Under the ASEAN 2023 Chairmanship agenda with the theme "Epicenter of Growth", energy security and financial stability have become two very important principles. To ensure an equitable, inclusive, affordable and sustainable energy transition, it is necessary to revolutionize energy sources, technologies and financing.
Last Tuesday (27/06), the ASEAN Chairmanship 2023 Seminar titled "Sustainable Energy Financing and Mobilization of Energy Investment in ASEAN" was held in Jakarta, Indonesia. The event was an opportunity to deepen the discussion on how to mobilize the necessary financing not only in Indonesia but also in the entire ASEAN region. It also aimed to facilitate the flow of public and private finance to ASEAN.
In addition to financing, the discussion also focused on the ASEAN Renewable Energy Roadmap and the ASEAN Green Deal, which are the focus of the cooperation. On the other hand, the role of Australia as the first ASEAN dialogue partner was also discussed through knowledge sharing, financial assistance, policy development, research and renewable energy projects.
ASEAN Energy Transition
According to a report by the International Renewable Energy Agency (IRENA), ASEAN will need to invest $29.4 trillion by 2050 to achieve an energy transition with a target of 1.5°C and 100% renewable energy.
However, ASEAN countries are still heavily dependent on fossil fuels. While ASEAN countries need to boost the industrial sector, it is also important to promote the use of sustainable energy. In this context, energy transition financing is a solution that can bridge the two, with blended finance and financing structures, including for the early retirement of coal-fired power plants.
As a result, significant investment is needed in sectors critical to the energy transition, including the development of renewable power generation, the supply of biofuels, improved grid reliability and flexibility such as transmission, distribution and energy storage, and the development of a broader electrification system.
Indonesia's Chairmanship: Driving Innovation in ASEAN's Energy Transition
A representative from Indonesia's Ministry of Energy and Mineral Resources revealed that as the current ASEAN Chair, Indonesia is fully committed to achieving a number of key outcomes in the energy sector. These include developing a clear approach to sustainable financing for energy transition, establishing a long-term roadmap for renewable energy, bridging the gap between policy decisions and actual investment practices, and creating a clear pathway for regional energy interconnectivity.
It was also noted that new partnership initiatives that support countries' efforts to accelerate the energy transition are always welcome. Collaboration between developed and developing countries is an important form of cooperation to ensure a just and affordable energy transition for all.
Working Together: Leveraging Synergy for ASEAN Energy Transition
ASEAN's current momentum must be harnessed to achieve economic transformation together with other ASEAN countries. To achieve this, conducive cooperation in the ASEAN region is very important. Febrio Kacaribu, Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance of the Republic of Indonesia, also revealed that Indonesia already has an Energy Transition Mechanism (ETM) as well as the Just Energy Transition Partnership (JETP), which will soon launch an investment plan in August 2023. A voluntary carbon market is also expected to be launched this year.
Each country needs to develop short- and long-term strategies to achieve net zero emissions (NZE) by mid-century. According to Febrio, Indonesia's strategy should be linked to the energy strategy focus of ASEAN and Australia through blended financing.
The ASEAN region and Australia, which are currently in an important phase of climate change, need to build trust with each other. Projections show that Indonesia will need an estimated $1 trillion in financing by 2060 to achieve a successful transition by 2060.
Andrew Hudson, CEO of the Centre for Policy Development (CPD), stressed that Australia, as ASEAN's first dialogue partner, stands ready to support the region's decarbonization journey. He emphasized the importance of the strategic discussions that are part of the Energy Transition Policy Development Forum.
The energy transition is very country-specific, therefore it is necessary to consider a range of energy sources, technologies and financing to ensure an equitable, inclusive, affordable and secure energy transition in accordance with each country's unique conditions.
