ASEAN Dynamics in Renewable Energy: The Dilemma of Various Barriers
Written by: Ranggi Reksa Pradana & Aida Rachmawati
ASEAN has committed to securing 23% of its primary energy from renewable sources by 2025 as energy demand in ASEAN region is expected to grow by 50% (The ASEAN Post Team, 2022). Rising energy demand, supply-demand dynamics, and renewable energy prices in a changing market share create new and formidable challenges for policymakers in Southeast Asia. While there are opportunities created to meet cleaner energy uses, some challenges require a region-wide approach. In this article, we will examine the energy-related issues that most ASEAN countries face. The dilemmas such as energy distribution problems during COVID-19, ASEAN’s consideration of transforming to green energy, deliberation of the main pillars in ASEAN Energy Cooperation, and other challenges in transitioning renewable energy in ASEAN will be discussed in this article.
Covid-19 and energy problems that ASEAN faces: Not just an ordinary nightmare
As the end of 2021 approached, many countries around the globe have experienced a downtrend in their COVID-19 cases for a few months in a row. The rise of the vaccination rate and strict enforcement of months-long social gathering restrictions in many countries seems to be the prime factor that makes the case curve fall. With this downward curve coming up in many countries, there is an atmosphere in society around the world that the Covid-19 situation has become under our control and is no longer a serious threat to the human race. The emergence of this optimistic atmosphere has created some pressure on governments around the world to ease or (if possible) to repeal their social restriction and borders closing policy, so peoples and goods can travel freely.
There is a significant possibility to increase ASEAN’s economic growth when countries loosen their social restriction and border regulations, due to the effect triggered by the policy which influences the rate of trade and economic activity in a positive way. That is exactly what the people and government want to happen in this malaise situation. In normal environments, it will not create a new problem, because the supply chain is still running at its usual pace, so the supply and demand can reach equilibrium in quite a fast time. However, during the Covid-19 situation, opening up the economy after being suppressed by the government for a long time, can actually lead to another supply-chain-related “catastrophe.” This is the energy crisis, and that is exactly what is happening in Southeast Asia.
First of all, we all need to know why suddenly opening up the economy in the Covid-19 time can create an energy disaster, especially in Southeast Asia. According to the International Energy Agency (2020), Southeast Asia is one of few regions in the world that still uses coal and other non-renewable resources as primary energy for electricity, with only 20% of their electricity output coming from renewable sources, and the trend is still going up. However, how can the massive use of non-renewable natural resources and the opening of economic activity in Southeast Asia lead to an energy crisis? The answer lies in the production capacity of Southeast Asia’s countries and the energy consequences of the rise of economic activity because of policy changes.
When the government eases its social restriction policy and opens its borders, it can trigger an increase in the movement of people, production of goods, and exchanges of goods (including services), or we usually know as economic activity. The economic activity itself is powered by energy because virtually all the machine that produces goods needs electricity to run and the movement of goods and peoples mostly use engine-powered vehicles that need fuel, which in Southeast Asia is mostly dominated by coal, gas, and Crude Palm Oil (CPO). The problem among Southeast Asia countries is not all of them have vast natural resources that can supply their power plants enough. Thus, many Southeast Asia countries have a dependence on other countries’ production (mainly from their neighbors such as Indonesia, Malaysia, and Brunei Darussalam) and also on international trade activity.
That dependence itself has become a problem in Southeast Asia, when much of the government eases their restriction policy in late 2021. The rise in economic activity has created a spike in energy demands. However, because of the Covid-19 condition, the producer countries are not in their ready state to supply that sudden rise in demand (Conway, 2021). The buyer countries finally have to compete with each other to acquire these resources and that makes the energy prices in the global market rise sharply. As a result, essential commodities like coal and CPO reach an all-time high price in the last few months of 2021 since energy is critical for human activities. It creates a domino effect on the price of other products such as food, transportation, and utilities. Therefore, ASEAN as a whole experienced their highest inflation rate in a decade (Jiao, 2021), with the “buyer” nations like Singapore, Lao DPR, and the Philippines experiencing a really unusual spike in their inflation rate (Tani, 2021).
