will be necessary to decarbonise energy-intensive sectors and to meet long-term climate goals.

Project Development

Nationwide, 21 CCUS projects have been launched, spearheaded by the Ministry of Energy and involving public–private collaboration. Preliminary assessments estimate 2.7 billion tonnes of CO₂ storage capacity, excluding saline aquifers, pointing to strong potential for future development.

These projects remain at the early stage, focussing largely on feasibility studies and pilot initiatives. Thailand’s trajectory shows both the appetite for CCUS and the gaps that still need to be filled.

Regulatory Gaps

Despite policy ambition, Thailand lacks a dedicated CCUS law. Currently, the Petroleum Act B.E. 2514 (1971) (the “Petroleum Act”) regulates exploration and production of petroleum and may be interpreted to permit CCUS for enhanced oil recovery. However, the Petroleum Act does not extend to long-term CO₂ storage or to CO₂ captured outside petroleum operations.

Recognising this gap, the Department of Mineral Fuels is considering amendments to the Petroleum Act. The draft proposes definitions of “carbon business”, expands regulatory authority over carbon-related operations, and introduces a licensing framework for CCUS concessions, environmental safeguards, site closure procedures and transfer of operational responsibilities.

Incentives

Thailand’s Board of Investment offers A2-level incentives, including eight-year corporate income tax exemptions and import duty relief, to encourage CCUS adoption in natural gas separation and petrochemical product manufacturing. These incentives reflect a pragmatic approach to accelerate private sector participation.

Outlook

Thailand’s opportunity lies in aligning its ambitious national framework with a clear and comprehensive legal regime. Investors await regulatory certainty to scale up the 21 projects already in the pipeline. The challenge will be balancing ambition with governance to ensure safety, liability management and long-term monitoring.

WFW insight: Thailand is at a crossroads: ambition and projects are advancing, but legal clarity remains the decisive next step.

Vietnam: Incentives but Fragmented Regulation

"Investors will need to navigate Vietnam’s fragmented legal landscape carefully, with early legal engagement critical to manage risk and capture incentives."

Geological Potential

Vietnam’s CCUS industry is at a formative stage, with no operational projects to date. However, studies led by Vietnam National Industry – Energy Group (Petrovietnam) highlight substantial geological potential in southern offshore sedimentary basins, closely aligned with industrial CO₂ sources and existing petroleum infrastructure. These natural advantages could underpin a viable CCUS ecosystem.

Policy Incentives

Vietnam has moved to create early-stage incentives. Under Decision No. 38/2020/QD-TTg, CCUS is designated a priority technology within the Law on Advanced Technology (2008). This unlocks preferential tax treatment, access to financial support from national technology programmes, and eligibility for training, technology transfer and R&D funding.

Companies applying CCUS to product innovation or adaptation of imported technologies also benefit from preferential treatment. These measures aim to position CCUS as a growth area for technology-driven enterprises.

Fragmented Legal Framework

Vietnam’s regulatory challenge is fragmentation. Different aspects of CCUS fall under multiple laws:

  • Law on Environmental Protection (environmental impacts, safety);
  • Law on Water Resources (water use, disposal); and
  • Law on Petroleum (subsurface activity).

No unified instrument directly addresses CCUS. A Petrovietnam–JOGMEC joint study (2023) catalogued these gaps, noting issues around licensing, long-term liability for CO₂ storage, monitoring, safety standards and cross-border CO₂ transport.

Roadmap to 2036

The joint study proposes a phased regulatory approach, aiming for commercialisation by 2036. This would involve gradually harmonising laws, clarifying liability regimes, and preparing for integration with international markets.

Outlook

Vietnam offers a mix of opportunity and complexity: early incentives signal political support, but the absence of a consolidated legal framework makes large-scale investment risky. International collaboration, particularly with Japan, is likely to play a major role in filling technical and regulatory gaps.

WFW insight: investors will need to navigate Vietnam’s fragmented legal landscape carefully, with early legal engagement critical to manage risk and capture incentives.

Singapore: Pursuing Cross-Border CCS

"Singapore’s role will be less about storage and more about shaping cross-border value chains and structuring finance for the region."

Policy Commitment

Singapore has pledged to reach net zero by 2050. With a highly industrialised economy, CCUS is seen as imperative for decarbonising hard-to-abate sectors including the energy and chemicals sectors.

