China’s Potential to Catalyze Clean Energy Transformation in Southeast Asia

Last Updated on April 8, 2024 1:57 pm

While Southeast Asia is poised at the brink of a renewable energy revolution, the region faces a daunting challenge: how to ensure the delivery of abundant, affordable clean energy while advancing the critical agenda of decarbonization. In light of this, a strategic partnership between Southeast Asia and China could be the game-changer the region needs.

At the heart of this challenge lies the need for substantial and sustained investments in renewable energy projects. While the public sector has historically been the main source of funding, it falls short of meeting the region’s ambitious goals. Recent years have seen investments totaling around US$60 billion in clean power, primarily from the public sector. Yet, this pales in comparison to the estimated US$92 billion annual investment required to align with the Paris climate goals.

Amidst the aftermath of the Covid-19 pandemic, Southeast Asian governments are grappling with managing public debt and expenditure, making increased public funding for renewable energy projects a challenging proposition. This underscores the urgent need for private investment to drive the region’s energy transition forward.

China, as a leading investor in clean energy and a key economic partner for Southeast Asia, holds immense potential to bolster private investment in the region’s renewable energy sector. However, conventional approaches like capacity building and technical assistance may fall short in addressing the magnitude of the challenges at hand.

Innovative strategies are required to navigate the complexities of Southeast Asia’s energy landscape, which often involves conflicting interests and limited implementation capabilities. The Asia Society Policy Institute’s Clean Prosperity Plan presents a novel approach, advocating for a bottom-up strategy focused on rapid deployment of renewable energy projects with tailored policy support and international collaboration.

One promising avenue for immediate impact lies in the deployment of off-grid renewable energy and storage systems, particularly in the industrial sector, which heavily relies on coal-fired power generation. This approach not only addresses the region’s energy needs but also creates opportunities for clean industrialization, leveraging Southeast Asia’s strengths in clean equipment manufacturing and mineral processing.

By unlocking the region’s potential to produce solar modules and battery cells, Southeast Asia can not only achieve energy independence but also stimulate economic growth and job creation. These initiatives align with major regional initiatives such as Indonesia’s Just Energy Transition Partnership, creating a conducive environment for comprehensive market and regulatory reforms.

As Southeast Asia charts its course towards a clean and prosperous future, collaboration with China could be the catalyst needed to accelerate the region’s transition to renewable energy, paving the way for sustainable development and climate resilience.

Contributors: Dr. Muyi Yang, Non-resident Senior Policy Fellow at Asia Society Australia Alistair Ritchie, Director of Asia-Pacific Sustainability at the Asia Society Policy Institute (ASPI)

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