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Southeast Asia to renew efforts to boost renewable capacity in 2022 after climate pledges: ASEAN researchers

11 January 2022 Max Tingyao Lin

The ASEAN Centre for Energy (ACE) expects Southeast Asian nations to boost renewable energy deployment following their climate pledges in recent quarters.

Among the 10 member states of the Association of Southeast Asian Nations (ASEAN), nine are aiming for net-zero emissions by 2050 or later to help counter climate change. The Philippines is the sole exception.

In a virtual forum 11 January, analysts from ACE—a research body of ASEAN—said Southeast Asian countries are set to design and implement more policies to expand low-carbon energy sources soon in order to meet their emissions goals.

Muhammad Rizki Kresnawan, a research analyst specialized in modelling and policy planning at ACE, suggested regional governments could provide more financial incentives to promote renewable installations in the coming years.

"2022 could be a turning point for the ASEAN region to keep up its energy transition efforts," Kresnawan said. "Proper fiscal mechanism[s] for providing green recovery packages in the post-pandemic [years] are expected to hold a crucial role in bouncing the economy back while still aligning it with climate goals."

The nine ASEAN members with net-zero targets made their pledges in 2020 and 2021 when their economies took heavy hits from the COVID-19 pandemic.

ASEAN is targeting a 23% share of renewables in total primary energy supply and a 35% share in installed power capacity by 2025. The intergovernmental organization also wants to see a 32% energy intensity reduction from 2005 levels.

The latest ACE figures show ASEAN had a 13.9% renewable share of primary energy and a 28.7% share of power capacity in 2019. But the region had already achieved a 21.8% cut in energy intensity by that point.

Indonesia, Thailand, and Vietnam are expected to see some of the largest renewable capacity expansions in Southeast Asia in 2022, according to ACE.

In Indonesia, two floating solar plants—one 40-MW power station at a Krakatau Steel facility, and one 145-MW station in Cirata, West Java—are due to come online this year.

Thailand has plans to have 1.77 GW of capacity installed this year, the majority of which will be renewable, ACE said.

Having granted approval for 11.8 GW of wind power by the end of 2021, Vietnam is expected to see 488 MW installed in 2022.

According to ACE, ASEAN members are seeking a diverse mix of renewable energy sources to maintain grid stability.

"Due to their intermittent nature, solar and wind are definitely insufficient," an ACE research paper said. "The members recognize the potential of renewable baseload sources like hydropower, geothermal, and biomass to solve the net-zero equation in power generation."

ACE is due to release more electricity data in the 7th ASEAN Energy Outlook report later this month.

Mega trade deal

Separately, some energy experts suggested the Regional Comprehensive Economic Partnership (RCEP) could help accelerate the low-carbon transition by facilitating more renewable investment, trade in equipment, and transfers of green technologies.

Hailed as the world's largest trade agreement by GDP, RCEP was signed by Australia, China, Japan, New Zealand, South Korea, and the 10 ASEAN nations. It came into force 1 January.

"RCEP is expected to bring more growth for its members. … Deals among the members could leverage investment to fuel the energy transition," Kresnawan said.

However, there are also doubts over whether the RCEP could actually promote renewable expansion, as the trade deal principally does not discriminate against energy sources based on their carbon intensity. When it comes to tariff removals, green energy is not favored over fossil fuels.

"RCEP is neutral with regards to climate change requirements," said Alloysius Joko Purwanto, a senior energy economist at the Economic Research Institute for ASEAN and East Asia. "We should work on … the optimization of RCEP to assist the energy transition."

Jennifer Tay, who heads advisory firm PwC's infrastructure team in Singapore, suggested that the trade deal does not feature low-carbon energy trade in particular but could facilitate more capital flows overall.

"It remains to be seen in terms of implementation," Tay said.

Climate finance

Tay already saw strong appetite from the private sector for low-carbon investments. She estimated that nearly $81 billion was raised globally in the first three quarters of 2021 by infrastructure investment funds. Of that total, 61% will focus on renewable energy projects.

"In the last 12 months, we have seen a lot of fundraising happening in the market," she said. "We see some of the capital being deployed."

Tay observed that project developers, strategic investors, and infrastructure fund managers are keenest for solar power to expand in Southeast Asia, with wind coming in second.

Vong Sok, head of the environment division at the ASEAN Secretariat, suggested investors could also look for funding from the public sector.

During COP26, the Asian Development Bank secured a total of $665 million from the UK, the EU, Cassa Depositi e Prestiti, and the Green Climate Fund to help develop post-pandemic green infrastructure projects in Southeast Asia.

The Manila-based development bank separately launched the Energy Transition Mechanism to accelerate the replacement of coal power with renewables in the region.

"I think if an ASEAN member gets involved in a sector and makes use of these opportunities, this would create some good things," Sok said.

With ASEAN members aligning their national policies with the long-term climate goals, the decarbonization efforts are expected to spread from the power sector to other industries—and ACE expects this to prompt development of new, low-carbon technologies.

"Reaching net zero is indeed challenging, but I believe it provides a clear bar to ensure [ASEAN's] performance in mitigating climate change," said Monika Merdekawati, an ACE research analyst focused on renewables and energy efficiency.

"Member states will start seriously looking at innovation. … Net zero would be a good wake-up call for them to find a way of decarbonizing hard-to-abate sectors, such as steel, cement, and transportation," she added.

Cambodia's ambition

Cambodia, which promised to achieve carbon neutrality by 2050 in late December, could be one example.

In its long-term decarbonization strategy submitted to the UN Framework Convention on Climate Change, the country said it will continue to implement the enhanced Reducing Emissions from Deforestation and Forest Degradation program (REDD+), gradually decarbonize its power and transportation sectors, improve energy efficiency, and promote low-carbon agriculture.

Cambodia's model suggests it could achieve carbon neutrality by 2050 with the food-and-land-use sector providing a carbon sink of 50 million metric tons (mt) of CO2e, offsetting 28 million mt of emissions from the energy sector and 19 million mt from the agricultural sector.

"Nowadays, climate change and environmental issues are the major challenge to the globe," Cambodia's Minister of Mines and Energy Suy Sem said during the 11 January ASEAN forum. "Cambodia recognizes the needs in contributing to the abatement of global climate change."

The ASEAN member is the second in the group of Least Developed Countries—deemed by the UN as highly disadvantaged in the development process—to commit to a net-zero goal. Bhutan is the first.

Posted 11 January 2022 by Max Tingyao Lin, Principal Journalist, Climate and Sustainability

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