Criminal Accountability in Offshore CCS: Balancing Deterrence and Innovation Amid Compliance Risks in Indonesia 2026

Indonesia is developing CCS (Carbon Capture and Storage) projects that are expected to be operational by 2025, including preparations for 19 oil and gas blocks as carbon storage sites and initiatives such as those in the North Natuna Sea, with evaluations for storage centers capable of holding up to 3 gigatons of CO₂. Regulations need to be issued to provide guidelines for offshore CCS activities in the maritime environment. The development of CCS intersects with Indonesia’s Global Maritime Fulcrum Strategy, in which its position as a carbon storage center involves maritime elements, thereby integrating climate responsibility with existing regulations.

Introduction

Offshore Carbon Capture and Storage (CCS) represents a critical technology for global energy transitions, involving the capture of CO₂ from industrial emitters, its compression, maritime transport via ships, and injection into sub-seabed formations.[1] Internationally, CCS has accelerated since COP26, exemplified by Norway’s Northern Lights project, which facilitates cross-border CO₂ shipping and storage, highlighting scalable models for emissions reduction.[2] Some collaborations such as between Indonesia and Singapore are also advancing, capitalizing on Indonesia’s vast geological storage potential to serve as a CCS exporter. However, risks such as CO₂ leaks posing threats to marine biodiversity necessitate robust legal protections to prevent operational mishaps.[3]

In Indonesia, the drive toward net-zero by 2060 and 29% emissions cut by 2030 amplifies the need for CCS frameworks. Presidential Regulation[4] No. 14 of 2024 (Perpres 14/2024) establishes guidelines for CCS activities, including licensing for exploration, transport, and storage, with emphasis on maritime aspects. Becoming a CCS hub forms an element of the Global Maritime Fulcrum (GMF) strategy, involving maritime infrastructure for carbon handling. This article will highlight areas that are not yet regulated in CCS activities and the potential criminal risks that may arise.

Currently, The 1996 IMO London Protocol sets standards for exemptions from marine waste disposal in CCS, but domestic adjustments show inconsistencies in regulating the marine environment and CCS.  Potential criminal liability in offshore CCS stems from complex processes, where compliance issues can impact the marine environment, requiring a review of regulations such as the Environmental Protection and Management Law (UU PPLH[5]), Law No. 32 of 2014 on Maritime Affairs (Maritime Law), and Law No. 66 of 2024 amending the shipping law (UU Pelayaran). The latest framework includes Presidential Regulation No. 110 of 2025 (Perpres 110/2025) on Carbon Economic Value Instruments. This setting underscores unregulated issues in emerging CCS operations within Indonesia’s maritime domain.

Criminal accountability in offshore CCS is crucial due to the complex supply chain, where errors could cause lasting ecological damage. Given Indonesia’s extensive maritime territory, policies shall support blue economy goals, incorporating lessons from Norway’s liability models that promote safe innovation.[6] Recent updates, such as ministerial regulations on CCS blocks, further address permitting and long-term responsibilities, underscoring the balance needed between environmental safeguards and technological advancement. [7]

This legal research will examine existing legislation to map out how the current legal regime responds to CCS activities. A crucial issue that arises is whether the generally designed environmental regulatory framework (Environmental Protection and Management Law) can be applied precisely to the unique characteristics of CCS in marine areas, or whether it creates grey areas that risk criminalizing innovation due to regulatory misinterpretation. This is also essential for maintaining environmental integrity and investor confidence.

Legal Risk Identification

This analysis focuses on identifying potential criminal risks by examining the correlation between CCS activities and the existing statutory and regulatory framework. Based on the regulatory mapping, several vulnerability points emerge that may expose both corporations and individuals to criminal liability due to normative gaps or regulatory ambiguity.