The buyer countries are not the only ones who are suffering from this situation. The producer countries are also facing a really tough dilemma to solve. They are facing a dilemma whether to focus on exporting these resources to other countries or fulfill the domestic demand first. This is exactly the situation that ASEAN “producer” countries like Indonesia and Malaysia currently face. With the CPO and coal reaching an all-time high price. It creates a really huge incentive for coal and CPO companies to sell their product abroad. However, that action also creates a shortage of that goods in the domestic market, which makes the situation of ordinary citizens in those producer countries much harder. We can see in Indonesia and Malaysia that the government must apply rationing policies on the cooking oil and diesel fuel-which is based on CPO-in attempts to keep domestic prices under control and keep the country’s purchasing power and peoples’ well-being still on track. That unfortunate situation needs a sustainable solution because energy security is really essential to people’s everyday lives. But, do we have a really sustainable way to prevent this malaise from happening again in the future?
Going green, is that a solution?
Bill Gates in his book How to Avoid a Climate Disaster (2021) argues that the most feasible and sustainable way to secure one’s energy security and cut a country’s energy dependence on other countries is moving toward renewable energy sources. This is because almost every country has resources to generate energy from renewable sources. It is a fact that all countries on the globe own at least a few forms of renewable resources such as sunlight, water, or wind in their land. Especially Southeast Asia, which is blessed with vast tropical sunlight. Therefore, when one’s country generates more power from renewable sources, not only they can have more independence in their energy supply because they do not necessarily import raw materials from other countries, but they can also cut down their carbon emission and contribute more to the earth’s well-being. Along with the recent mandates given by the COP26 summit as quoted from UNFCC–which are to reduce carbon dioxide emissions to 45% by 2030, achieve net-zero emissions around mid-century, and deep reductions in other greenhouse gasses–the shift from carbon-emitted non-renewable energy to carbon-free renewable energy is unavoidable and is a must.
However, in the economical and technological sense, is it really possible to have one’s country’s power solely on renewable sources? The answer is yes, but not in the near future. For the last few decades, the lack of incentive to fund renewable power research and companies has made the renewable industry lag behind the fossil-energy industry (Gates, 2021). Nevertheless, the recent increase in climate change awareness among world leaders has created some hope that renewable energy can reach economical and technological feasibility to power a nation in near future through the increase of funds and brainpower allocated to this industry. The dramatic decrease of solar panel cost in just a few years is one example of what can be achieved when we put more effort into this industry. As the world leader has become more aware of the threat of climate disaster and the importance of renewable energy, ASEAN has committed to take an action to gradually increase the share of renewable energy capacity in their energy mix as started in ASEAN Action Plan for Energy Cooperation 2016–2025 (Safrina, 2021). The question that we need to ask now is what should we do to convince society to use greener energy?
Highlighting Principal Aspects in the Four Pillars of ASEAN Energy Cooperation
Energy is a major form of economic cooperation in ASEAN. The ASEAN Action Plan for Energy Cooperation 2016–2025 (APAEC) has found scopes to shape the region’s energy development. The first phase of the 2016–2020 plan to increase trade among ASEAN member countries is aimed at realizing the ASEAN electricity grid. In order to increase trade in the realization of the electricity grid, ASEAN has established a regulatory scheme for electricity interconnection in the region through the ASEAN Power Grid (APG) with the vision of ASEAN 2020 adopted at the second ASEAN Informal Summit in Kuala Lumpur on 15 December 1997. The Heads of ASEAN Power Utilities/Authorities (HAPUA), as the Special Energy Agency (SEB), were tasked with ensuring regional energy security by promoting the efficient use and sharing of resources. The development of APG is carried out bilaterally across borders, sub-regions, then into a totally integrated regional system (Asean Centre for Energy (ACE), 2015). In addition, more adequate aspiration targets are set to increase energy efficiency and absorb renewable energy. According to Kamonphorn Kanchanaii, the lecturer at the Faculty of Political Science and Public Administration, Chiang Mai University, Thailand, ASEAN is estimated to experience an energy demand by around 50% in 2025 and market share of renewable energy to 23% (Volkwyn, 2020).
The International Energy Agency’s (IEA) Southeast Asia Energy Outlook places the renewable energy market share in regional primary energy supply at around 15%. According to the IEA, energy demand is predicted to grow at twice the global average which challenges energy policymakers. Then, together with a regional study entitled “The Future of Cooling in Southeast Asia” and “ASEAN Renewable Energy Integration Analysis”, several priorities such as regional electricity trade, renewable energy integration, cooling efficiency and investment have been carried out. According to Dr. Fatih Birol, Executive Director of IEA, Southeast Asia has great potential in the next two decades along with the importance of energy policy for the citizens of Southeast Asia as well as the world. Therefore, to help realize the great potential of Southeast Asian countries, in determining sustainable energy planning, there are four pillars as the foundation for energy success.
