Japan, Malaysia Sign Memorandum on Carbon Capture, Storage, but Realizing Commercialization Comes with Challenges

By Takashi Itoda / Yomiuri Shimbun Correspondent

16:38 JST, October 18, 2025

KUALA LUMPUR — The Japanese and Malaysian governments signed on Friday a memorandum for jointly promoting carbon capture and storage (CCS).

CCS is seen a promising technology to help realize carbon neutrality.

Though the Japanese government aims to accelerate decarbonization efforts by enhancing cooperation with Malaysia, there are many challenges to overcome in achieving the commercialization of CCS.

Economy, Trade and Industry Minister Yoji Muto held talks with Malaysia’s Science, Technology and Innovation Minister Chang Lih Kang, in Kuala Lumpur on Friday. They signed the memorandum on bilateral cooperation and enhancing information sharing on CCS.

At a press conference after the meeting, Muto emphasized the significance of the memorandum saying, “It is a great step toward the realization of businesses to transport and store CO2 in Malaysia.”

CCS involves the capture of CO2 emitted from manufacturing plants and thermal power plants, among other locations, and then storing the gas underground. The technology is attracting attention as it reduces the amount of CO2 emitted into the atmosphere and helps tackle the problem of global warming.

The Japanese government aims for the commercialization of CCS systems in around 2030.

Malaysia is a country with rich natural resources, including plentiful reserves of natural gas and oil. The country also has depleted oil wells and gas fields located in hard ground, which can easily be converted into storage sites for CO2.

For CO2 to be stored in Japan, it would be necessary to search for viable sites from which the CO2 cannot escape. Such searches would be time-consuming and costly because of the need to collect geological data. Transporting CO2 from Japan and storing it in Malaysia would save this time and money.

The Economy, Trade and Industry Ministry launched the Advanced CCS Projects initiative in fiscal 2023 to support the commercialization of CCS by providing companies with subsidies for relevant research.

The ministry has selected nine projects to date. Of them, three assume that storage will be conducted in Malaysia and that the country will store about 50% of the Japan’s target of about 20 million tons of CO2 a year.

Petronas, a Malaysian state-run oil company, will take part in the project and conduct the research for storage sites and other factors alongside Japanese companies including ENEOS Corp., Cosmo Oil Co. and JFE Steel Corp.

Malaysia is positive on cooperation with Japan, with Malaysian Prime Minister Anwar Bin Ibrahim saying that CCS could be a new revenue source for the country. Japan and Malaysia hoped to boost momentum toward realizing cooperation through the signing of the memorandum.

High economic hurdles

However, building a viable business model will not be easy.

It will be necessary to liquefy the CO2 captured in Japan and transport it by ship. However, the construction of ships capable of carrying liquefied CO2 is still in the planning stage.

Even if the ships do enter practical use, transporting the CO2 overseas will require fuel. Also, the ships will sail in principle return to Japan with empty tanks.

An official of a major energy company said, “Securing profitability is difficult and so the business cannot stand without subsidies from the government.”

At the press conference, Muto said: “Realizing the transportation and storage of CO2 to Malaysia will require technological progress in ship-based transportation and improvements in business environments. We will proceed with discussions over rules and other considerations with the Malaysian government.”