1. The Law on Environmental Protection and Management

Law No. 32 of 2009 on Environmental Protection and Management (UUPPLH) serves as the primary legal reference for the enforcement of environmental criminal offences. Article 103 stipulates that any person who generates hazardous and toxic waste (B3 waste) and fails to carry out proper management may be subject to criminal sanctions in the form of imprisonment of at least one year and a minimum fine of IDR 1 billion. In the context of CCS, a significant legal risk arises from the absence of regulatory certainty regarding the legal status of injected CO₂, namely whether it is to be qualified as hazardous and toxic waste (B3) or treated as an industrial commodity. Should CO₂ be construed as B3 waste due to its potential to cause environmental harm in the event of leakage, even the slightest failure in management procedures could directly trigger criminal liability under Article 103. In addition, a juridical issue persists concerning the territorial scope of the UUPPLH in marine areas, particularly with respect to the effectiveness of applying environmental criminal provisions within the Exclusive Economic Zone or the continental shelf as carbon storage locations, given that the legal regimes governing these areas differ from those applicable to territorial waters. This lack of clarity regarding jurisdictional boundaries opens space for debate in law enforcement practice.

2. Maritime and Shipping Law Regime: Between Storage and Dumping

Within the shipping law framework as regulated under the prevailing Shipping Law, Article 325 imposes severe criminal sanctions for the unlawful disposal of waste into waters, with penalties reaching up to ten years’ imprisonment where such conduct results in pollution. In the context of CCS, criminal risk arises from the lack of a clear distinction between the concepts of “storage” and “dumping.” As neither the Shipping Law nor the Maritime Law expressly and comprehensively regulates CCS as an activity excluded from the legal definition of dumping, leaks occurring at the injection stage or during transportation may be interpreted by law enforcement authorities as acts of illegal dumping. In the absence of an explicit legal framework carving out CCS from conventional dumping offences, operators of vessels transporting carbon dioxide remain exposed to a relatively high level of criminal risk.

3. Presidential Regulation No. 14 of 2024: Gaps in Transportation Mechanisms

Articles 30 paragraphs (2) and (3) of Presidential Regulation No. 14 of 2024 permit the transportation of carbon by sea vessels, provided that safety and environmental protection aspects are observed in accordance with prevailing laws and regulations. However, this formulation presents risks as it refers back to other legal provisions that have yet to provide clear technical guidance. While the Regulation authorizes carbon transport, it does not specify technical standards or the criminal consequences in the event of an accident. The absence of CCS-specific technical standards for CO₂ carrier vessels in Indonesia may give rise to subjective interpretations when determining the element of negligence under criminal law. Furthermore, it remains uncertain whether compliance with international standards, such as those set by the International Maritime Organization (IMO), would be sufficient to negate criminal negligence under domestic law.

It should be noted that the Attorney General’s Office is currently drafting the Attorney General’s Guidelines on handling criminal cases arising from carbon trading activities, as part of the implementation of the Carbon Economic Value (NEK) regulation.[8] While this initiative represents a progressive step, the drafted guidelines appear to focus primarily on administrative aspects and the carbon trading mechanism. This raises a critical question regarding the regulation of criminal aspects related to physical operations, such as leaks or marine pollution, which are not yet addressed in the guidelines. This regulatory gap has the potential to further complicate compliance risks for business operators.

So How to Balance Deterrence and Innovation?

The pursuit of a balance between criminal deterrence and the promotion of technological innovation in offshore CCS operations presents significant regulatory challenges, particularly due to the absence of tailored guidelines addressing the unique compliance risks of this emerging sector. Existing frameworks, such as the strict liability provisions under Law on Environmental Protection and Management Article 103 for hazardous waste mismanagement, aim to deter environmental violations through penalties like imprisonment and substantial fines. [9]  However, the lack of explicit criteria for classifying CO₂ in the context of CCS creates uncertainty, where operational ambiguities could inadvertently expose innovators to criminal liability. This uncertainty is further compounded in maritime transport under Presidential Regulation No. 14/2024 Article 30, which references safety and environmental standards without specifying CCS-specific thresholds for negligence, potentially heightening risks during innovation-driven activities, including cross-border shipping.

