SEA Energy Transition Blueprint: programme introduction

The SEA Energy Transition Blueprint programme is one of the Southeast Asia Public Policy Institute’s core programmes, exploring pathways and policy development to support Southeast Asia’s energy transition and journey to net zero. 

Introduction 

A range of forces are driving the global energy transition. Political pressure from years of dialogues; increasing demand for energy, especially from renewable sources; a trend towards electrification such as the shift from petrol to electric vehicles; and a dramatic decrease in the cost of renewable energy production compared to fossil fuels.  

The approach of different markets to the energy transition so far reflects their structure, strengths, and their natural approach to significant challenges. The European Union has led international rhetoric on climate change and has continued to lead with policy – starting in the 1990s with strict greenhouse gas regulations and most recently on the introduction of carbon border adjustment mechanism (CBAM). While the EU and its member states also mobilised the European industrial base in some areas of renewable technology, China has become a world leader across a wide range of climate technologies, from wind and solar, to heat exchange technologies and electric vehicles. Meanwhile, the US has recently caught up with the massive mobilisation of state resource in the Inflation Reduction Act in 2022, aimed at bolstering key green industries and building supply chains in the US to support the energy transition. 

As group of diverse markets, from high income economies such as Singapore to higher- and lower-middle income economies elsewhere in the region, the approach of Southeast Asian markets to the energy transition has been mixed. Since the political commitments made in the Paris agreement in 2016, the pace of change has accelerated. Unfortunately, these commitments have not been matched by a necessary overhaul of policies that will enable the transition to move forward. The transition is therefore stagnating in many countries in the region, jeopardizing the ability to meet political commitments and contribute to the global efforts to combat climate change, and meet market demand. 

There is huge potential in the region for renewable energy generation – solar, hydropower, wind, and geothermal, and an economic and demographic landscape conducive to building the supply chains needed for the transition, from essential minerals to equipment assembly. Capitalising on these natural and demographic advantages could see the region improve its energy security, affordability, and reducing reliance on global technology supply chains. 

There are major challenges to overcome, especially the phase-out of fossil fuels which provide baseload energy and are readily available in a number of markets, paired with an energy demand that is projected to triple by 2050 due to rapid urbanisation and economic development. Continued reliance on fossil fuels could see the region become a net importer of gas and coal before 2040. Meanwhile, the coordination of development timelines for renewables projects, the mobilisation of finances and industrial capacity, and access to materials and supply chains must all be addressed.  

However, the key obstacle to progress is the domestic policy environment in markets across Southeast Asia, where far-reaching changes are needed to accommodate a transition to renewable energy at speed. Part of this is the structuring of a comprehensive economic case for the transition, which must then be accepted and internalised by governments – and societies – in the region. 

There has been a significant amount of work on the energy transition at the ASEAN level, as well as support from other global and regional forums. This includes the JETP projects in Vietnam and Indonesia launched at the G20, and the Bangkok goal for a bio-circular green economy (BCG) agreed at the APEC Summit in 2022.  

There are other opportunities to support the energy transition through regional collaboration. The region lacks a unified vision for the energy transition which would lay the foundation for cooperation. A more coordinated approach could see the development of a regional, and potentially globally competitive, supply chain for renewables equipment. Based on a regional vision, the development of regional energy markets would link supply and demand and create more bankable projects. More cooperation and collaboration can uncover the region’s competitive advantage while delivering on political commitments and increasing energy and economic security. 

It is essential that clear pathways are signposted for policy change to enable the political will that exists to drive the transition. The Institute’s Energy Transition Blueprint aims to explore these pathways in order to support a swift and successful energy transition in Southeast Asia. 

Programme outline 

The Southeast Asia Public Policy Institute’s Energy Transition Blueprint is a programme of work that will explore opportunities for regional cooperation and collaboration both within and outside of existing frameworks as well as best practice policy at the market level to support the energy transition in Southeast Asia.  

