Southeast Asia’s Challenge of Decarbonizing While Growing Rapidly

With the world’s focus shifting to the UN Climate Change Conference of the Parties (COP27) slated for Egypt from November 6–18, the emerging economies of Southeast Asia face daunting decarbonization hurdles. Their economies over the past decade have grown an average of 5 percent a year, while the demand for electricity—much of it generated by fossil fuels—has surged an annual average of nearly 6 percent.

Many economists expect the region’s economies to continue to expand at this pace through 2050 and triple their size over the next three decades. If this happens, electricity needs will surge exponentially as industries grow, urban areas expand, and increasing living standards push up demand. S&P Global Commodity Insights estimates that electricity requirements will rise to some 3,000 terawatt-hours (one terawatt hour is equal to 1 trillion watts for an hour, and for comparison, total global electricity consumption in 2019 was nearly 24,000 terawatt hours).

Fossil fuel burning facilities fire around 75 percent of Southeast Asia’s electricity supply today, and coal makes up a little over 50 percent of the total. This hands the region a daunting task to achieve decarbonization, particularly at a time when Russia’s war against Ukraine is creating gas shortages and soaring prices.

Southeast Asia is one of the most climate-vulnerable regions of the planet—it faces brutal tropical storms, rising sea levels that threaten coastlines and cities, and massive floods and severe droughts. Three of the top 10 countries affected by climate risks from 2000–2019 are Myanmar, the Philippines, and Thailand, according to Germanwatch's recent global climate risk index .

Southeast Asian governments have set targets for reducing carbon emissions and provided updates at the Glasgow COP26 in 2021. Eight of the 10 nations set targets to achieve net-zero carbon emissions by 2050 to meet the Intergovernmental Panel on Climate Change’s target of 1.5 degrees Celsius. Indonesia pledged to achieve net zero by 2060, while the Philippines has not yet committed to a net-zero goal.

Southeast Asian economies have pledged to achieve their goals by investing in renewable energy sources, boosting gas use to produce electricity, and cutting the use of coal. But analysts say these countries have not yet set firm enough measures to help them achieve their net-zero goals. S&P Global estimates that Southeast Asia’s emissions will reach their peak in 2029 and begin dropping by 2041, as renewable energy growth increases, more carbon capture measures are implemented, and coal consumption begins to phase out.

Based on current projections, Southeast Asia will miss the goal of net zero by 2050 unless governments implement more ambitious policies, provide more robust budget support, set more stringent measures to reduce fossil fuel use, and lure much higher levels of investment.

Renewables will need to provide a much larger share of electricity needs and other emerging technologies, including hydrogen, carbon capture and energy storage.

Indonesia, the largest economy in Southeast Asia, is highly dependent on coal and has moved slowly to substitute renewables. The country, which today is the world’s eighth-largest emitter, has a goal of achieving net-zero emissions by 2060 or sooner. Indonesia’s rapid economic growth powered by coal power generation means that carbon emissions will continue to rise about 25 percent until 2030. More coal capacity will be added over the next five years. Indonesia will need to invest $150–$200 billion per year over the next decade in low-carbon projects to meet its goal of net-zero carbon emissions by 2060.

Vietnam is one of the region’s fastest-growing economies and requires ever more electricity, much of which is produced from coal. Vietnam pledged at COP26 that it would abandon coal use but has not made specific proposals. The government’s various power development drafts pledge more reliance on gas and wind to replace coal, but the final version keeps being delayed. Vietnam has two sizeable gas fields, one of which has been explored by ExxonMobil, that the country could develop to speed up the transition from coal.

Singapore is the only country in the region that is expected to see a real carbon emission drop (9 percent) in 2030 compared to 2019. It is actively pursuing solar power and other renewable projects and introducing a carbon tax to create incentives for low-carbon energy. It has also launched a pilot initiative to import hydropower from Laos.

Thailand will see modest emission growth of 11 percent by 2030 caused in part by having to switch to burning oil temporarily due to gas shortages this year. Thailand has stopped building coal power facilities and is launching renewable energy projects under its Bio-Circular Green agenda . Thailand is also developing smart grids, planning to buy more hydropower from Laos, and taking steps to implement carbon pricing. It hopes renewable energy will achieve 50 percent of the energy mix by 2050.

Malaysia also has relatively low carbon emissions , which are forecast to grow about 12 percent until 2030. Like Thailand, Malaysia has suspended construction of coal power plants and has announced that it will phase out its existing coal plants and use its domestic gas resources instead. The government has awarded four large solar projects totaling over 2 gigawatts of power and has announced the Malaysia Renewable Energy Roadmap to support renewable energy projects and take steps to decarbonize electricity production through 2035.

The Philippines has not pledged a net zero target. Its one functioning domestic gas source (Malampaya) is nearly depleted, and the development of new offshore fields is hobbled by competing claims with China in the South China Sea. The government has announced a moratorium on new coal plants, but roughly half of the earlier planned coal plants continue to be implemented. The Philippines will continue to rely on coal generation , and emission growth will rise continue to rise 32 percent until 2030.

Southeast Asia is far from alone in not meeting its commitments to combat climate change, according to a recent UN report . Out of 193 nations, only 26 that pledged to do more at COP26 have come forward with more robust plans. Without more action, the report warned that by 2100, earth is on target to warm 2.1–2.9 degrees Celsius above preindustrial levels. The goals set by the Paris Agreement in 2015 were intended to keep this rise to no more than 1.5 degrees Celsius.

The climate conference in Egypt will press nations to make more ambitious commitments to cut carbon emissions more quickly. Less-developed nations are also expected to call on wealthy countries that contributed most to driving climate change to create an international fund to help those who are least prepared to better tackle its impact. One of the most outspoken leaders in Southeast Asia calling on developed nations to provide more financing for poor countries is President Joko Widodo of Indonesia.

Many observers fear the energy crisis prompted by Russia’s war in Ukraine will be a major setback in the transition away from fossil fuels toward cleaner technologies as countries have again stepped-up burning coal. But a recent report by the International Energy Agency forecasts that this development will not last long and the rising costs and disruption will prompt countries to quickly transition to solar panels, wind turbines, hydrogen, and electric vehicles. Still, the world’s top energy organization warned that countries are not moving with enough speed to avoid the earth’s temperature rising to dangerous levels of warming.

Murray Hiebert is a senior associate of the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C.

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© 2022 by the Center for Strategic and International Studies

Murray Hiebert
Senior Associate (Non-resident), Southeast Asia Program