Domestic Initiatives

The government is piloting CCS technologies across several fronts:

  • waste-to-energy plants: pilot test of the viability of CCS technologies announced for 2026;
  • power generation: in July 2025, the Energy Market Authority selected three companies to conduct feasibility studies on both post- and pre-combustion capture; and
  • ocean-based removal: the Public Utilities Board is co-funding the construction of the world’s largest ocean-based CO₂ removal facility, capable of removing 10 tonnes from seawater daily when fully operational by 2026.
Regulatory Context

Singapore has no CCS-specific legislation. Its small landmass and geology limit underground storage capacity, creating inherent constraints. These challenges explain Singapore’s proactive pursuit of cross-border CCS solutions.

Cross-Border Partnerships

Singapore has signed MoUs with Indonesia and Malaysia to explore regional CCS collaboration. The government has also partnered with an industry consortium formed by ExxonMobil and Shell, known as “S Hub”, to evaluate the feasibility of cross-border CCS projects. The “S Hub” is evaluating infrastructure to capture and store 2.5 million tonnes annually by 2030 with CO₂ exported for storage beneath seabeds or in deep rock formations.

Targets and Challenges

The government has set a goal of abating 2 million tonnes annually by 2030 through CCS. The challenge is execution: without domestic storage, Singapore has to depend on foreign reservoirs and robust cross-border governance.

Outlook

Singapore’s CCS strategy lies in structuring international projects, financing and creating enabling conditions for industry adoption. Its legal framework will need to evolve to support cross-border liability, monitoring, and crediting systems.

WFW insight: Singapore’s role will be less about storage and more about shaping cross-border value chains and structuring finance for the region.

Indonesia: Emerging as a Regional CCS Hub

"Indonesia’s storage capacity positions it as the backbone of Southeast Asia’s CCUS value chain."

Scale of the Challenge

Indonesia emitted approximately 672 million tonnes of CO₂ in 2023, ranking among the top ten global emitters. With significant reliance on coal and oil, CCUS is central to its decarbonisation strategy.

Geological Endowment

Indonesia has exceptional storage potential: 572 gigatons in saline aquifers and 4.85 gigatons in depleted oil and gas reservoirs. These formations provide optimal long-term containment conditions and are considered among the world’s most promising storage sites.

Major Projects
  • Abadi CCS Project: a US$20bn initiative involving INPEX (Japan), Pertamina (Indonesia) and Petronas (Malaysia), in which WFW is actively engaged;
  • Asri Basin CCS: a collaboration between ExxonMobil and Pertamina, leveraging Indonesia’s oil and gas infrastructure to build world-class storage; and
  • MoU with Singapore: signalling ambition to anchor regional CO₂ storage solutions.
Regulatory Framework

To support CCS deployment, Indonesia has introduced four key regulations:

  • MEMR Regulation No. 2/2023: Llegal foundation for CCS/CCUS activities in upstream oil and gas;
  • Presidential Regulation No. 14/2024: centralises CCS strategy, enables cross-border CO₂ transport, designates storage zones and creates incentives;
  • PTK 070: issued by the Special Task Force for Upstream Oil and Gas Business Activities as an implementing regulation of MEMR Regulation No. 2/2023, it provides technical guidelines for CCS/CCUS project development; and
  • MEMR Regulation No. 16/2024: licensing and operational requirements.

Together, these measures establish one of the most detailed regulatory regimes in Southeast Asia.

Outlook

Indonesia’s geological scale and regulatory reforms make it a potential regional hub. Challenges such as policy gaps, infrastructure readiness and financing remain but its ambition to lead CCS deployment is clear.

WFW insight: Indonesia’s storage capacity positions it as the backbone of Southeast Asia’s CCUS value chain.

ASEAN: Regional Ambition, Shared Challenges

"ASEAN’s diversity means no single model will fit all. Success will depend on cross-border collaboration."

Regional Context

ASEAN member states collectively overtook Japan in GDP 2024, making the bloc the world’s fourth largest economy after the US, China and Germany. Rapid economic and population growth are driving surging energy demand, projected to more than triple between 2020 and 2050. At the same time, nine out of ten ASEAN governments have pledged to achieve net-zero targets by 2050. This dual reality, escalating energy demand and ambitious decarbonisation commitments, highlights the critical role of CCS.