The programme will explore the following themes: 

1. Deployment 

Exploring best practice from other markets in Southeast Asia, as well as elsewhere in the Asia-Pacific region and globally, the programme will look at policies that create clear and expedient routes to market for renewables deployment that work for developers, financers and the countries hosting them. We will look at ‘mature’ technologies being deployed at scale already, such as wind, solar and hydroelectric power (and pumped hydro as storage), as well as newer technologies such as geothermal generation, energy storage solutions, and hydrogen. At the regional level, the programme will explore the opportunities for cross-regional collaboration on supply chains, supported by industrial policies tailored to the renewables sector and associated industries. 

2. Infrastructure 

Increased deployment can only shift the needle on the energy transition if it is supported by the right infrastructure – the ports, roads, and offshore infrastructure to support deployment, improved grid infrastructure to take and distribute renewable energy, storage options, and systems to balance intermittency. At the regional level, there is a huge opportunity for better regional connectivity, sharing clean energy across borders, especially as demand increases in regional hubs such as Singapore. 

3. Energy markets development 

Reflecting the diversity of the region, there are a range of approaches to domestic energy markets. This complexity is a missed opportunity for countries producing clean energy. Policies that allow direct purchasing of clean energy, paired with the right infrastructure, would open up new revenue streams as help the region to meet its goals together. Similarly, progress in carbon markers and renewable energy credits schemes would also help organisations in the region meet their clean energy goals as well as further incentivising renewable energy production. 

4. Green jobs 

Deploying renewables projects, overhauling grid infrastructure, and maintaining renewables equipment will require a huge workforce mobilisation and upskilling, for years to come. While some immediate needs can be met, education systems and workforce incentives must match the coming needs and opportunities of the energy transition. At the regional level, there is the opportunity for greater mobility of skilled workers around the region where more experienced workers can help kick-start the energy transition in other countries looking to catch up.    

5. A just energy transition 

While there is a global need for the energy transition to move fast, it is also inevitable that the transition will have negative consequences for some communities and even local environments, and these must be managed and offset. Ensuring a just energy transition means addressing a range of issues including employment, public health, energy security, energy affordability, environmental management, and making sure communities impacted by the transition are heard. Learning the lessons of the past will be essential to ensuring a just transition moving forward.  

Programme goals 

Working across the above policy areas, the Energy Transition Blueprint programme will aim to: 

1. Build the economic case for the energy transition in SEA markets 

While international political commitments on reducing emissions, the economic case for the energy transition has not yet been full made, accepted and internalised by governments in the region. The programme can support this case at the market level. 

2. Explore best practice policy development for achieving the energy transition in ASEAN. 

This will include exploring best practice policy for deploying renewables, infrastructure and supply chains; building a regional energy market and a green workforce; and ensuring a just transition around the region. 

3. Build an economic case for ASEAN energy connectivity and highlight pathways towards it. 

There must be a step change in how countries are approaching the energy transition, from a national perspective, to greater regional coordination. The programme will develop a case for better bilateral and regional coordination, from highlighting the economic downside of climate change, to quantifying the opportunities such as greater focus on ESG by investors sensitive to climate commitments and reputation, demand for renewable energy by foreign investors, and better jobs, growth, and security. 

4. Convene stakeholders and policymakers to move the dial on energy transition policy 

The programme will host a series of dialogues at the regional level, between complementary markets and at the market level to drive the discussion forward. 

About the Southeast Asia Public Policy Institute 

The Southeast Asia Public Policy Institute is a research institute based in Bangkok and Singapore, working across the region. Our mission is to support the development of solutions to the most pressing public policy challenges facing Southeast Asia in the 21st century. The Institute undertakes in-depth research to develop actionable policy solutions on a range of issues across sustainability, technology, public health, trade, and governance. We convene dialogues with stakeholders and decisionmakers to drive discussion on the challenges and opportunities facing markets across the region. The Institute draws on a network of in-market researchers, advisors, and partners to provide insights and recommendations for governments, policymakers, and businesses.