Carbon Capture and Storage in Indonesian Water: Brief Identification on Risk of Transboundary Dispute in 2026

This article examines the legal, policy, and governance challenges of offshore carbon capture and storage (CCS) in Indonesian waters, with particular attention to the risk of CO₂ leakage that may cross into the jurisdiction of neighbouring states. As Indonesia explores offshore CCS to support its energy transition, it must develop clear regulatory frameworks, strengthen institutional capacity, and align domestic rules with UNCLOS and emerging international standards. The analysis highlights key risks, governance gaps, and potential dispute resolution mechanisms relevant to future offshore operations. By addressing these issues proactively, Indonesia can enhance maritime environmental protection, attract CCS investment, and advance its Global Maritime Fulcrum ambitions.

 Introduction                                                                                                                                       

As the global community accelerates efforts to mitigate climate change, Carbon Capture and Storage (CCS) technologies have emerged as a crucial tool in reducing industrial carbon emissions.[1] Indonesia’s commitment to achieve Net Zero emissions by 2060 or sooner has accelerated interest in carbon capture and storage (CCS) as a strategic mitigation instrument. Offshore CCS, where carbon dioxide (CO₂) is injected and permanently stored beneath the seabed, presents significant opportunities for Indonesia given its extensive offshore sedimentary basins.

Presidential Regulation Number 14 of 2024 concerning the Implementation of Carbon Capture and Storage Activities (“PR 14/2024”) signals Indonesia’s concrete intention to enter the CCS sector. The implementation of CCS, however, poses a number of risks.[2] Disputes may arise over issues such as liability for leakage, environmental harm, ownership of underground storage sites, and default, namely, arising from unpredicted events in the field.[3]

Legal Risk Identification

This research identifies in brief legal risks with offshore CCS in Indonesian waters that may pose risk to the neighbouring waters, as follows:

1. Transboundary CO₂ Leakage

Offshore CO₂ storage is designed to be permanent, but uncertainties exist due to geological variability, faults, abandoned wells, and pressure differentials.[4] A leakage event could allow CO₂ to escape from the storage complex and migrate across Indonesia’s maritime boundaries, reaching. Such transboundary leakage may constitute a breach of obligations under the United Nations Convention on the Law of the Sea (UNCLOS), which requires states to prevent marine pollution originating from activities under their jurisdiction[5] In this context, Indonesia needs to design a regulatory and liability framework capable to navigate such risk.

2. Marine Environmental Impacts

Leakage of CO₂ into the water may lead to localized ocean acidification, affecting corals, organisms, and commercially significant fisheries.[6] Given Indonesia’s heavy reliance on marine resources, impacts on fisheries could have social and economic consequences, particularly for coastal communities. Beyond leakage, the CCS operation itself—including drilling activities, injection wells, subsea pipelines, and monitoring equipment—carries risks of disturbance to seabed ecosystems.[7] Albeit not originating from offshore CCS activities, in the same vein, in the Montara oil spill case, a group of fishermen and seaweed farmers filed a lawsuit in the Australian federal court in Sydney against a Thai company, PTT Exploration and Production (PTTEP).[8] As a result of the explosion and fire that occurred in PTTEP’s oil drilling rig located 700 km from Darwin, Australia, and 250 km from Rote Island in East Nusa Tenggara (NTT) on August 21, 2009, 23 million liters of oil were spilled over a period of 74 days from August to November. The oil spill damaged the coasts across 13 districts and cities in NTT and destroyed the livelihoods of the fishermen and seaweed farmers in the area.[9]

3. Regulatory Development

Although PR 14/2024 is currently in force and has included foundational provisions for the implementation of CCS, this regulation does not specifically cater to offshore CCS. The implementation of offshore CCS in Indonesia, therefore, must not only pay attention to PR 14/2024 but also to other marine and environmental-related regulations in harmony. Among others, Law Number 32 of 2014 concerning Maritime, and Government Regulation Number 22 of 2021 concerning Implementation of Environmental Protection and Management.

4. Monitoring, Reporting, and Verification (MRV) Limitations

Offshore CCS requires continuous MRV using advanced techniques including the implementation of sensors, collection of samples, simulations, and assessment tools for biological indicators of environmental impact.[10] Indonesia could benefit from further developing its MRV technical capacities for offshore CCS implementation.  Enhancing MRV capability is essential not only for environmental safety but also for defending against future transboundary claims.

