Far East: Opportunities, Challenges, and Solutions in Southeast Asia's Energy Transition
Southeast Asia’s growing population and booming economies have led to a sharp increase in energy demand. By 2040, energy needs are expected to rise by 60%. Right now, much of this energy comes from fossil fuels such as coal, which provides over 40% of the region's electricity. Southeast Asia's dependence on coal contributes substantially to global carbon emissions. At the same time, countries like Vietnam, Indonesia, and the Philippines have great potential to shift to renewable energy sources, namely solar, wind, hydropower, and geothermal.
Vietnam – Leader in Solar and Wind
Vietnam has emerged as a major leader in renewable energy in Southeast Asia, setting an example for the region with impressive progress. The country has made significant strides in solar power, developing a robust industry with over 16.5 gigawatts (GW) of installed capacity by 2020. This growth results from government support, favorable policies, and increased private investments in clean energy.
In addition to solar, Vietnam is making large-scale investments in wind power, which is becoming another key part of its renewable energy strategy. The focus is particularly on offshore wind projects, which have great potential due to Vietnam's long coastline and favorable wind conditions. The country has set an ambitious goal to expand its wind power capacity to 30 GW by 2030. These efforts portray a commitment to reducing reliance on fossil fuels, addressing climate change, and meeting energy needs sustainably.
Indonesia – Rich in Geothermal Resources
Indonesia ranks as the second-largest producer of geothermal energy in the world, but it still has significant room to expand its capabilities. With 27.79 gigawatts (GW) of untapped geothermal potential, which accounts for 40% of world geothermal resources, the country is sitting on a largely underutilized resource that could transform its energy sector. This vast geothermal capacity, if fully harnessed, could provide clean, reliable, and sustainable electricity for millions of people, helping to address growing energy demands while supporting economic development.
Geothermal energy is particularly valuable for Indonesia, as it is located along the geologically active Pacific Ring of Fire, which gives it access to abundant geothermal resources. Despite this natural advantage, the country has only developed a fraction of its potential, leaving plenty of opportunity for growth. By increasing investments in geothermal projects, improving infrastructure, and fostering partnerships with private and international organizations, Indonesia could significantly expand its geothermal capacity.
Laos – The "Battery of Asia"
Laos is harnessing the power of its rivers, especially the Mekong River, to develop a strong hydropower sector. The country has an enormous hydropower potential of more than 18,000 MW, excluding the mainstream of the Mekong River and up to 27,000 MW with it. This has allowed the country to become a significant exporter of electricity, expecting to export 14,600 MW to neighbors such as Thailand and Vietnam. By selling hydropower, Laos has been able to boost its economy, generate revenue, and strengthen regional energy cooperation.
Hydropower plays a crucial role in Laos' development strategy. The country's mountainous terrain and extensive river network provide ideal conditions for building dams and generating renewable energy. With ongoing investments in hydropower projects, Laos aims to position itself as the "battery of Southeast Asia," providing a steady and sustainable energy supply to the region. While hydropower helps reduce reliance on fossil fuels and supports clean energy goals, it also raises concerns about the environmental and social impacts of dam construction, especially on the Mekong River’s ecosystem and communities that rely on it for their livelihoods. Balancing economic benefits with sustainability remains a key challenge for Laos as it continues to expand its hydropower industry.
Challenges to the Energy Transition
Despite the potential, these countries face several obstacles: many countries, like Indonesia and Cambodia, lack clear renewable energy policies or incentives for investors. This slows progress in clean energy adoption. Nations like Myanmar and the Philippines require better infrastructure to handle renewable energy sources. Aging grids can’t handle the variability of solar and wind power. Renewable energy projects often require significant upfront investment from both the government and businesses, which can be hard for poorer countries such as Cambodia and Laos to afford. Countries such as Indonesia continue to subsidize coal, making it cheaper than clean energy options. Hydropower dams, while providing clean energy, can harm ecosystems and displace communities. Laos and Myanmar have faced criticism over large dam projects.
To succeed in the energy transition, Southeast Asia will need support from other countries and organizations: advanced renewable energy technologies from countries like Japan, the US, and Germany can help nations like Vietnam and Indonesia build efficient renewable systems. International funds, such as the Green Climate Fund established by the Biden Administration, can provide loans and grants to countries like Cambodia and Myanmar to build renewable energy projects. Countries like the Philippines and Indonesia need skilled workers to build and maintain renewable energy facilities. Training programs can ensure local people are prepared. ASEAN nations can work together to trade renewable energy and share the costs of infrastructure. For example, Laos can export hydropower to Vietnam and Thailand. Partnering with private companies can help countries like Vietnam expand renewable energy projects faster.
Looking Forward to COP 29
As the world prepares for COP 29, Southeast Asia has a chance to show leadership in renewable energy. Countries like Vietnam, Indonesia, and Laos can set ambitious goals to reduce coal use and increase clean energy. They can also work with international partners to secure funding and technology to speed up the transition.
Southeast Asia has the resources to lead the way in clean energy. By overcoming challenges and working with global partners, countries in the region can achieve a sustainable future. At COP 29, Southeast Asia can present itself as a model for balancing economic growth and environmental protection.