Putrajaya, February 20, 2025 – The Institute for Essential Services Reform (IESR) through the Southeast Asia Energy Transition Coalition (SETC) encourages Malaysia, as Chair of the Association of Southeast Asian Nations (ASEAN) 2025 to encourage and implement the energy transformation agenda in ASEAN as a regional contribution to climate crisis mitigation. Some strategic steps that Malaysia can take include strengthening regional commitments, collaboration and policies, increasing clean energy investment, and building a renewable energy industry ecosystem.
IESR assesses that ASEAN, as the region with the fastest economic growth, is still lagging behind in the renewable energy transition. This condition risks increasing carbon emissions, increasing economic vulnerability, weakening energy security and hampering the achievement of the Paris Agreement target to limit the earth’s temperature below 1.5 degrees Celsius.
IESR Executive Director Fabby Tumiwa said that currently, the share of renewable energy in ASEAN’s total primary energy supply is still at 15.6 percent, far below the target of 23 percent by 2025. In fact, the region has more than 17 terawatts of renewable energy potential. Unfortunately, investment is still minimal. ASEAN only receives 2 percent of global renewable energy investment, despite contributing 6 percent of the world’s GDP and 5 percent of global energy demand.
“Dependence on fossil fuels is still very strong. Without major intervention, fossil fuels are expected to supply up to 75 percent of ASEAN’s energy needs in the future. The impact is not only on increasing carbon emissions, but also increasing the region’s economic vulnerability,” Fabby said at the National Seminar ‘Accelerating Energy Transition in Southeast Asia and the Role of ASEAN Chairmanship Malaysia’, Thursday (20/2/2025) in Putrajaya, Malaysia. The event was organized by IESR in SETC, in collaboration with the Institute for Energy Policy and Research (IEPRe) and the Solar Energy Research Institute (SERI).
Fabby explained that dependence on fossil fuels is increasingly burdening the region’s economy. By 2023, ASEAN countries spent more than USD 130 billion on oil imports, almost four times the investment in sustainable energy. In addition, fossil fuel subsidies reached more than USD 105 billion in 2022.
Fabby warned that without policy changes, ASEAN risks becoming a net importer of natural gas by 2027. This is predicted to increase fossil fuel import spending to more than USD 140 billion by 2030, which could strain national budgets and increase geopolitical risks.
To address these challenges, IESR promotes an ASEAN Energy Transformation Agenda that rests on four main pillars. First, accelerating clean energy development and integration, such as establishing the ASEAN Just Energy Transition Partnership (ASEAN-JETP) to unlock funding of up to USD 130 billion per year until 2030. Second, making ASEAN a clean energy manufacturing and trading hub, for example by launching the ASEAN Clean Energy Industrial Strategy to attract more than USD 100 billion of investment in solar cells, electric vehicles, batteries, wind turbines, and green hydrogen. Third, strengthen green investment and financing mechanisms, by expanding ASEAN’s green taxonomy and sustainable finance framework to attract global investors and green bond issuance. Fourth, improving policy coordination and workforce development, such as establishing the ASEAN Clean Energy Workforce Initiative to create more than 3 million jobs in the manufacturing, engineering, and digital innovation sectors, and establishing the ASEAN Clean Energy Research and Development Center to encourage clean energy technology research and innovation.
Dr. Norasikin Ahmad Ludin, Deputy Director of Solar Energy Research Institute (SERI), Universiti Kebangsaan Malaysia emphasized that ASEAN is at a crucial juncture with sharply rising energy demand and the urgent need to address climate change.
“Malaysia has a strategic opportunity to lead integration and innovation in the region’s energy transition. During this leadership period, we expect Malaysia to prioritize the expansion of renewable energy, strengthening of policy frameworks, and enhancing regional cooperation,” he said.
Dr. Nora Yusma Binti Mohamed Yusoff, Director of the Institute of Energy Policy and Research (IEPRe), emphasized that the energy transition is not only about ensuring affordability and sustainability of energy supply, but also needs to be supported by technological transformation. This includes shifting from dependence on foreign technologies to independent technology development.
“ASEAN should cooperate in developing regional home-grown technologies and propose the establishment of trade collectives to optimally utilize economies of scale. In addition, focus also needs to be put on green foreign direct investment (FDI), as recent studies have shown that FDI is one of the major contributors to carbon emissions in ASEAN. Therefore, a green trade policy needs to be designed to reduce the impact of carbon emissions and ensure sustainable economic development in the region,” he said.