Potential disputes arising from offshore CCS may span multiple forums. Transboundary leakage could trigger inter-state processes, among others, under Part XV of the UNCLOS. Where foreign investors are involved, claims may proceed under bilateral investment treaties or ICSID arbitration.[11] Commercial arrangements often rely on arbitration through BANI, SIAC, or ICC.[12] Domestically, environmental or administrative challenges may be brought before administrative or civil courts.

Policy & Governance Relevance

Offshore CCS presents not only environmental and technical challenges but also important policy and governance implications for Indonesia’s broader strategic position. As Indonesia aspires to strengthen its role under the Global Maritime Fulcrum (Poros Maritim Dunia), a credible and coherent regulatory framework for offshore CCS becomes essential. Effective governance of offshore CO₂ storage—including clear liability rules, stringent monitoring requirements, and transparent permitting—signals to international investors and trading partners that Indonesia can manage advanced offshore industries safely and responsibly. Furthermore, by aligning domestic rules with UNCLOS obligations and international environmental standards, Indonesia reinforces its reputation as a safe and reliable maritime jurisdiction.

Closing Reflection

Looking ahead, Indonesia’s next frontier in carbon capture at sea will depend on its ability to build a coherent legal, policy, and governance architecture that matches the complexity of offshore CCS. Clear liability rules, transparent permitting, and strong monitoring systems will be essential to manage environmental risks. Equally important is institutional capacity—ensuring regulators can assess, supervise, and enforce advanced offshore operations. By aligning national frameworks with international standards and fostering regional cooperation, Indonesia can position itself as a credible leader in ocean-based climate solutions while safeguarding marine interests and strengthening its Global Maritime Fulcrum aspirations. (RBI/IAD).

References

Laws and Regulation

International Law

United Nations Convention on the Law of the Sea (UNCLOS)

Indonesian Laws

1. Law Number 32 of 2014 concerning Maritime
2. Government Regulation Number 22 of 2021 concerning Implementation of Environmental Protection and Management.
3. Presidential Regulation Number 14 of 2024 concerning the Implementation of Carbon Capture and Storage Activities

Literature

Australian Marine Conservation System, ‘Carbon Capture and Storage (CCS)’ (Australian Marine Conservation Society, 2025) <https://www.marineconservation.org.au/ccs/#:~:text=Pressure%20also%20builds%20up%20under,burying%20below%20the%20ocean%20floor> accessed 9 December 2025.

Center for International Environmental Law, ‘Deep Trouble The Risks of Offshore Carbon Capture and Storage’ (2024) <https://www.ciel.org/reports/deep-trouble-the-risks-of-offshore-carbon-capture-and-storage-november-2023/>

Csiro, ‘Validating monitoring technologies for carbon storage’ (Csiro, 5 January 2021) <https://www.csiro.au/en/research/natural-environment/oceans/Validating-monitoring-technologies-for-carbon-storage> accessed 9 December 2025.

Egmond S van and Hekkert MP, ‘Analysis of a Prominent Carbon Storage Project Failure – The Role of the National Government as Initiator and Decision Maker in the Barendrecht Case’ (2015) 34 International Journal of Greenhouse Gas Control 1

Lannini E, ‘The Next Generation of Energy Transition Disputes: What Might Be the Future for Carbon Capture, Use, and Storage and Arbitration?’ (Kluwer Arbitration Blog, 2024) <https://legalblogs.wolterskluwer.com/arbitration-blog/the-next-generation-of-energy-transition-disputes-what-might-be-the-future-for-carbon-capture-use-and-storage-and-arbitration/>

Legal Information Institute, ‘Bilateral Investment Treaty’ (Cornell Law School, 2024) <https://www.law.cornell.edu/wex/bilateral_investment_treaty>

National Energy Technology Laboratory, ‘Carbon Storage FAQs’ (U.S department of Energy) <https://www.netl.doe.gov/carbon-management/carbon-storage/faqs/carbon-storage-faqs#:~:text=Studies%20show%20that%20saline%20formations,basins%20located%20across%20the%20country> accessed 9 December 2025.

Nationalgrid, ‘What Is Carbon Capture and Storage?’ (nationalgrid, 2024)

<https://www.nationalgrid.com/stories/energy-explained/what-is-ccs-how-does-it-work>.