1. Energy Security
According to the International Energy Agency (IEA), energy security is a form of uninterrupted availability of energy sources at affordable prices. As a region rich in natural resources, ASEAN can achieve energy security by utilizing natural resources in a tactical way. This tactic is intended to utilize natural resources as a form of energy security but reduce the potential for further environmental damage. One of the tactics implemented was that the Energy Ministers in ASEAN at the 31st ASEAN Ministers on Energy and Its Associated Meetings in 2013 agreed on the conversion and diversification of fuel oil to gas fuel because it produces lower CO2. In addition, countries such as Indonesia, Malaysia, Myanmar, and Brunei Darussalam use their main commodity, namely natural gas, for export to other ASEAN countries to fulfill energy security (Kementerian Energi dan Sumber Daya Mineral Republik Indonesia, 2013). In the future, ASEAN Member States (AMS) are estimated to still depend on fossil fuels as a primary energy source because of its affordable price. The most widely used fossil fuel is coal for power generation. As a long-term plan that is more environmentally friendly, the fossil fuel that will be used is natural gas because it is also affordable and emits only 50%-60% less CO2 than coal. Also, fossil fuel-based energy systems are predicted to face unprecedented challenges in the future due to their dependence (The ASEAN Post Team, 2018). Taken in the 6th ASEAN Energy Outlook (AEO6), ASEAN has become a net importer of oil and is projected to become a net importer of natural gas and coal in 2024 and 2035. Although the reserve to production ratio (R/P) is declining very rapidly, AEO6 projects that ASEAN will still be dependent on fossil fuels until 2040. Therefore, ASEAN must embrace all resource options to secure energy supply.
2. Energy Accessibility
Regarding the Sustainable Development Goal (SDG) 7: affordable and clean energy, access to energy is very important in people’s lives. AEO6 reports that AMS’s great efforts in fulfilling people’s right to energy access have yielded good results. Five ASEAN countries namely Brunei Darussalam, Malaysia, Singapore, Thailand, and Vietnam achieved an electrification ratio or electricity coverage of 100%. Although there are still gaps observed in the AEO6 Base Scenario, SDG scenarios were explored to examine the transition from traditional stoves to LPG, electric, natural gas, or biogas by 2030.
3. Energy Affordability
The definition of “affordable” may differ between definitions from AMS due to the availability of resources, economy, and unique challenges in each country. For now, to supply good quality energy at an affordable price, AMS relies more on fossil fuels. However, as the cost of renewable energy technologies is rapidly decreasing, the energy transition to cleaner energy will see the diminishing trade-off between environmental and economic priorities. According to the International Renewable Energy Agency (IRENA), electricity costs from solar PV gained almost USD 0.068/kWh in 2019, while onshore and offshore wind power were USD 0.053/kWh and USD 0.115/kWh.
4. Energy Sustainability
AEO6 reports that the electricity and transportation sectors are the largest contributors to CO2 emissions in ASEAN. These two sectors account for 42% and 25% of the total significant GHG emissions. This has serious implications for climate change, especially since ASEAN is an area that has a high level of climate disaster risk (Ienanto et al., 2021). Decarbonization is carried out as a form of climate change mitigation that is prioritized in increasing energy efficiency and the diffusion of renewable energy. Most AMS prioritize rural electrification, while cross-border energy interconnection between selected AMS is critical in terms of energy security and future renewable energy penetration (e.g. through the ASEAN Power Grid). ASEAN will phase out fossil fuel power plants without Carbon Capture and Storage (CCS) after 2050 under the Net Zero Scenario which achieves CO2-net zero emissions around 2050. In the transportation sector, most AMS targets public transportation systems in urban areas and alternative fuels such as biofuels and some AMS target innovative road transport modes, such as diffusion electric vehicles (EVs) (Arino et al., 2021).
Challenges to Unleashing Renewable Energy Strategic Communication Barriers
Related to the four principal pillars of ASEAN Energy Cooperation, although there are many renewable energy sources, the ASEAN region still relies on hydrocarbons or non-renewable energy which is considered more affordable. In line with the previous statement, the demand for fossil fuels is evidence of an increase in air pollution and CO2 emissions that disturb the environment. Along with efforts to align the goals of slowly shifting to New Renewable Energy (NRE) and the transition to cleaner energy, ASEAN countries must pay attention to, such as strategic communication by the government, investment, and bilateral diplomacy between countries to help realize the transition to NRE.
