Civil Liability for Carbon Leakage at Sea: Identifying Legal Remedies in Indonesia 2025

As Carbon Capture Storage (“CCS”) expands offshore globally, Norway and the European Union (“EU”) are prepared for potential carbon leakage issues. On the other hand, while currently Indonesia has permitted offshore CCS activities under Presidential Regulation Number 14 of 2024 on The Organization of Carbon Capture and Storage Activity (“PR 14/2024”), if a carbon leakage causes harm at sea, Indonesian courts will have to decide which civil liability model to be applied. The primary question is which regime Indonesia should follow: strict liability, negligence, hybrid model or to create its own version specifically for this potential issue in the archipelago.

Introduction

As maritime CCS expands globally, the risk associated with offshore injections becomes more complex, particularly for carbon leakage scenarios that can cause environmental damage, economic loss, or degradation of marine resources. Europe is leading the way in early governance with large-scale offshore CCS demonstrations and cross-border CO₂ shipping.[1] Investor expectations, judicial reasoning, and policy formation in other states including Indonesia, will all undoubtedly be impacted by these events. Indonesia, as an archipelagic state with ambitions to position itself as a regional CCS hub,[2] must therefore deal with a newly emerging legal frontier: the distribution of civil liability for harm caused when stored carbon leaves the seabed.

Through PR 14/2024, Indonesia has already created regulatory authorization for CCS activities domestically, indicating the state’s readiness to operationalize offshore storage soon. However, the legal framework for civil remedy is still unclear, and Indonesian courts, not the regulators, are likely to become the first dispute resolution forum when leakage disputes arise. Globally, the jurisprudential challenge is obvious: CCS is a long-term liability activity in which damages can arise decades after injection and causation is essentially technological and probability based.

In addition to evaluating how Indonesian judges could potentially handle adjudication when CCS activities result in economic or environmental harm, this paper will examine at what civil remedies and redress model should be available under Indonesian law when carbon leakage happens at sea–with a focus on whether Indonesia should use strict liability, negligence-based standards, or a hybrid approach. The analysis will consider CCS regulatory frameworks, litigation frameworks, comparable models, and applicable Indonesian tort law.

Legal Risk Identification

Under the framework established by PR 14/2024 Indonesia is actively opening the door to large-scale including cross-border storage arrangements.[3] There is, however, limited direct jurisprudence in Indonesia on civil liability for CO₂ leakage from CCS operations, necessitating a doctrinal and comparative analysis to assess how Indonesian courts might handle damage claims and whether a strict liability, negligence-based or hybrid model is more suitable. Under the current Indonesian regulatory framework, it is unclear what liability a contractor would have for long-term leaks or contamination.[4] PR 14/2024 appears silent on the specific civil private-law regime of liability for leaks, damages or injuries caused by CCS operations, let alone specific to mitigation of cross-border incidents during the carriage thereof via land or at sea. That leaves Indonesian courts to draw on the general tort/contract law under Indonesian Civil Code (“ICC”), along with the current environmental and administrative law frameworks.

In Indonesian civil law, the classic framework for tort or unlawful acts is of a fault/negligence-based liability model, as stipulated in Articles 1365 up to 1367 Indonesian Civil Code (“ICC”), in which the Claimant must show that the Defendant committed an unlawful act, that damage resulted, and that there was causation and the element of either fault or negligence. Another issue to look at is that civil claims due to collisions or accidents during a carriage of goods by sea is governed by the Indonesian Commercial Code and Law Number 66 of 2024 on Shipping (“Shipping Law”), which applies fault/negligence-based liability.

Meanwhile, the applicability of the strict liability model (liability without fault) in Indonesian civil cases is less common. For instance, in order for strict liability to apply in Indonesian environmental legislation, e.g., Law Number 32 of 2009 on Environmental Protection and Management as amended by Law Number 6 of 2023 on Job Creation (“Environmental Law”), it imposes certain obligations that suggest more rigorous standards in environmental settings.[5] By contrast, the concept of strict liability involves liability for the operator regardless of fault or negligence — the operator is liable when the damage occurs, even if they have been careful.

