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Accelerating Commercial Hydrogen and Carbon Capture and Storage Projects in Indonesia: Building an Enabling Ecosystem

Economic Research Institute for ASEAN and East Asia (ERIA) and Economic Research Institute for ASEAN and East Asia (ERIA)

No 2026-RPR-16 in Books from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: Despite significant resource potential, the deployment of hydrogen and carbon capture and storage (CCS) remains limited. Most projects are still at the feasibility study or memorandum of understanding (MoU) stage, with few progressing to commercial investment. Focusing on Indonesia, this study examines the factors underlying this slow progress and proposes pathways to accelerate implementation through a bifocal approach that combines private sector perspectives with enabling government policies, drawing on actual project case studies. To this end, interviews were conducted with private sector actors, government agencies, and other relevant stakeholders. Using a policy and market ecosystem assessment, the study analyses cost structures, market readiness, fiscal frameworks, and institutional challenges. It identifies weak demand signals, limited revenue models, evolving regulatory frameworks, and insufficient financial de-risking as the principal barriers to investment. The study recommends positioning hydrogen and CCS as strategic national investments, strengthening the financial ecosystem, enabling carbon monetisation, and promoting cross-border business models. It also advocates a no-regret strategy, prioritising actions that generate value across a range of future scenarios.

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