Published 06 August 2024
Net zero targets set by Southeast Asian governments embody the region’s commitment to making a transition to clean energy, but the challenges ahead remain significant. The costs will be commensurately enormous, as will be the potential for geopolitical tension and competition. While progress at the national level in several countries is mildly encouraging, success will ultimately require unprecedented regional cooperation.
As with any major international projects, the clean energy transition in Southeast Asia is intensely political, both domestically and internationally. Befitting a region as diverse politically and economically as Southeast Asia, the political factors in its clean energy transition are disparate. At the national level, one of the primary political factors is the role of entrenched interests. A particularly prominent example is Indonesia, where its coal sector, which generated 63% of the country’s electricity in 2023, is notoriously rife with corruption. A secondary issue at the national level that will need to be addressed is the lack of supportive regulatory systems in many Southeast Asian nations.
Greater competition, fostered through reforms of national electricity systems, will be required to drive the region’s transition. Currently, competition in the electricity market is almost entirely within the generation segment, with regulated monopolies in its transmission and distribution.
The region’s energy transition is also caught in the strategic rivalry between China’s dominance in the sector and its desire to remain non-aligned or aligned more with the US. Further complicating matters is Beijing’s geopolitically difficult relations with some countries in Southeast Asia, which makes it risky for businesses and policymakers to rely on the import of large amounts of clean energy from China or its client states. Meanwhile, the US has done little beyond the Indo-Pacific Economic Framework for Prosperity Clean Energy Framework to counter China. In fact, there is little the US can do in terms of actually providing supply of clean energy.
Download Southeast Asia's pathway to clean energy is all but clean by Kieran Thompson:
Kieran Thompson, sector manager for defence, advanced manufacturing, and technology at the risk consultancy Dragoman, plumbs the geopolitical, infrastructural, and financial hurdles facing Southeast Asia in its path to carbon neutrality. Each of these issues is closely interrelated, requiring the region to come together to pursue close collaboration to increase the uptake of renewables. A holistic solution that addresses each nation’s needs is required to ensure that the necessary transmission infrastructure, financing, and other factors are all in place for the clean energy transition to succeed. ASEAN, with its history of regional collaboration, is the obvious forum for countries to work together. The region’s focus at the national, bilateral, and multilateral level must now be to set about pursuing the policy agenda, regulatory reform and harmonization, and infrastructure development that will be needed to make the leap.
© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).
Author
Kieran Thompson
Kieran Thompson is sector manager for defence advanced manufacturing and technology at Dragoman, a Melbourne-based, international strategic advisory firm.
Have any feedback on this article?
Related Articles
