Bright outlook for renewable energy
In the last five years, Southeast Asia has been ramping up generation of renewable energy. Notably, Vietnam more than doubled its renewable energy production between 2016 and 2020 (from over 17,000 megawatts to over 35,000 megawatts), according to data from the International Renewable Energy Agency. Land-scarce Singapore also increased its renewable energy production by more than 50% in the same period.
Even as economies have been disrupted by the pandemic, the transition to clean energy has not come to a halt. An EY study of eight economies across Asia — Indonesia, Japan, Malaysia, the Philippines, South Korea, Taiwan, Thailand and Vietnam — between August and September 2020 found as many as 800 clean energy projects in the pipeline. Assuming all of them are realized, we are looking at an investment potential of over US$316b and an emission-saving potential of over 229 metric tons of carbon dioxide equivalent or MTCO2e. These projects and investments also have the potential to generate up to 870,000 jobs.
The transition to clean energy remains attractive, with the private sector ready to deploy capital into it. This can be seen from how Malaysia has procured large commitments from solar energy developers during the pandemic, while other Asian economies have dedicated sizable portions of their COVID-19-related relief packages to clean energy-related initiatives.
The push to adopt cleaner energy in Southeast Asia has not gone unnoticed. According to the 58th edition of the EY Renewable Energy Country Attractiveness Index (RECAI) in October 2021, the Philippines, Vietnam and Indonesia have risen up the rankings of the world’s top 40 markets in terms of the attractiveness of their renewable energy investment and deployment opportunities. Indonesia is a new entrant to the RECAI, having set more ambitious renewables targets and policies to retire diesel and coal power plants.
The traditional oil and gas sector is also tapping into opportunities in clean energy. According to the Powering ASEAN’s Energy Transition report by the EU-ASEAN Business Council, energy transition in the oil and gas sector can bring Southeast Asian countries economic opportunities of up to 20% of GDP.1 As oil and gas players seek to provide clean energy for consumers, they are also seizing growth opportunities that come with energy transition. Take for example the 10-year plan by Shell Singapore, which outlines how it could make significant investments in people, assets and capabilities to repurpose its core business and cut its carbon dioxide emissions by about a third within a decade.2