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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Cross-Border Energy Projects Light Up Southeast Asia's Green Future

  • Southeast Asia, a major energy consumer, is grappling with the risks of relying heavily on fossil fuels and seeks diversified energy sources.
  • Regional cooperation, such as cross-border energy projects between countries like Malaysia and Indonesia, is on the rise.
  • While local initiatives are crucial, international funding from developed nations could significantly accelerate Southeast Asia's transition to renewables.
Southeast Asia

Southeast Asia has long relied on fossil fuels to meet the energy demand of its rapidly growing population. Many countries in the region continue to rely on coal for their power, as much of the world moves away from the highly polluting energy source. But now several governments are showing increasing interest in developing their green energy capacity to help ensure their energy security as the world undergoes a green transition. 

The economy of Southeast Asia has grown rapidly over the past few years and is expected to continue expanding as the region maintains its dominant role in manufacturing and several other industries. Meanwhile, the region’s energy demand is also growing in line with its expanding population and industrialisation. Southeast Asia’s energy demand has increased by an average of 3 percent a year for the past two decades, a trend that is expected to continue to at least 2030. 

The region continues to rely heavily on fossil fuels, which contributed 83 percent of its energy mix in 2020, with just 14.2 percent coming from renewables, according to the ASEAN Center for Energy. Unless governments across Southeast Asia introduce new policy changes in favour of a green transition, fossil fuels could account for 88 percent of the region’s primary energy supply by 2050. 

However, many countries in Southeast Asia are all too aware of the energy price shocks and supply constraints that come with fossil fuels, which make them extremely vulnerable to energy insecurity. The supply chain disruption faced in the Covid pandemic and the energy price hikes following the Russian invasion of Ukraine and subsequent sanctions on Russian energy have shown the world that the stable global supply of oil and gas cannot be guaranteed. This is particularly clear in Southeast Asia as it cannot outbid richer countries in Europe and North America to ensure its gas supply. Further, if the region does not make any notable gas discoveries in the coming years, it could become a net importer of natural gas by 2025 and of coal by 2039. 

The only way to guarantee the energy security of the region is to develop a broader range of energy sources to diversify its dependency away from oil, gas and coal. This has been reflected in the creation of renewable energy targets and energy transition strategies in countries across the region. Malaysia, Vietnam, Singapore, The Philippines and Indonesia have all established ambitious climate targets aimed at the diversification of their energy sources and a general shift away from coal. 

As well as developing independent projects, the desire to solidify energy security is driving countries across the region to strengthen their cooperation with neighbouring powers. In August, Malaysia and Indonesia revisited a two-decade-old plan aimed at power sharing. The two governments signed an agreement to explore 18 potential locations for the development of cross-border transmission lines. In 2017, cross-border power purchases contributed just 2.7 percent of the region’s power capacity. However, developing new power-sharing infrastructure could help some countries in the region to rapidly reduce their reliance on fossil fuels. The Vietnamese government is exploring the option of selling clean energy from offshore wind to neighbouring countries, while Malaysia could sell hydropower to neighbouring Indonesia if the infrastructure was put in place. 

The plan for a regional grid between the 10 member states of the Association of Southeast Asian Nations(ASEAN) was initially suggested 20 years ago, but interest was dampened due to technical barriers and political mistrust. But as countries across the region race to ensure their energy security and tackle the effects of climate change, the project could offer the answer. 

As important as energy diversification is for Southeast Asia, the region’s shift away from fossil fuels to renewable alternatives is critical for a global green transition. The ASEAN region is the world’s fourth-largest energy consumer, a figure that could increase if new climate policies and greater investment in the sector fail to be seen. 

During the COP27 climate summit, leaders across the region asked for international support for the rollout of clean energy sources to promote diversification and develop a green economy. During the summit, many developed nations pledged to support the expansion of the green energy capacity in developing countries worldwide. In 2021, in the U.S., President Biden pledged to work with Congress to quadruple U.S. climate support for developing countries to over $11 billion a year by 2024. However, many developing countries, including those in Southeast Asia, believe not enough is being done to support the development of their renewable energy sectors, which could help to accelerate a green transition. 

Although it continues to rely heavily on oil, gas and coal, Southeast Asia is looking to diversify its energy mix by developing its renewable energy capacity to promote greater energy security. This could be done through the development of domestic renewable energy projects as well as through the construction of new cross-border energy infrastructure to encourage energy sharing. The region’s shift away from fossil fuels to renewable alternatives is also key to achieving a global green transition. However, as well as local initiatives, Southeast Asia could benefit significantly from international funding from the developed countries that are pushing for worldwide decarbonisation. 

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By Felicity Bradstock for Oilprice.com

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