Renewable Energy Must Reign Supreme in Southeast Asia

Jakarta, March 27, 2024-Southeast Asia is a world’s fifth-largest economy region in 2022. However, this economic growth comes with a concerning projection: greenhouse gas (GHG) emissions in the region are expected to soar by 60 percent by 2050. Curbing these emissions is pivotal for global efforts to combat climate change. Unfortunately, current endeavors to promote renewable energy in Southeast Asia fall short of aligning with the Paris Agreement, which aims to limit global warming to below 1.5 degrees Celsius.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), stated at the Revision 2024 International Conference in Tokyo (14/3) that ASEAN countries have set a target to achieve a renewable energy mix of 23 percent by 2025. However, he emphasized that this target doesn’t align with the Paris Agreement’s objectives.

“To align with the Paris Agreement, the renewable energy mix needs to account for 55 percent, with variable renewable energy (VRE) contributing 42 percent. Except for Vietnam, Cambodia, and the Philippines, others have yet to reach 5 percent VRE penetration. The good news is that in 2023, ASEAN countries will have over 28 GW of operating utility solar and wind capacity, a 20 percent increase in operating capacity since last year. Currently, they make up 9 percent of ASEAN countries’ total electricity capacity. But in order for ASEAN countries to meet the goal, they need to install more renewable energy,” Fabby remarked.

Fabby further highlighted the relatively abundant renewable energy resources in Southeast Asia, which are estimated to be 40-50 times greater than the region’s current energy needs. He suggested that utilizing floating solar power plants could be a strategic move towards decarbonizing the energy system. He elaborated on the technical potential, with reservoirs boasting 134 to 278 GW and natural water surfaces such as rivers, lakes, and seas holding 343 to 768 GW. However, he stressed the importance of conducting detailed calculations of the technical, market, and economic potential, as well as site-specific assessments to develop floating solar power plants.

Additionally, he highlighted the need for Southeast Asian countries to adopt more ambitious policies, provide robust budget support and incentives, and enact policies that attract investment. The average annual investment in renewable energy capacity should be increased by five times to USD 73 billion per year.

Fabby emphasized that Southeast Asian countries must elevate their ambitions to meet the Paris Agreement targets. As an immediate step, ASEAN should aim for a 23 percent renewable energy mix by 2025 and 40 percent by 2030.

“Various studies have shown that decarbonizing the energy system with renewable energy in Southeast Asia is feasible; however, current policies and actions are insufficient to achieve significant decarbonization by 2050. While renewable energy resources are abundant and ample, substantial investment is needed. Each country must reform policies and manage risks associated with renewable energy projects to attract and mobilize investors further,” Fabby added.

He also cautioned against perpetuating a narrative that prioritizes fossil energy as a baseload generator under the guise of maintaining energy security, while sidelining renewable energy. Such a narrative, he argued, is counterproductive and contradicts the spirit of the Paris Agreement.

Building Collaboration Between CSOs in ASEAN to Accelerate Energy Transition

press release

Jakarta, May 16, 2023 – As the Chair of ASEAN in 2023, Indonesia can engage civil society in enhancing ASEAN’s relevance in various aspects aligned with global development challenges. These include increasing ambitions for regional climate targets, developing renewable energy, and promoting sustainable development.

The Institute for Essential Services Reform (IESR) believes that following the success of the energy transition agenda at the G20, Indonesia can foster cooperation among ASEAN countries to implement energy transitions in line with the targets of the Paris Agreement. This collaboration can help build joint efforts to strengthen resilience in the face of various threats and impacts of climate change, through sustainable development.

ASEAN already has the ASEAN Working Group on Climate Change (AWGCC) and ASEAN Working Group on Forest and Climate Change (AWGFCC), as well as ASEAN Energy Cooperation. However, achieving climate mitigation targets and advancing renewable energy require additional efforts and collaboration between these working groups, along with civil society organizations and transnational communities, to increase their contribution to the region.

IESR believes that Indonesia, as the Chair of ASEAN, can provide space for civil society at the regional level to be involved in the process of its chairmanship agenda in 2023, particularly regarding energy and climate issues.

“As one of the regional organizations projected to experience 4.7% economic growth in 2023 amidst weakening global demand, ASEAN is a promising region for investment, especially in the renewable energy sector. Leveraging its leadership in ASEAN, Indonesia can encourage and embrace civil society organizations in ASEAN to focus on the energy transition. By initiating concrete collaborations, together we can accelerate the energy transition in the region and tackle climate change,” said Fabby Tumiwa, IESR Executive Director, during the public discussion titled “Making Energy Green and Low Carbon to Support Sustainable Growth: Advancing the Role of Civil Society in Southeast Asia Energy Transition During Indonesia ASEAN Chairmanship 2023,” organized by IESR.

