Concern about fossil fuel language seen holding Southeast Asia back from adopting COP28 renewables pledge

The declaration text’s wording points to an intention for the removal of unabated fossil fuels and references a coal phase down. Some industry observers say tackling issues like coal dependence is more crucial than political commitments.

Tambak Lorok Semarang Indonesia gas and floating solar
A floating solar panel installation in Indonesia's Semarang city, Central Java, said to be the largest of its kind in the country before being superceded by a much larger 340,000-panel array last month. In the background is a gas power plant. Image: PLN.

A pledge to drive adoption of renewables and energy efficiency initiatives at the COP28 climate summit has been signed by 123 countries and counting, but several Southeast Asian economies are still not on board.

Observers suspect the pledge’s inclusion of clauses on reducing fossil fuel use, along with sentiments of the West imposing unreasonable targets, could be alienating policymakers from the rapidly developing region.

Only Brunei, Malaysia and Singapore signalled their support when the pledge was launched over the weekend. Thailand joined earlier this week.

This leaves six members of the Asean bloc, including populous Indonesia and de-facto clean energy powerhouse Vietnam as holdouts. Also missing from the pledge are Cambodia, Laos, Myanmar and the Philippines.

Coal catch

The pledge mainly calls for a global effort to triple renewable energy capacity to at least 11 terawatts by 2030, and to double the rate of energy efficiency improvements, without mandating such targets on individual countries.

But it also says that the initiative is to help remove unabated fossil fuels from energy systems by mid-century, and recognises calls for ending investments in unabated new coal plants this decade – wording that could have spooked Southeast Asian policymakers.

Dr Dinita Setyawati, Southeast Asia senior electricity policy analyst at think-tank Ember, said the pledge’s inclusion of phasing down unabated coal is a “big ask” for the region, which is still reliant on the fuel. 

Even though several Asean countries, including holdouts Indonesia, Vietnam and the Philippines, have existing plans that could help triple their solar and wind capacity by 2030, renewables cannot fully meet rising electricity demand in the region, Dinita explained.

There are also “distractions”, such as carbon capture technologies, “which makes policymakers complacent about the current trajectory of fossil reliance”, Dinita said.

Coal contributed to almost 40 per cent of Southeast Asia’s power generation in 2020. Countries in the region are also betting big on natural gas, another fossil fuel.

Olivier Duguet, chief executive of regional renewables developer The Blue Circle which has wind projects in Vietnam, thinks action on coal would be more impactful than a “blank pledge” on renewables.

“If coal funding could be stopped, if the phasing out of coal could be financed, if carbon-based taxes could be more broadly imposed by economic blocs on imports from Southeast Asia, they could have a much broader and long-lasting impact than a political pledge,” Duguet said.

Simon Bell, managing director of Quantum Power Asia, which is developing a large-scale solar project in Indonesia, said parties with vested interests and still profiting from coal could be hindering the country from backing the COP28 pledge.

Coal contributes to over 60 per cent of Indonesia’s power generation, and the country caps domestic prices for the fuel, making it harder for new energy providers to compete.

Across the region, political support for the global pledge could also be tempered by a sense of the West attempting to impose unreasonable targets on developing countries without providing meaningful financial support, which can hinder economic growth, Bell added.

Such sentiments were on display earlier this year, when Indonesia repeatedly complained of high lending rates from international partners in a “Just Energy Transition Partnership” (JETP) deal led by the United States and Japan, meant to help the country transition from coal to renewables. Initial investment plan for the US$20 billion deal was published last month.

The renewables and energy transition pledge at COP28 itself was co-led by the European Union, with backing from major intergovernmental bodies. The text said expanding financing and technical support in emerging markets are key to its goals, but does not oblige signatories to specific commitments.

Grid roadblock

Tripling renewables within Southeast Asia by 2030 appears to be within the ballpark of current projections – think-tank Asean Centre for Energy expects renewable energy generation to rise by about three-quarters by 2025, before almost quadrupling by 2040 if progressive policies are followed through.

But observers say a key roadblock to clear is the need for better power grids, that can support more wind and solar installations, which generate electricity based on weather conditions rather than power demand.

In particular, Cambodia may lack the know-how to add more renewables into its grid, Bell said, and the returns do not quite match up against risks for international renewables investors.

Vietnam could be close to capacity for rapid scale-up, with over 20 gigawatts of solar and wind already deployed, unless more grid upgrades are incorporated, he added. Renewables providers in the country had to cut production in past years because of power grid imbalances, resulting in financial losses.

Both Indonesia and Vietnam, which is also involved in a US$15.5 billion JETP deal, have recently said they would prioritise grid upgrades in the coming years. Indonesia said it could deploy 14,000 kilometres of transmissions, an effort that would need nearly US$20 billion in funding this decade.

The Blue Circle’s Duguet said the competitiveness of renewables in Southeast Asia is nonetheless growing in countries such as the Philippines, Thailand, Cambodia and Malaysia, independent of what policymakers are doing at COP28. The policy landscape in Indonesia is also becoming more favourable in Indonesia, Bell said.

But Ember’s Dinita still hopes more Southeast Asian countries will support the COP28 renewables and energy efficiency pledge.

“Participating in the global tripling pledge would be a strong signal to the markets, which could attract new investments. This would not only unlock the region’s immense renewable potential but also catalyse job creation,” she said, adding that relaxing requirements on local manufacturing of renewables components could also sweeten the deal for developers’ early projects.

Global support for the renewables and energy efficiency pledge has been pitched as a key objective for COP28 host United Arab Emirates, though Asian giants China and India are still sitting out.

At the global summit, countries are also mulling over a political declaration that could include text on phasing out fossil fuels for the first time. The clause is expected to meet fierce opposition from oil and gas dependent countries.

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