According to an Indonesian official, economic growth can occur without increasing emissions if there are fair and equitable expectations between developed and developing countries.
At the Coaltrans Asia 2024 conference, Luhut Binsar Pandjaitan, the Indonesian Coordinating Minister for Maritime and Investment Affairs, emphasized the need for countries with greater capacity to rapidly intensify their efforts in reducing carbon emissions. He also stressed the importance of the developing world maintaining growth while simultaneously working to slow down its emission trajectory.
He also stressed the need for developed nations to support energy transition in the Global South, acknowledging the challenges of energy transitions for developing countries.
Pandjaitan mentioned that while Indonesia and its neighboring countries have plans for energy transition and decarbonization, coal still plays a significant role in their energy grids by stabilizing power output alongside intermittent renewable energy sources. He highlighted different countries’ unique challenges, emphasizing that solutions from developed nations may not be entirely applicable due to fiscal capacity and technology access disparities.
Understanding Southeast Asia’s Economic Landscape
In Southeast Asia, the ASEAN’s GDP is forecasted to increase by a compound annual rate of 4.6% from 2020 to 2050. However, despite the potential for adopting cleaner energy and reducing carbon emissions, there is a significant shortfall in funding for the ASEAN energy transition, posing challenges in meeting the targets outlined in the Nationally Determined Contributions. This transition will necessitate substantial investments in grid infrastructure and clean technologies.
The Association of Southeast Asian Nations (ASEAN) ‘s GDP is anticipated to maintain a 4.6% compound annual growth rate between 2020 and 2050. Concurrently, the Asia Pacific Energy Research Centre foresees that, in nearly all scenarios, ASEAN’s coal consumption will continue to rise.
Opportunities exist for transitioning to cleaner energy, including the early decommissioning of coal-fired power plants and reducing carbon emissions through fuel switching, ammonia co-firing, and carbon capture. However, accomplishing this will heavily rely on securing adequate financing.
According to APERC Senior Researcher Phung Quoc Huy, “There is a substantial cost involved in the ASEAN energy transition, and there is a significant disparity between the required funding and the committed funding to achieve the targets set in the Nationally Determined Contributions (NDC). We require approximately $263 billion for the transition, but we face a funding gap of $189 billion.”
In addition to the funding gap, electricity prices are expected to increase, impacting end-users and particularly affecting low-income countries.
Huy emphasized that the transition should prioritize gradually reducing coal usage, developing alternative energy sources, and substantial investments in grid infrastructure and clean technologies.
Balancing Vision with Pragmatism
Aboitiz Power Corporation’s Chief Operating Officer for Thermal Operated Assets, Ronaldo Ramos, drew parallels between the energy transition experiences of other ASEAN countries and those of the Philippines.
The Philippine Energy Plan (PEP) aims for a 50:50 mix of renewable and non-renewable energy sources by 2040. However, the PEP data indicates that the Philippines would require approximately a $550.2 billion investment to achieve this target.
Ramos commented that there is a collective aspiration for a future that relies on plentiful renewable energy. The promising reduction in the expenses of solar panels and battery storage technologies is noteworthy. However, it is crucial to remain aware of the present circumstances in the Philippines.
The Philippines, an archipelago comprising over 7,000 islands, has only recently interconnected its three major island grids.
Ramos explained the need for reliable and cost-effective baseload power to address renewable energy’s natural variability and the challenges of integrating these intermittent capacities into the current grid.
A cautious and phased approach to the energy transition is crucial to ensuring a fair transition, given the Philippines’ present socio-economic needs.