INVESTMENT EVALUATION OF CARBON CAPTURE, UTILISATION, AND STORAGE PROJECT IN WEST JAVA, INDONESIA

• Main Author: Titi Amelinda, Adanya
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/74309
• Institution: Institut Teknologi Bandung

Following The Paris Agreement, Indonesia submitted an Enhanced Nationally Determined Contribution with an emission reduction target of 31,89% unconditionally. Indonesia envision to reach net zero emission by 2060 or sooner. Contributing approximately a third of the carbon emission nationally, the decarbonization of the energy sector plays a big role in the ENDC pathways. From the oil and gas subsector, one of the programs designated to reduce their greenhouse gas emission are CCS (Carbon Capture and Storage) and CCUS (Carbon Capture, Utilization, and Storage). However, the development of CCUS is filled with challenges. Other than the technical challenge of CCUS, the project is deemed to be too expensive and unable to generate a positive return for the project owner. The objectives of this research is to analyze the advantages and disadvantages of CCUS implementation in oil and gas upstream sector, assess the project’s financial feasibility in current condition and regulation for the project owner, and determine if carbon trading will help CCUS and other similar projects become more attractive. In qualitative analysis, SWOT and TOWS analysis will be used to help analyze the internal and external factors of CCUS project implementation. In quantitative analysis, the revenue of the project will be calculated under two scenarios; as is and with added revenue from carbon trading. CCUS project benefits the project owner by increasing oil production and also decarbonize the oil and gas upstream sector. However, CCUS project possess a high risk of failure while also unable to generate a positive return for the project owner. In current regulation, the CCUS project proposal in West Java is not financially feasible. While additional revenue from carbon trading using the carbon offset mechanism does improve the feasibility of the project, in the case of this CCUS project in West Java, the project still generates negative NPV albeit lower than without carbon trading revenue. Therefore, emission trading systems and implementation of carbon trading does help CCUS project to become more financially feasible, however project owner couldn’t rely solely on carbon trading to make CCUS project financially feasible.