Asean appears to be at the crossroads in terms of their collective energy future amid continued economic growth. The region faces a 50 percent rise in energy demand, which brings challenges in supplying affordable and sustainable energy.
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Asean has targeted a renewable energy share of 23 percent in the primary energy supply chain by 2025. It means Asean countries must double the share of renewable energy every year to meet the target.
According to the International Renewable Energy Agency, it only generates 9.4 percent of its primary energy from renewables in 2014. It will require an estimated annual investment of $27 billion, equivalent to one percent of regional gross domestic product, for the next eight years.
Various Asean countries will embrace renewables. After three years, Thailand recently unveiled its updated power development plan (2018-2037) which explicitly shows the country’s ambition to embrace renewable energy.
In 2018, Thailand made some achievement in the renewable energy sector, including adopting innovative blockchain technology and issuing the first green bond in the country.
Though the country’s renewable energy transition is only getting off the ground, it shows the country is heading in the right direction to become a low carbon society.
On the other hand, Indonesia is unlikely to meet its renewable energy target, set after the Paris Climate agreement, causing critics to call for changes in government policy.
At the Indonesia Clean Energy Forum in Jakarta in 2018, Energy and Mineral Resources Minister Ignasius Jonan expressed pessimism over the Indonesia meeting Asean’s 23 percent target. He said Indonesia should perhaps try to hit a lower target of around 20 percent.
The Philippines meanwhile, continues to rely heavily on coal and miserably failed to meet its goal in doubling the installed capacity of renewable capacity, 10 years after the passage of the Renewable Energy Law.
Based on figures from the Department of Environment in the Philippines, coal, oil, and natural gas contributed over half the Philippine energy mix while renewable energy sources like biomass, geothermal, solar, hydro, and wind add up to around 36.1 percent, with geothermal being the biggest contributor at 17.9 percent.
In Malaysia, the Energy, Science, Technology and Environment Ministry targeted 20 percent of the country’s electricity to be generated by renewable energy by 2030, an increase of two percent from 2014.
The need for renewables has become more paramount now as the population of Asean will grow to 715 million by 2025 from about 615 million in 2014. Projections show the regional economy is to grow by over five percent per year, resulting in a rapid rise in energy demand.
The region will see four percent annual growth in energy demand until 2025, amounting to 50 percent over 2014 levels. Electricity demand will double between 2014 and 2025. The region has insufficient indigenous fossil fuel resources to meet its demand and the share of imported fossil fuel will increase, which has an important energy security implication.
External costs related to air pollution from the combustion of fossil fuels will increase by 35 percent to $225 billion in 2025 from $167 billion annually in 2014, equalling around five percent of the region’s gross domestic product in 2025.
The region will see rising costs for energy supply and the negative effects of greater fossil fuel use in increasing urban societies.
While the energy needs of the region will increase and the rapidly declining cost of renewable energy generation via wind and solar photovoltaic come to fore, Southeast Asia is presented with a golden opportunity to meet the immense electricity demand in a cost-effective manner.
However, there are several challenges that Asean is likely to face towards achieving these objectives. A factor that stands as a great impediment for the region to embrace renewable is the cost. This is coupled with the expertise that is lacking in countries such as Malaysia, Indonesia and Vietnam. The lack of financial support and channels including the public financial support has made renewable energy a sector that is not attractive to investors.
Infrastructure availability, and restrictive and bureaucratic practices are impediments in introducing renewables with some countries that have no framework.
In addition, there is lack of coordination and understanding over the need for renewable energy as well as a shortage of leaders.
Sathish Govind is a Contributing Writer, Capital Cambodia, an ex-analyst in a think tank in Malaysia
