More firms join Japan-Malaysia CCS value chain study

Japanese firms Chugoku Electric Power and Nippon Gas Line (NGL) plan to join a study to establish a carbon capture and storage (CCS) value chain from Japan to Malaysia.

Chugoku and NGL on 26 February signed an initial agreement with upstream developer Japex, engineering firm JGC, shipping firm K-Line and steel mill JFE Steel to jointly study the facilities and costs required for the potential CCS project. The partners are looking to separate and capture CO2 from JFE's steelworks and Chugoku's power generation plants, with NGL promoting the delivery of liquefied CO2 through coastal transportation in western Japan's Setouchi area to storage sites in Malaysia.

The deal followed JFE's participation in the feasibility study of the Japan-Malaysia CCS value chain in June 2023. Japex, JGC and K-Line had looked for potential CO2-emitting firms, under a separate CCS value chain tie-up with Malaysia's state-owned Petronas through its subsidiary Petronas CCS Ventures.

The collaboration with Petronas first began with Japex in January 2022, with JGC and K-Line joining later in July 2022. The four companies reached a key principle agreement in September 2023 to jointly develop the CCS project offshore Malaysia. The project aims to start injection and storage of CO2 emitted in Malaysia and outside Malaysia under the seabed at the end of 2028.

Chugoku is looking to Malaysia as a destination for its CO2 exports and storage. The company on 19 February also signed an initial agreement with Japanese trading house Mitsui to jointly study building another CCS value chain to a planned project offshore Malaysia.

Getting involved in overseas CCS projects could be inevitable for Japan, because of its limited domestic storage sites. Tokyo aims to add 6mn-12mn t/yr of CO2 storage capacity domestically and overseas from 2030, and achieve 120mn-240mn t/yr of capacity by 2050. The government previously estimated that Japan could store up to 70pc of its forecast 240mn t/yr of CO2 emissions in 2050.

Japan hopes to carry out CCS projects in its territory. Japanese cabinet agreed on 13 February to support a bill outlining administrative rules for exploratory drilling and storage operations for CCS, which would require government permission to conduct, to prepare for the commercial start of CCS business by 2030.

By Motoko Hasegawa