Given the gaps, it is useful to additionally look to the doctrinal options and comparative regimes. As a comparative example, the European Union (“EU”) has established a regulatory framework governing CCS development, which is comprised of the Directive 2009/31/EC of the European Parliament and of the Council on the Geological Storage of Carbon Dioxide (“Directive 2009/31/EC”) adopted by the European Parliament and Council. Articles 17 and 18 of Directive 2009/31/EC establishes risk distribution, i.e., allowing transfer of risks from site operator to member states when conditions in the storage permit are met and the site is closed after 20 years. In sum, the site operator shall remain responsible for monitoring, reporting, corrective measures and all obligations relating to the surrender of allowances under the EU Emissions Trading System (ETS) in the event that CO₂ leaks from the storage site occur prior to the successful completion of obligation transfer.[6] Furthermore, as outlined in Article 19 and 20 of the Directive, potential operators must offer financial security from the time of application until the injection process begins and, it must provide a financial contribution for the post-transfer period, covering at least the costs for monitoring by the member states for 30 years.

An appropriate civil liability model for damages and harm caused at CCS activities at sea should be considered for all stages. This is since that in the setting of traditional CO₂ geological storage, the risk of leakage may manifest long after injection has been completed, lasting hundreds to millions of years later,[7] may involve complex subsurface processes, and may fall outside conventional negligence proof regimes. A fault/negligence standard (operator liable only for careless behavior) fits conventional Indonesian tort law but may under-protect victims given the complex and high-risk nature of CCS operations, the victims may struggle to prove operator negligence or foreseeability). A strict liability model (operator liable simply by virtue of the harmful outcome, regardless of fault) shifts the burden: the operator must bear the risk of damage even absent fault,[8] which can promote stronger risk management and align with the “polluter-pays” principle, this would provide stronger protection and align with the precautionary nature of environmental risk; however, it may raise issues of fairness and insurability for operators, thereby discouraging investment. A hybrid or layered model (operator liable by default but some risks transferred or capped after closure, or to the State once certain conditions are met)[9] would strike a balance—mirroring the EU model, where liability initially rests with the operator and only shifts after long-term containment is verified.

From the claimant’s perspective, a regime of strict or near-strict liability would ease causation and fault burdens; the claimant would focus on proving damage and link to the storage site, rather than having to demonstrate operator fault. Indonesian courts could award damages for property loss, personal injury, environmental remediation and loss of amenity. In addition, administrative or regulatory sanctions (via environmental law) may accompany civil remedies. A hybrid model would allow operators to insure or cap their exposure, while still guaranteeing compensation for victims.

If we look back to the current regulations applicable for CCS in Indonesia, it seems that although PR 14/2024 does not explicitly spell out the liability regimes per se, strong regulatory obligations (e.g., Measurement, Reporting and Verification (“MRV”), licensing, prioritization of domestic capacity) outlined therein indicates that Indonesian policy treats CCS operations as a high-risk infrastructure requiring robust governance. Indonesian courts could infer from these obligations a heightened standard of care and for major leaks may consider the application of strict liability on the basis of “serious threat” to the environment.  This is in accordance with Article 88 of the Environmental Law, in conjunction with Article 38(1) of the Supreme Court Regulation Number 1 of 2023 on Guidelines for Adjudicating Environmental Cases (“SCR 1/2023”).

The issue of when operator liability ceases and the State takes over is critical. In Indonesia, PR 14/2024 mentions closure triggers (e.g., license expiry, capacity reached) but is silent on subsequent liability transfer. Given the long-tail risks of storage (e.g., leakage decades later), an Indonesian regime might emulate the hybrid model: continue operator responsibility for a defined post-closure period and thereafter allow transition to State, subject to evidence that storage is permanently secure. This approach is also consistent with the provision under Minister of Energy and Mineral Resource Regulation Number 2 of 2023 on the Organization of Carbon Capture Storage, as well as Carbon Capture, Utilization and Storage in Upstream Oil and Gas Business Activity (“MEMR Regulation 2/2023”) which stipulates that operator is obliged to conduct monitoring to ensure worker safety, installation and equipment safety, environmental safety, and/or public safety – which shall be carried out since the plan for organization of CCS is approved until 10 (ten) years after the completion of CCS activity closure.

