How ASEAN should step up to accelerate sustainable energy within the region (Opinion)

Written by Alifia Sekar, an undergraduate student at Universitas Gadjah Mada, majoring in International Relations with a concentration on International Politics and Economic Development (IPED).

ASEAN is favored to be the 4th largest economy in the world by 2030 after showing impressive economic growth in the last decade. However, to reach that goal, ASEAN member states need to make sure that they can provide reliable access to energy to support industrial development. Unfortunately, as the region still imports 40% of its primary energy supply with fossil fuels becoming the largest share, the promise of ASEAN economic growth is currently at stake.

Over the years, ASEAN has been known for its heavily reliant on fossil fuels to meet domestic demand. ASEAN Center for Energy has reported that more than 80% of ASEAN’s energy mix in 2017 was fueled by fossil energy with oil accounting for 38,2% of total share and followed by gas (23.2%), and coal (22.3%). Vietnam and Indonesia, as the largest oil and coal producers respectively, have become important players for energy-importing countries such as Thailand, Philippines, and Malaysia. This long historic record on fossil consumption has posed a threat for Southeast Asia to become the slowest region in the world to shift to renewables.

But even so, it doesn’t mean that the ASEAN member states haven’t made any efforts at all. Vietnam might have shown the greatest accomplishment in accelerating the energy transition compared to other countries. Between 2016-2020, Vietnam has successfully doubled its production of renewables from 17.000 to over 35.000 megawatts. The rapid growth of solar panels in just four years has even made Vietnam become the third-largest solar market globally by 2020. Furthermore, ASEAN has also witnessed promising growth in the use of hydropower. Lao PDR, as traversed by The Greater Mekong, has powered 98.8% of its national electricity with hydropower generators in 2017. It even exports its energy to Thailand, Vietnam, and Cambodia through the transmission lines and is looking for expansion to Malaysia and Singapore, aiming to become Southeast Asia’s battery.

Seeing these potentials for sustainable energy deployment, the next question would be whether it is enough to push ASEAN to phase out the fossil fuel industry. Unfortunately, the same report from ASEAN Center for Energy has estimated that fossil fuel would still provide the majority of energy supply in 2040 even if ASEAN member states adopt a progressive scheme such as APAEC Targets Scenario. This is because energy security still presents a sensitive issue for Southeast Asia, where fossil fuels are perceived to be more reliable and cheaper than renewables. In consequence, while ASEAN will witness an enchantment of renewables in the following years, it will also see the growing trend in the use of clean coal technology, especially in major producer countries like Indonesia and Malaysia. Even Vietnam, which is considered the most successful country in accelerating renewables, will continue to rely on coal due to such perception of fossil fuels. As long as fossil fuels are still reckoned to be the main asset  of energy security, ASEAN won’t go far with its transition.

The incapability of ASEAN member states to undertake adequate transition on their own, makes regional cooperation becomes crucial. So far, the two most noticeable cooperation that promotes energy interconnections within the region are ASEAN Power Grid (APG) and Greater Mekong Subregion (GMS) Program. APG has been run under APAEC since 1999 to facilitate cross-border electricity trade and enhance the integration of Member States’ power systems. To date, 7 of 16 power interconnection projects have been completed mainly in The Upper West System (or in the Greater Mekong Subregion) and The Lower West System which covered Thailand, Peninsular Malaysia, Singapore, and Indonesia. However, most interconnection projects are still based on bilateral agreements and thus have no integrated regional power architecture. One program conducted on a multilateral basis is Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), yet the trading is still limited to a unidirectional flow of electricity. The energy cooperation under GMS also presents a similar problem where all projects still occur on bilateral deals.

Although bilateral cooperation carried out under APG and GMS has helped the member states to fulfill their domestic demand, implementing a more integrated power grid with a multilateral trading system will enhance the region’s energy security. This is because a regional power transmission grid with multilateral exchange offers more alternative resources and geographic diversification that will lower the systemic risks on renewables infrastructure. For example, countries with abundant clean energy like Lao PDR can transfer their hydropower to areas of deficit such as Malaysia and Singapore. Whilst, at the same time, surplus energy from one country can be sold to another through the power grid. This is where the multilateral trading regime becomes relevant to improve the accessibility and stability of energy consumption. Additionally, an interconnected power grid can also attract more investment as large-scale renewables will become more profitable.

It is therefore very timely for ASEAN to step up the game by accelerating the construction of an integrated power grid across the region. Without a strong commitment and sufficient transition, Southeast Asia’s economy could plummet by 11% by the end of the century. An integrated power grid might be the best possible scenario to prolong ASEAN’s economic growth in the future.

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