Additional complexities emerge from the ongoing development of the Attorney General’s Guidelines on carbon-related criminal cases, stemming from Presidential Regulation No. 110/2025, which primarily address administrative and trading violations while leaving operational issues—such as leaks during sub-seabed injection—largely unregulated. Comparative models, such as Norway’s Northern Lights project, demonstrate the value of proportional liability frameworks that balance innovation with accountability. [10] In contrast, Indonesia’s current regulatory landscape exhibits gaps in integrating international standards, such as the IMO London Protocol, into domestic criminal enforcement, raising concerns that unresolved ambiguities may deter investment in innovative CCS infrastructure. The interaction between deterrence-focused sanctions and innovation incentives highlights the need for adaptive mechanisms, such as compliance programs that mitigate liability, to support both environmental protection and the development of maritime CCS projects.[11]

Policy and Governance Relevance

The identification of these legal risks underscores key policy challenges, particularly where regulatory instruments such as the Environmental Protection and Management Law (UU PPLH) and Presidential Regulation No. 14 of 2024 intersect with the Global Maritime Fulcrum (GMF) strategy’s objectives to develop Indonesia as a CCS hub, while leaving certain maritime activities insufficiently regulated. Relevant ministries, including the Ministry of Energy and Mineral Resources and the Ministry of Environment and Forestry, are confronted with complex considerations in licensing assessments, supported by CCS task forces, within the broader context of UNCTAD’s analyses of maritime environmental risks. Moreover, the adaptation of international frameworks, such as the IMO London Protocol, to the ASEAN maritime context presents practical and regulatory challenges, highlighting ambiguities in domestic marine governance for blue economy activities. These uncertainties have potential implications for insurance coverage and trade facilitation, as observed in UNCTAD evaluations.

Closing Reflection

In Indonesia’s offshore CCS landscape, criminal accountability plays a central role in connecting energy ambitions with environmental responsibility, particularly where white-collar risks arise during maritime transport and subsea operations. The existing regulatory framework provides a foundation, but proportional sanctions combined with incentives for robust compliance programmes will be essential to deter misconduct such as data manipulation, unlawful discharge and evasion of monitoring obligations. Strengthening transparency, verification and institutional coordination enables the law to function not only as a deterrent but also as a catalyst for safe innovation. With clearer safeguards and accountable practices, CCS projects in areas such as the North Natuna Sea can progress in a manner that builds trust, protects marine ecosystems and supports Indonesia’s long-term climate and governance objectives. (TNH)

References

Laws and Regulation

International Law

1. The 1996 IMO London Protocol

Indonesian Laws

1. Law No. 66 of 2024 amending the shipping law.
2. Law No. 32 of 2014 on Maritime Affairs.
3. Law No. 32 of 2009 concerning Environmental Protection and Management
4. Presidential Regulation of the Republic of Indonesia Number 14 of 2024 concerning the Implementation of Carbon Capture and Storage Activities.
5. Ministry of Mineral Resources (MEMR) Regulation No. 16 of 2024 on the Implementation of Carbon Storage Activities in Carbon Storage Permit Areas in the Framework of Carbon Capture and Storage Activities.
6. The latest framework includes Presidential Regulation No. 110 of 2025 (Perpres 110/2025) on Carbon Economic Value Instruments.

 Literature

Hammad M and Hashmi SAM, ‘Carbon Capture and Storage : An Evidence-Based Review of Its Limitations and Missed Promises Intergovernmental Panel on Climate Change’ [2025] Petroleum Research 1 <https://doi.org/10.1016/j.ptlrs.2025.09.005>

Howard BC, ‘Wielding the Big Stick: Deterrence and the Criminal Enforcement of Environmental Laws’ (1990) 15 William & Mary Environmental Law and Policy Review 29 <http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1505&context=wmelpr>

HukumOnline, ‘Kejaksaan Atur Pedoman Pelanggaran Pidana Karbon’ (HukumOnline, 2025) <https://pro.hukumonline.com/legal-intelligence/a/kejaksaan-atur-pedoman-pelanggaran-pidana-karbon-lt692705336c2f4/>