Ratih Kusumawati, ‘Petani dan Nelayan NTT Menang Gugatan Kasus Montara’ (Portonews, 2020)<https://portonews.com/2021/oil-and-chemical-spill/petani-dan-nelayan-ntt-menang-gugatan-kasus-montara/> accessed 9 December 2025.

Vladimir Tarakanov, ‘How Carbon Emissions Acidify Our Ocean’ (IAEA)

<https://www.iaea.org/bulletin/how-carbon-emissions-acidify-our-ocean> accessed 9 December 2025.

VOA, ‘Kasus Tumpahan Minyak Montara: 10 Tahun, Satu Gugatan’ (VOA, 22 October 2019)

<https://www.voaindonesia.com/a/kasus-tumpahan-minyak-montara-10-tahun-

satu-gugatan/5134088.html> accessed 9 December 2025.

Footnotes :

[1] nationalgrid, ‘What Is Carbon Capture and Storage?’ (nationalgrid, 2024) <https://www.nationalgrid.com/stories/energy-explained/what-is-ccs-how-does-it-work>.

[2] Center for International Environmental Law, ‘Deep Trouble The Risks of Offshore Carbon Capture and Storage’ (2024) <https://www.ciel.org/reports/deep-trouble-the-risks-of-offshore-carbon-capture-and-storage-november-2023/>.

[3] Sander van Egmond and Marko P Hekkert, ‘Analysis of a Prominent Carbon Storage Project Failure – The Role of the National Government as Initiator and Decision Maker in the Barendrecht Case’ (2015) 34 International Journal of Greenhouse Gas Control 1, 2.

[4] National Energy Technology Laboratory, ‘Carbon Storage FAQs’ (U.S department of Energy) <https://www.netl.doe.gov/carbon-management/carbon-storage/faqs/carbon-storage-faqs#:~:text=Studies%20show%20that%20saline%20formations,basins%20located%20across%20the%20country> accessed 9 December 2025.

[5] UNCLOS, Article 194 paragraph (2), “States shall take all measures necessary to ensure that activities under their jurisdiction or control are so conducted as not to cause damage by pollution to other States and their environment, and that pollution arising from incidents or activities under their jurisdiction or control does not spread beyond the areas where they exercise sovereign rights in accordance with this Convention”.

[6] Vladimir Tarakanov, ‘How Carbon Emissions Acidify Our Ocean’ (IAEA) <https://www.iaea.org/bulletin/how-carbon-emissions-acidify-our-ocean> accessed 9 December 2025.

[7] Australian Marine Conservation System, ‘Carbon Capture and Storage (CCS)’ (Australian Marine Conservation Society, 2025) <https://www.marineconservation.org.au/ccs/#:~:text=Pressure%20also%20builds%20up%20under,burying%20below%20the%20ocean%20floor> accessed 9 December 2025.

[8] Ratih Kusumawati, ‘Petani dan Nelayan NTT Menang Gugatan Kasus Montara’ (Portonews, 2020) <https://portonews.com/2021/oil-and-chemical-spill/petani-dan-nelayan-ntt-menang-gugatan-kasus-montara/> accessed 9 December 2025.

[9] VOA, ‘Kasus Tumpahan Minyak Montara: 10 Tahun, Satu Gugatan’ (VOA, 22 October 2019) <https://www.voaindonesia.com/a/kasus-tumpahan-minyak-montara-10-tahun-satu-gugatan/5134088.html> accessed 9 December 2025.

[10] Csiro, ‘Validating monitoring technologies for carbon storage’ (Csiro, 5 January 2021) <https://www.csiro.au/en/research/natural-environment/oceans/Validating-monitoring-technologies-for-carbon-storage> accessed 9 December 2025.

[11] Legal Information Institute, ‘Bilateral Investment Treaty’ (Cornell Law School, 2024) <https://www.law.cornell.edu/wex/bilateral_investment_treaty>.

[12] Emma Lannini, ‘The Next Generation of Energy Transition Disputes: What Might Be the Future for Carbon Capture, Use, and Storage and Arbitration?’ (Kluwer Arbitration Blog, 2024) <https://legalblogs.wolterskluwer.com/arbitration-blog/the-next-generation-of-energy-transition-disputes-what-might-be-the-future-for-carbon-capture-use-and-storage-and-arbitration/>.

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