In accordance with the context of communication, according to the Journal of Review of International Geographical Education in 2021, in Indonesia, it was found that various energy messages such as reducing greenhouse gas emissions (GHG), climate change mitigation, and the potential for new and renewable energy (NRE) could not be combined and conveyed to the public because the type of energy’s material have different characteristics and material information. A resource person from the Communication and Public Information Bureau of the Ministry of Energy and Mineral Resources reminded the importance of increasing awareness of energy information and sharing knowledge through different communication channels (ASEAN Centre for Energy (ACE), 2019). The Indonesian government prioritizes energy saving knowledge by conducting various communication programs aimed at increasing public knowledge about energy saving. These activities include roadshows and school visits, energy-saving competitions and energy ambassadors, and community gatherings. Then, in several cities, public education about biodiesel and inviting the public to see the management of palm oil mills. In addition, the government has carried out the largest communication campaign titled “Cut 10%” in 2017 which aims to reduce energy consumption by 10% of daily use. However, some communication campaigns carried out for energy saving awareness are sometimes rejected by some remote communities for refusing to be provided with “technological solutions.”
Thomas and Stephen in Patrianti, Bajari, Agustin, & Bakti (2021) stated that the Ministry of Energy and Mineral Resources must have the authority to develop and distribute messages so that they can be understood by the public. Strategic communication lives at the intersection of management strategy and communication. In fact, the Communication Bureau, which plays a role in distributing ministry programs and policies, must follow the ministry’s communication policies. Meanwhile, strategic communication must have a strategic positioning. Communication on climate change is the key to increasing public understanding of science, social aspects like impacts on daily life and policy like to reduce and achieve climate change goals. The government has performed many important tasks to communicate mitigation policies but not yet in the strategic communication function. Communication is considered strategic if the communication policy itself is the main one and the main message is also developed. For example, a communication policy to distribute climate change messages from the energy sector stands alone as energy itself. Communicating public information strategically in coordination with relevant agencies is a better way to achieve public understanding that the government is doing well.
In addition, energy diplomacy is also needed to increase renewable energy investment in ASEAN. Energy diplomacy aims to ensure the country’s energy security while promoting business opportunities related to the energy sector. AMS participation in the ASEAN Plan of Action and Energy Cooperation (APAEC) itself is a form of energy diplomacy to achieve regional energy targets with a purpose in slowly shifting the use of fossil fuels to more environmentally friendly fuels. Nevertheless, it is important to highlight that the practice requires mobilization of a massive increase in investment.
However, global investment in renewable energy is still far below its potential. By addressing the critical risks and barriers, public finance and investment climate can play an important role in bridging the financing gap and attracting further investment from the private sector to renewable energy and raising significant investment. ASEAN must intensify diplomacy and energy cooperation internally because strengthening diplomacy from within can also help share best practices, comprehension, materials, money circulation, and others. There are many things that basically can be explored further to achieve its regional targets in NRE and Energy Intensity (EI) while ensuring energy security, accessibility, affordability, and energy sustainability. This is emphasized in the APAEC document such as facilitating intra-ASEAN trade for NRE, promoting enabling mechanisms or policy instruments to accelerate NRE research, development and demonstration in the region can also be considered.
Examples of energy diplomacy arise in Vietnam where Vietnam will double the use of NRE in the country by the end of this decade and plans to reduce carbon emissions by 15% during this period. To allow the sustainable implementation of RE, Vietnam is establishing cooperation and energy diplomacy with Sweden. Vietnam and Sweden are focused on assisting technical cooperation, upgrading the power grid, developing the NRE market, and mobilizing credit support from Swedish financial institutions for NRE projects. Several Swedish export credit companies and institutions offer attractive technical and financing solutions for NRE projects in Vietnam. Therefore, to help realize a gradual shift to renewable energy use, ASEAN countries should examine energy diplomacy as a prime instrument to increase renewable energy investment through regional foreign policies (Wijaya & Kresnawan, 2021).
Conclusion
The easing of Covid-19 policies in various countries in ASEAN has indeed stimulated the resurgence of economic activity that needs vast quantities to power it. Until now, various countries in ASEAN complement each other’s energy needs both domestically and internationally with their respective natural resources. However, considering several things such as the economic versus environmental costs of fossil fuel energy, producing countries have a dilemma in terms of fulfilling export priorities or domestic needs. Furthermore, it is also necessary to increase environmental awareness with various communication strategies that are conveyed from stakeholders related to energy to the community. Therefore, the ASEAN region must review the precise strategy and identify the obstacles that will be faced before being completely ready to substitute for the use of renewable and greener energy which will be beneficial for their own country and society, as well as other countries.
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