Kimura S and others, ‘Feasibility Study on a CCS Pilot Project in Indonesia’ (2024)

Lindqvist R and others, ‘The Deterrence Effect of Criminal Sanctions against Environmental Crime in Finland: An Application of the Rational Choice Model of Crime’ (2024) 58 European Journal of Law and Economics 175 <https://doi.org/10.1007/s10657-024-09818-8>

Norsk L på, ‘CO₂ Storage Capacity for Northern Lights to Be Expanded’ Government.no (2025) <https://www.regjeringen.no/en/whats-new/co-storage-capacity-for-northern-lights-to-be-expanded/id3109437/?s=08>

Norwegian Petroleum, ‘Carbon Capture and Storage’ (2024) <https://www.norskpetroleum.no/en/environment-and-technology/carbon-capture-and-storage/>

O’Brien A, ‘The Liability Regime for CO2 Shipping’ (SINTEFBlog, 2025) <https://blog.sintef.com/energy/the-liability-regime-for-co2-shipping/#:~:text=Where the monitoring and reporting,investments in shipping-based CCS>

Ramadhan R and others, ‘Carbon Capture, Utilization, and Storage in Indonesia: An Update on Storage Capacity, Current Status, Economic Viability, and Policy’ (2024) 5 Energy Geoscience 1 <https://doi.org/10.1016/j.engeos.2024.100335>

Footnotes:

[1] Romal Ramadhan and others, ‘Carbon Capture, Utilization, and Storage in Indonesia: An Update on Storage Capacity, Current Status, Economic Viability, and Policy’ (2024) 5 Energy Geoscience 1, 2 <https://doi.org/10.1016/j.engeos.2024.100335>.

[2] Les på Norsk, ‘CO₂ Storage Capacity for Northern Lights to Be Expanded’ Government.no (2025) <https://www.regjeringen.no/en/whats-new/co-storage-capacity-for-northern-lights-to-be-expanded/id3109437/?s=08>.

[3] Muhammad Hammad and Syed Abdul Moiz Hashmi, ‘Carbon Capture and Storage : An Evidence-Based Review of Its Limitations and Missed Promises Intergovernmental Panel on Climate Change’ [2025] Petroleum Research 1, 21 <https://doi.org/10.1016/j.ptlrs.2025.09.005>.

[4] Peraturan Presiden (Perpres) translates to Presidential Regulation.

[5] UUPPLH is short for Undang-Undang Perlindungan dan Pengelolaan Lingkungan Hidup which translates to the Law on Environmental Protection and Management.

[6] Norwegian Petroleum, ‘Carbon Capture and Storage’ (2024) <https://www.norskpetroleum.no/en/environment-and-technology/carbon-capture-and-storage/>.

[7] Shigeru Kimura and others, ‘Feasibility Study on a CCS Pilot Project in Indonesia’ (2024) 3.

[8] See HukumOnline, ‘Kejaksaan Atur Pedoman Pelanggaran Pidana Karbon’ (HukumOnline, 2025) <https://pro.hukumonline.com/legal-intelligence/a/kejaksaan-atur-pedoman-pelanggaran-pidana-karbon-lt692705336c2f4/>.

[9] Riku Lindqvist and others, ‘The Deterrence Effect of Criminal Sanctions against Environmental Crime in Finland: An Application of the Rational Choice Model of Crime’ (2024) 58 European Journal of Law and Economics 175, 181 <https://doi.org/10.1007/s10657-024-09818-8>.

[10] Bradley C Howard, ‘Wielding the Big Stick: Deterrence and the Criminal Enforcement of Environmental Laws’ (1990) 15 William & Mary Environmental Law and Policy Review 29, 30 <http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1505&context=wmelpr>.

[11] Alice O’Brien, ‘The Liability Regime for CO2 Shipping’ (SINTEFBlog, 2025) <https://blog.sintef.com/energy/the-liability-regime-for-co2-shipping/#:~:text=Where the monitoring and reporting,investments in shipping-based CCS>.