Remaining Challenges

Despite momentum, CCS deployment across ASEAN faces significant obstacles:

  • high costs: development remains prohibitively expensive without breakthrough technologies or scalable financing;
  • policy and regulatory gaps: absence of carbon pricing and fragmented legal frameworks hinder investment confidence; and
  • storage uncertainty: geological storage potential is unevenly mapped and under-assessed across member states.
Pathways for Deployment

The September 2024 ASEAN CCS Deployment Framework and Roadmap considers policies, legal and regulatory frameworks, and storage capabilities of member states, and provides recommendations. Three key pillars for CCS deployment are identified:

  • policy integration: embedding CCS into national and regional energy strategies, aligned with ASEAN’s Carbon Neutrality Strategy 2023 and the ASEAN Plan of Action for Energy Cooperation Phase II (2021–2025);
  • legal and regulatory clarity: establishing frameworks for CO₂ ownership, liability and long-term monitoring, and cross-border CO₂ transport and storage agreements; and
  • storage readiness: advancing geological assessments in high-potential jurisdictions such as Indonesia, Malaysia and Vietnam.
Outlook

The regional approach underscores both ASEAN’s ambition and the gaps that must be addressed to scale CCS. Coordinated policy, legal certainty and investment in storage mapping will be crucial if ASEAN is to balance rising energy demand with its net-zero commitments.

WFW insight: ASEAN’s diversity means no single model will fit all. Success will depend on cross-border collaboration.

China and Hong Kong: Scaling Projects, Linking Carbon Markets

"China leads on deployment, whilst Hong Kong builds the financial infrastructure to monetise CCUS."

China’s Leadership

China has placed CCUS at the centre of its climate strategy, aligned with its “Dual Carbon Goals” of peaking emissions by 2030 and neutrality by 2060. More than 60 national-level policies since 2013 reference CCUS, and 31 of 34 provinces now have CCUS strategies.

As of 2023, China had over 100 demonstration projects, representing 6 million tonnes annual capture capacity and 4 million tonnes injection capacity. The Enping 15-1 oilfield (“CNOOC”) has captured over 200,000 tonnes since commissioning in 2023, making it one of Asia’s leading offshore CCUS sites.

Hong Kong’s Financial Role

Hong Kong does not host large-scale CCUS projects but plays a strategic role in regional carbon markets. The HKEX Core Climate platform positions the city as a hub for voluntary carbon trading, facilitating access to high-quality carbon credits from global projects. Efforts are underway to harmonise Hong Kong’s voluntary markets with China’s compliance-based Emissions Trading System (“ETS”), which covers over 2,200 entities and is expanding to include sectors such as cement, steel and aluminium.

The HKEX–Guangzhou Futures Exchange partnership aims to integrate standards and potentially trade CCUS-linked credits across borders.

Outlook

China provides scale and rapid deployment, whilst Hong Kong contributes market infrastructure. Together, they highlight the dual importance of physical CCUS projects and robust carbon finance.

WFW insight: China leads on deployment, whilst Hong Kong builds the financial infrastructure to monetise CCUS.

Challenges and Opportunities

Challenges
  • regulatory gaps: Thailand and Vietnam like several ASEAN peers, lack comprehensive CCUS laws;
  • cross-border liability: Singapore’s reliance on overseas storage requires complex bilateral agreements;
  • high costs: CCUS remains expensive relative to alternatives; and
  • public acceptance: safety and environmental concerns persist across jurisdictions.
Opportunities
  • Japan’s model: legal certainty under the CCS Business Act sets a benchmark;
  • Indonesia’s geology: regional hub potential with world-class storage;
  • Singapore’s finance role: international structuring of CCS projects;
  • China’s scale: large-scale deployment provides valuable operational lessons; and
  • Hong Kong’s carbon market: enabling infrastructure for CCUS credit monetisation.

Conclusion

CCUS in Asia is gaining momentum, but progress varies. Japan has established itself as a regulatory pioneer, Indonesia offers unparalleled storage, Singapore is shaping cross-border finance, Thailand and Vietnam are building foundations, and China/Hong Kong provides scale and trading infrastructure.

The common thread across ASEAN and Asia more broadly is the need for legal certainty. As countries move from pilot projects to commercial deployment, investors will prioritise jurisdictions that provide clarity on licensing, liability and incentives. Cross-border cooperation will be equally critical, especially for states like Singapore and Japan that depend on overseas storage.

Tokyo Trainee Katy Warren, Hanoi Trainees Quynh Nguyen, Mai Do and Paralegal Ha Hoang also contributed to this article.

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Key contacts

Theo Cleminson

Theo
Cleminson

Senior Associate (Foreign Qualified Lawyer) Hanoi

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