Residents in many of the Association of Southeast Asian Nations’ (Asean) most polluted cities have been delighted to observe significant decreases in pollution levels as a result of Covid-19 lockdown measures that have disrupted the economy and thus many pollution-causing activities. However, as governments begin lifting restrictions and business activities return, so too will the demand for energy. Economic recovery could see the levels of carbon dioxide (CO2) emissions bouncing back very quickly. Indeed, global data from late May shows an all-time high for levels of CO2 as countries start to reopening the economies.
However, with all the tragedy caused by the Covid-19 pandemic, perhaps there can be a silver-lining in terms of how we navigate Asean’s energy transition if we can embrace renewable energy (RE) and clean technologies. Covid-19 seems to be accelerating the adoption of several pre-pandemic trends like digitalization and robotics. Perhaps decarbonization can be another.
The post-Covid-19 economic recovery will drive increased energy demand. Asean’s energy mix greatly relies on fossil fuels which are a significant source of emissions. To ensure the region’s energy sustainability, development, and healthy environment, this rapid increase in demand will need coordinated management and appropriate energy supply infrastructure and investment. Investment in renewable energy (RE) and clean technologies still faces instability and high costs. Thus, energy policy targets and clean technologies penetration into energy systems will need to be promoted by Asean leaders. Investments into low-carbon technologies and renewables are key to managing the energy transition towards cleaner use of energy and addressing emissions.
The Asean Plan of Action for Energy Cooperation (APAEC) Phase 2, which is under preparation for endorsement at the Asean Ministers on Energy Meeting in 2020, will set key energy policy targets and will have significant policy implications for energy infrastructure related investment in the region. Key targets include the revision of the new Energy Efficiency and Conservation target from 30-percent energy intensity reduction by 2025 (based on 2005 levels) to more ambitious levels — with a likely new target of 35- to 40-percent reductions — and will involve expansion of energy efficiency measures for transport and industries.
APAEC Phase 2 will also establish a new sub-target for the share of renewables in installed power capacity which will complement the existing target of 23-percent share of renewables in the Total Primary Energy Supply by 2025. In addition, APAEC Phase 2 will include policy measures to pursue smart grids and RE grid integration, and measures to address emerging and alternative technologies such as hydrogen, energy storage, bioenergy, nuclear energy, climate change and decarbonization, energy investment and financing and private sector participation.
However, Asean will need to do more to lay out a clear energy transition strategy to deal with the mix of fossil fuels and new and clean technologies.
While economic growth has increased the affordability of REs around the world, many emerging economies are still at the early stages of development and may not have sufficient funds. For Asean members who can afford more investment in REs, an important concern is the need for electricity storage and smart grids to support higher RE penetration levels into the electricity sector. Smart grid technologies are already making significant contributions to electricity grids in some developed countries of the Organization for Economic Cooperation and Development. However, these technologies are undergoing continual refinement and hence are vulnerable to potential technical and non-technical risks. RE growth will thus be constrained by infrastructure development as well as by the evolution of technology including the capacity to assess and predict the availability of RE sources. These capacities offer additional benefits, notably the promise of higher reliability and overall electricity system efficiency.
In terms of the global climate narrative, REs provides a promising prospect for the world’s energy sector. Asean countries would be smart to follow the same trend as the rest of the world and expand their RE industries. Due to technological advance, the great growth potential of RE in the future will come from wind, solar and biofuel power which will be competitive with traditional fossil fuels. Among the Asean economies, there is also ample scope for growth in hydroelectricity, particularly in relatively less developed economies such as Cambodia, Myanmar and Laos. In several Asean countries, there is also potential for growth in geothermal energy.
The largest reduction of CO2 emissions is expected in the power sector, as a result of introducing renewable energy as much as possible. To realize high penetration of renewables in the power system, requires a huge investment in power system integration through the Internet of Things (IoT) which enables coordinating the balance between (1) distributed power generation (eg; wind power plants, mega-solar photovoltaic (PV) plants, rooftop solar PV systems on buildings), (2) market systems, (3) demand response technologies, and (4) information technology (IT, i.e. data acquisition and communication).
Coordinated power system integration through IoT is known as a “smart grid system.”
Smart grid systems consist of complex arrangements of infrastructure and digital technologies whose functions depend on many interconnected elements. As the European Union has achieved a high penetration of renewables using the smart grid system, Asean may have much to learn from them.
To bridge from the current energy system to a future cleaner energy system, Asean will need to consider the role of the cleaner use of fossil fuel and the innovative technologies that can reduce CO2 and Green House Gas (GHG) emissions. Given that the energy sector accounts for two-thirds of global GHG emissions, urgent steps are needed to decarbonize the energy sector through development of a low-carbon economy which requires the rapid deployment of clean fossil fuel technologies, renewable energy development and a doubling of energy efficiency.
Taking the opportunity of Covid-19, Asean’s leaders will need to act boldly to increase RE investment and clean technologies into the energy mix to formulate energy policies such as removal of fossil fuel subsidies that discourage investment in RE. If Asean leaders are complacent or lack bold actions, energy consumption and the resultant emissions are likely to surpass pre-pandemic levels. Thus, it is very important for leaders in Asean to act now for energy policy changes toward more renewables and clean technology investment for decarbonizing the emissions.
Han Phoumin is a Senior Energy Economist of Economic Research Institute for Asean and East Asia (ERIA)
The views expressed here are personal and do not reflect ERIA’s position.