Economic growth in the ASEAN region needs to align with commitments to reduce greenhouse gas emissions following the Paris Agreement. ASEAN has set a target of achieving 23% of the renewable energy mix by 2025. However, according to the IEA, 80% of the primary energy mix in the Southeast Asian region still comes from fossil fuels. Reducing the cost of renewable energy is predicted by the IEA to increase the penetration of renewable energy in ASEAN by up to 70% by 2040. This can be achieved through intensive coordination and collaboration among stakeholders (government, civil society, and business stakeholders) in ASEAN, especially in the regional policy-making process.

Nevertheless, Arief Rosadi, Coordinator of the IESR Climate Diplomacy Project, highlights that ASEAN currently lacks a formal channel for civil society to express aspirations, particularly on climate and energy issues. Therefore, Indonesia needs to lead ASEAN in providing an inclusive and constructive dialogue space for civil society in the decision-making process within the region.

“One immediate step to take is to increase the intensity of communication between civil society in the region, enabling the sharing of information and the latest developments in each country regarding energy and climate issues. This aims to strengthen solidarity and a sense of ownership of ASEAN as a collective region,” said Arief.

According to him, Indonesia can encourage more public discussions that focus on knowledge exchange and provide data-based policy recommendations that support the acceleration of the energy transition through the development of renewable energy at the regional level. Additionally, this approach can offer opportunities for developing human resource capacity in the renewable energy sector.

“Another important action is to strengthen grassroots collaboration and civil society networks at the regional level. This collaboration can contribute to the achievement of the climate agenda and energy transition in the region by sharing good practices and technical knowledge,” Arief added.

Energy Transition Development in the Southeast Asia Region

press release

Jakarta, 1 August 2022 – Achieving the renewable energy mix target of 23% in 2025 in the Southeast Asian region needs strong collaboration among the countries to support the sustainable energy transition and shift the fossil fuel investment into renewable energy.

It was confirmed by Fabby Tumiwa, Executive Director Institute for Essential Services Reform (IESR) on the webinar ‘The State of Southeast Asia Energy Transition’ (29/7). According to him, Southeast Asia is growing to become a region that is entitled the second largest powerful economy in Asia after China so the energy demand will continually increase in the future.

“Many countries in the Southeast Asia region still relied on fossil energy such as coal, gas, and oil. Meanwhile, Southeast Asia is a region that is vulnerable to the impact of the climate crisis. Collaborative measures of transition from fossil into renewable energy in this region may give significant contributions toward global efforts to achieve the Paris Agreement target,” he said.

Indonesia itself has a 23% target for renewable energy mix in 2025 and 31% in 2030. Nonetheless, according to Handriyanti Puspitarini, the IESR study found that if there was no policy change, then Indonesia would only achieve 15% of the renewable energy mix in 2025 and 23% in 2030.

“If we look at the trend from 2013-2021, the renewable energy market has increased though in slow progress. In the meantime, according to the IESR study, Indonesia has technical potential in renewable energy for more than 7.000 GW. Meanwhile, the utilization only reaches 11,2 GW,” Handriyanti explained. 

She examined the duration of permission matters and the complexity of the mechanism for procuring renewable energy projects in Indonesia makes investors reluctant to invest in Indonesia.

“Indonesia needs to increase its political aspect, policy and financial regulation to encourage the massive development of renewable energy, especially based on the results of IESR study, public awareness of the energy transition and climate change begin to increase,” she said.

On the other hand, in 2021, the commitment to increase the renewable energy mix in Malaysia had been conveyed by the Ministry of Energy and Mineral Resources Malaysia through Malaysia’s Energy Transition Plan until 2040.

“Malaysia increased the renewable energy mix target from 20% in 2025 to 31% in 2025 and 40% in 2030. Malaysia’s commitment would no longer establish a new CFPP to achieve carbon neutrality as soon as possible by 2050,” explained Anthony Tan, Executive Officer (Sustainability & Finance), All Party Parliamentary Group Malaysia on Sustainable Development Goals (APPGM-SDG) at the same occasion.

However, according to him, the Malaysian government also needs to encourage energy efficiency and holistic sustainable transportation planning.

“Malaysia needs a holistic national energy policy. Besides, Malaysia must develop or change National Automotive Policy to become a holistic National Transport Policy to reduce the utilization of fossil energy in the transport sector,” said Antony.

Vietnam’s commitment to achieving zero emission in 2050 was also conveyed by Nguyen Thi Ha, Sustainable Energy Program Manager at Green Innovation and Development Centre (GREENID). She explained that Vietnam was committed to ceasing the 7-8 GW CFPP operation to support decarbonization in the energy system by increasing the renewable energy mix on offshore wind turbines by 11,7 GW (9,7%) in 2030 and 30 GW onshore wind turbines (10,5) in 2045. The Solar Park itself will achieve 8,7 GW (7,2%) in 2030 and will increase by 20,6% in 2045.

