Indonesia’s carbon capture and storage (CCS) ecosystem has advanced considerably from a regulatory and technical perspective. Geological storage potential has been identified, licensing frameworks are evolving, and the release of Presidential Regulation No. 110 of 2025 on Carbon Economic Value (NEK) architecture provides institutional grounding. However, regulatory readiness alone does not ensure commercial uptake. The viability of CCS depends on alignment with the expectations of existing carbon credit buyers, seen the markets current demand.
Buyers of Carbon Credits Today
Globally, emerging buyer segments are becoming clearer as carbon pricing expands across major economies. The World Bank’s State and Trends of Carbon Pricing 2025 highlights how carbon pricing mechanisms are increasingly concentrated in specific economic sectors, providing a useful indicator of where emissions cost exposure and credit demand is strongest.
1. Energy and extractive industries
Oil and gas, mining, and power generation sectors operate in the highest carbon pricing exposure globally, showing that 51% of power sector emissions are covered by carbon pricing (45% ETS, 6% carbon tax), while mining and extractives face around 15% coverage.
2. Hard-to-abate industries
Heavy industry is rapidly being integrated into carbon pricing systems, with 43% of global industrial emissions now covered. Within the market, China’s 2025 expansion of its national ETS to include cement, steel, and aluminum added approximately 3 billion tCO₂e. This illustrates the scale of carbon pricing integration in hard-to-abate sectors.
3. Export oriented manufacturing
Export-facing sectors are responding to trade-linked mechanisms such as EU’s Carbon Border Adjustment Mechanism (CBAM) that targets emissions-intensive sectors. Similar measures in the United Kingdom and United States are expanding export pressure for industries such as iron and steel, aluminum, cement, and fertilizers, requiring structural decarbonization solutions to maintain competitiveness.
Early developments such as the Northern Lights project in Norway demonstrate the commercial viability of CCS-based carbon dioxide removal (CDR), with industrial emitters securing permanent CO2 storage services. The project’s 1.5 MtCO₂ per year capacity is fully contracted by industrial buyers such as Heidelberg Materials and Yara, with a 15-year agreement covering 900,000 tCO₂ annually supporting expansion to 5 MtCO₂ per year. These agreements provide an important benchmark for the emerging market value of CCS-enabled carbon mitigation.
Sources of Carbon Credit Demand
In Indonesia, carbon credit demand is emerging through several distinct channels, shaped by both domestic policy instruments and international cooperation frameworks.
Domestically, Indonesia has begun operationalizing compliance-based carbon pricing instruments under the PR 110/2025, such as the power-sector emissions trading system (ETS) where regulated entities may purchase eligible carbon units as part of their compliance strategy. Second, voluntary demand is developing through market-based platforms such as IDXCarbon, where companies purchase credits to support corporate net-zero commitments and sustainability strategies. In 2025, IDXCarbon recorded approximately 1.6 million tCO₂e traded, with transaction value reaching around Rp 78 billion, indicating growing participation in available and lower-cost nature-based credits. Through PR 110/2025, Indonesia’s demand potential also extends into international carbon transfers under Paris Agreement article 6.2 and 6.4. This opens pathways for sovereign-to-sovereign transactions and bilateral cooperation agreements to meet their NDC targets.
Supporting these mechanisms is the Sistem Registri Unit Karbon (SRUK), which functions as Indonesia’s national carbon registry within the NEK architecture. SRUK serves as the centralized platform for carbon unit issuance, certification (SPE-GRK), recording, and transaction tracking, ensuring transparency and alignment between domestic trading, compliance use, and international transfers.
Role of CCS in Emerging Demands
Demand channels show that Indonesia’s carbon market is active, with early compliance exposure remains concentrated in the energy sector, while voluntary activity reflects cautious participation. For hard-to-abate industries such as cement, refining, petrochemicals, and steel, residual process emissions cannot be eliminated through electrification alone. As export-oriented producers face CBAM jurisdictions and growing carbon cost alignment globally, durable abatement becomes more strategically relevant than short-term credit purchases. For companies in these sectors, CCS represents a pathway to address residual emissions rather than only offsetting them.
The central constraint remains cost competitiveness as CCS infrastructure require significant investment, and resulting abatement costs are typically higher than many nature-based credits. However, technological advancements and efficiency improvements are expected to reduce CCS costs over time, potentially lowering capture costs as low as USD 35/tCO2. Indonesia’s substantial geological storage capacity and concentrated industrial clusters also offers the possibility of scale through more efficient transport and storage integration, enabling structural cost improvements over time. With continued regulatory clarity, CCS can transition from a policy concept into a commercially viable decarbonization solution for targeted buyer segments.
Conclusion
Indonesia’s carbon market is evolving towards exposure to compliance obligations, export competitiveness pressures, and corporate transition commitments, while the direction of demand increasingly favors durable and transition-aligned mitigation. In this context, CCS is positioned not as a competing offset option, but as a strategic decarbonization pathway for hard-to-abate and export-oriented sectors facing structural carbon cost pressure. As regulatory frameworks mature and industrial carbon exposure increases, CCS can evolve into a commercially relevant decarbonization pathway aligned with Indonesia’s long-term industrial and climate objectives.