Policy and Governance Relevance

Liability provisions will be relevant beyond the courtroom.  The way Indonesia establishes liability rules will influence how the country is perceived as a maritime nation.  To support the Global Maritime Fulcrum, Indonesia needs clear laws on who pays for leaks. This will increase trust in investors, minimize insurance risks, and facilitate collaboration with other countries shipping CO₂ across borders.

Effective cooperation between multiple government agencies, businesses, and other stakeholders is also necessary to comply with CCS rules. For CCS to support Indonesia’s maritime industrial strategy, government coordination must be synchronized across essential bodies, among others Ministry or Energy and Mineral Resources or Kementerian Energi dan Sumber Daya Mineral (KESDM), Special Task Force for Upstream Oil and Gas Business Activities or Satuan Kerja Khusus Kegiatan Usaha Hulu Minyak dan Gas (SKK Migas), Aceh Oil and Gas Management Agency or Badan Pengawas Migas Aceh (BPMA) and various ministries such as Finance and Environment. [10] Each stakeholder possesses a role in policy formulation, project approval and regulatory oversight, reflecting their degree of interest and influence across different stages of CCS deployment. Without this clarity, the system will risk inconsistent enforcement and regulatory overlap. In Indonesia, cross-sector coordination is often a challenge due to differences in interests and lack of effective communication. This may make it more difficult to implement CCS requirements, which call for tight collaboration between all relevant stakeholders.[11]

Indonesian regulators may need to create secondary legislation, licensing conditions and insurance/regulatory frameworks to clarify the same. CCS at sea will only be effective if law, policy, and government cooperation advances at the same rate.

Closing Reflections

Indonesia’s future success in CCS at sea will be determined by more than just outstanding technology and facilities.  It will also depend on whether our rules of law are clear and reliable.  If we want to join the same CCS network as in Europe and other leading countries in this particular era and participate in such cross-border CCS activities, Indonesia must demonstrate that it can manage carbon leakage risks in a fair and predictable manner. The liability model that we adopt today will influence investor trust, industry confidence, and long-term policy direction.

Gaps are currently present in the regulatory frameworks for CCS activities at sea in Indonesia. Especially, on the issue of the applicable legal civil liability regime when an incident involving leaks causing environmental harm or marine pollution remains debatable. Adopting strictly fault-based liability might encourage operators but leave affected communities vulnerable. Conversely, uncompromising strict liability might raise project costs and hinder development. A hybrid model, where operator liability persists for a defined period, with post-closure handover to the State, may seem most practical for some. This legal question however, would ultimately be left to the courts to decide when the appropriate time comes.

(AKS/DBS)

 

References

 Laws and Regulations (Indonesia)

Indonesian Civil Code (Burgerlijk Wetboeak voor Indonesie)

Indonesian Penal Code (Wetboek van Strafrecht)

Law Number 32 of 2009 on Environmental Protection and Management as amended by Law Number 6 of 2023 on Job Creation

Law Number 66 of 2024 on Shipping

Supreme Court Regulation Number 1 of 2023 on Guidelines for Adjudicating Environmental Cases

Presidential Regulation Number 14 of 2024 on The Organization of Carbon Capture and Storage Activity

Laws and Regulations (Other Jurisdictions)

Directive 2009/31/EC of the European Parliament and of the Council on the Geological Storage of Carbon Dioxide

Literature

Directorate General of Oil and Gas of Ministry of Energy and Mineral Resource, ‘Transportasi Karbon Lintas Negara [Presidential Regulation on CCS/CCUS Is Officially Ratified, Regulating the Implementation and Allocation Scheme for Domestic and Cross Border Carbon Transportation’ (2024) <https://migas.esdm.go.id/post/Perpres-CCS-CCUS-Resmi-Disahkan-Atur-Skema-Penyelenggaraan-Alokasi-Domestik-Hingga-Transportasi-Karbon-Lintas-Negara>

Rizaldy WF and Lileh ECS, ‘Dilemma of Legal Transplantation in CCS Regulations: Between Harmonization and Adaptation to Local Context’ (2024) 4 Jurnal Kajian Pembaruan Hukum

Zhang H, ‘Resources , Conservation & Recycling Regulations for Carbon Capture , Utilization and Storage : Comparative Analysis of Development in Europe , China and the Middle East’ (2021) 173 Resources, Conservation & Recycling 1 <https://doi.org/10.1016/j.resconrec.2021.105722>

IPCC, IPCC Special Report on Carbon Dioxide Capture and Storage (B Metz, O Davidson, H de Coninck, M Loos and L Meyer eds, Cambridge University Press 2005).

de Figueiredo MA, The Liability of Carbon Dioxide Storage (PhD thesis, Massachusetts Institute of Technology 2007).