To achieve zero emission, it will need significant investment in the energy sector, transportation, agriculture, and industry.

“According to the World Bank study, the required total financing for decarbonization is approximately USD 114 million in 2022-2040,” Thi Ha explained.

Vietnam has also planned a new strategy to develop an environmentally friendly transportation system.

“Even from 2025, Vietnam will commit to replace 100% of its buses with electric buses and equip it with supportive infrastructure for Vietnam’s electrification of the transportation system,” said Thi Ha.

Power plants in Vietnam are dominated by 57% of coal in 2020, along with a renewable energy mix of 21% in 2020.

Bert Dalusung, Energy Transition Advisor Institute for Climate and Sustainable Cities (ICSC) said that for the first time the Philippines has a clear plan for renewable energy development.

“In this clean energy scenario, the Philippines is targeting a 30% and 50% share of renewable energy in the power generation mix by 2030 and 2040,” said Bert.

Bert added that the Philippines government realized that renewable energy would be a key element in the climate change agenda. Thus, citing President Ferdinand Marcos’ statement, the government will examine all transmission and distribution systems to accommodate the development of renewable energy and lower energy costs for consumers and industry. ***

The Webinar “The State of Southeast Asia’s Energy Transition” is available on the IESR Indonesia YouTube channel.

Coal Funding Discontinued, Southeast Asian Countries Must Plan the Energy Transition Measures

press release

Jakarta, 1 August 2022 –Climate mitigation actions by encouraging the use of renewable energy have led countries that fund coal-fired power plants (CFPP) to shift their investment to renewable energy. This transformation will bring implications and challenges that need to be worked on by the countries that have been the destination for fossil energy investment in Southeast Asia.

China, Japan, and South Korea are the top three countries that fund fossil energy projects in Southeast Asia. As much as 123 GW CFPP operated outside China gained financial support or even Engineering, Procurement, and Construction (EPC) support from China. Those fossil energy projects were developed within the last two decades. In September 2021, President Xi pledged to support the developing countries that carry out an energy transition to renewable energy. He also said that China would no longer fund CFPP overseas. Ever since it was declared, as much as 12,8 GW of coal that had been planned to develop was canceled.

Moreover, several companies and domestic financial institutions in China also ended funding coal projects, such as the Bank of China (BOC) which gave up on funding coal mining and new CFPP overseas, except for the projects that had signed the loan agreement, or Tsingshan Holding Group, a major player in the industrial zone overseas, especially in the steel industry, announced that it would not establish new CFPP abroad.

Isabella Suarez, an analyst, at the Center for Research on Energy and Clean Air at the webinar ‘The State of Southeast Asia Energy Transition’ held by the Institute for Essential Services Reform (IESR), explained that for the first time, President Xi’s statement was formulated within China domestic policy. Besides, there is also a progressing narrative to develop together the green development implementation within Belt and Road Initiatives framework.

According to Isabella, what China needs to do to ensure the implementation of its promise is to determine the period and its achievement target. 

“On the other hand, the countries that have received fossil energy project funding need to begin the cancellation of CFPP development and infrastructure & network efficiency, and implement the green development within Belt and Road Initiatives,” said Isabella.

Aside from China and Japan, Dongjae Oh, Program Lead for Climate Finance Solutions for Our Climate (SFOC) explained that South Korea has also become the third largest country in the world that funds CFPP projects. As much as 87% (USD 8,6 million) of the coal downstream funding from South Korea was allocated to Southeast Asia (2011-2020).

In April 2022, the South Korean President declared to stop the new funding for CFPP projects overseas. However, according to Dongjae, South Korea still relied on other fossil energy such as oil and gas.

“If we compare the coal funding that only reaches USD 10 million, oil and gas funding can reach USD 127 million within 10 years,” said Dongjae.

Indonesia becomes one of the largest beneficiaries of oil and gas industries from South Korea. This investment will make the Southeast Asia region shift its energy into oil and gas.

Dongjae added that if it is the case, the Southeast Asia region will fail to achieve the Paris Agreement target as the gas emits a significant amount of greenhouse gas emissions. Besides, sustaining fossil energy using CCS will only increase the energy price.

“The South Korean government and Southeast Asia have to cooperate in intensifying the termination of coal operations and accelerate the transition into renewable energy. On the other side, South Korea must stop coal and gas funding or investment, considering renewable energy prices are getting cheaper,” Dongjae asserted.

Lisa Wijayani, Program Manager Green Economy IESR said that the funding ending in fossil energy from China and South Korea was a concrete step to supporting energy transition globally.

“Indonesia is supposed to benefit from this chance to expand renewable energy development. A clear policy of green taxonomy and green investments should be able to attract investors to shift their funding into the green sector such as renewable energy,” she said. ***

The Webinar “The State of Southeast Asia’s Energy Transition” is available on the IESR Indonesia YouTube channel.