Schuett L, ‘Permanence and Liability: Legal Considerations on the Integration of Carbon Dioxide Removal into the EU Emissions Trading System’ (2024) 13 Transnational Environmental Law 87 https://www.cambridge.org/core/journals/transnational-environmental-law/article/permanence-and-liability-legal-considerations-on-the-integration-of-carbon-dioxide-removal-into-the-eu-emissions-trading-system/8DCF1CAEC7969ADEFD9F369CA937C224.

ASEAN Centre for Energy, ASEAN CCS Deployment Framework and Roadmap (September 2024) https://www.aseanenergy.org/wp-content/uploads/2024/09/Report-CCS-Deployment-Framework-and-Roadmap.pdf.

Footnotes

[1] Emily Rodriguez, ‘Storing Carbon Dioxide for Climate ’ s Sake : Contradictions and Parallels with Enhanced Oil Recovery’ (2023) 5 Frontiers in Climate 1, 3.

[2] Yuni Arisandy Sinaga, ‘Indonesia Set to Become Carbon Capture and Storage Hub: Ministry’ (ANTARA, 2023) <https://en.antaranews.com/news/301680/indonesia-set-to-become-carbon-capture-and-storage-hub-ministry>.

[3] Directorate General of Oil and Gas of Ministry of Energy and Mineral Resource, ‘Transportasi Karbon Lintas Negara [Presidential Regulation on CCS/CCUS Is Officially Ratified, Regulating the Implementation and Allocation Scheme for Domestic and Cross Border Carbon Transportation’ (2024) <https://migas.esdm.go.id/post/Perpres-CCS-CCUS-Resmi-Disahkan-Atur-Skema-Penyelenggaraan-Alokasi-Domestik-Hingga-Transportasi-Karbon-Lintas-Negara>.

[4] National Carbon Monitoring Centre, ‘Indonesia and Japan: Indonesia Introduces CCS/CCUS Regulation’ (National Carbon Monitoring Centre, 2025) <https://www.ncmc.go.tz/indonesia-and-japan-indonesia-introduces-ccs-ccus-regulation/>.

[5] Environmental Law (Indonesia) Article 88 in conjunction with Supreme Court Regulation Number 1 of 2023 on Guidelines for Adjudicating Environmental Cases (“SCR 1/2023”) Article 38-40.

[6] Hao Zhang, ‘Resources , Conservation & Recycling Regulations for Carbon Capture , Utilization and Storage : Comparative Analysis of Development in Europe , China and the Middle East’ (2021) 173 Resources, Conservation & Recycling 1, 4 <https://doi.org/10.1016/j.resconrec.2021.105722>.

[7] William Kojo Agyemang-Bonsu and others, ‘Implications of Carbon Dioxide Capture and Storage for Greenhouse Gas Inventories and Accounting’, IPCC Special Report on Carbon Dioxide Capture and Storage (New York 2005) 366.

[8] Mark Anthony De Figueiredo, ‘The Liability of Carbon Dioxide Storage’ (Massachusetts Institute of Technology 2007) 58.

[9] Lukas Schuett, ‘Permanence and Liability : Legal Considerations on the Integration of Carbon Dioxide Removal into the EU Emissions Trading System’ (2024) 13 Transnational Environmental Law 87, 88.

[10] ASEAN Centre for Energy, ‘ASEAN CCS Deployment Framework and Roadmap September 2024 ASEAN CCS Deployment Framework and Roadmap’ (2024) 3.

[11] Wahyu Fahmi Rizaldy and Elbouche Chems Sadja Lileh, ‘Dilemma of Legal Transplantation in CCS Regulations: Between Harmonization and Adaptation to Local Context’ (2024) 4 Jurnal Kajian Pembaruan Hukum 207.

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