By Francesco La Camera
To meet climate goals, support sustainable development and fuel economic growth, ASEAN countries would need to turn decisively to renewables.
According to the Intergovernmental Panel on Climate Change, we have less than 11 years to limit the rise of global temperatures by drastically reducing carbon dioxide emissions. No other solution can curb rising emissions from the energy sector while boosting prosperity within this timeframe. However, the potential of renewables is still largely untapped across the ASEAN region.
Energy remains key to growth. Economic expansion in ASEAN has pushed energy demand up by around 60 per cent in the past 15 years, and this trend will continue with rising populations, a booming middle class and greater energy access. This will require capacity additions of another two-thirds over the next 20 years.
To meet this increase in demand in a sustainable way, a new way of thinking is required - a topic that will be central to deliberations at the Singapore International Energy Week this week. With the event set to take place under the theme, Accelerating Energy Transformation, the opportunities presented by renewable energy will be at the heart of discussions.
Climate action simply cannot wait. Despite years of regional growth driven by fossil fuels, it is essential that the next period of ASEAN expansion is underpinned by low-carbon renewable technologies. A climate-safe energy path is possible for Southeast Asia and is critical to ensuring a future of stability and prosperity.
The use of renewables will result in decreasing costs, rising jobs, significant socioeconomic benefits and improved energy access. These benefits are proof that there are no trade-offs between climate action based on renewables, and economic growth. In fact, every dollar invested globally in energy transformation offers a payoff of between US$3 and potentially more than US$7, depending on how externalities are valued.
A warming planet presents a significant threat to Southeast Asia. Average global temperatures have risen for each of the last six decades. The climates of Vietnam, Myanmar, the Philippines, and Thailand are among 10 of the most affected in the world over the past 20 years. The World Bank counts Vietnam among the five countries most likely to be affected by global warming and the Asian Development Bank believes Southeast Asia’s gross domestic product (GDP) could shrink by 11 per cent by the end of the century because of climate change.
This outlook strengthens the argument that coal is almost certainly not the least expensive power generation option in the region, when such external factors are considered. Despite this, rising coal use contributed to record levels of global emissions last year – when the International Energy Agency found Southeast Asia to be the only region in the world where the share of coal in power generation grew. It is vital that Southeast Asia’s energy plans leave behind coal and take full advantage of renewables.
The notion that renewables are expensive is dated. Over 75 per cent of onshore wind and 80 per cent of solar photovoltaic (PV) project capacity due to be commissioned globally in 2020, will produce cheaper electricity than coal, oil or natural gas optionsn – all without any financial assistance.
These cost reduction trends are being reflected in Southeast Asia too. Recent auction prices for solar in Malaysia secured bids below the price of gas power in the country. Last year, Philippines’ utility Meralco set a record low solar PV bid for the region at US 4 cents per kilowatt hour – a price that would have set global records just a few years ago.
The socio-economic benefits from the use of renewables are already being realised today. Malaysia, Thailand and Vietnam were responsible for the greatest share of Asia’s renewable energy job growth last year. Under the International Renewable Energy Agency’s South-east Asia renewable energy roadmap, the region will be able to reduce its annual fuel bill of US$40 billion by 2025, while boosting GDP by more than three per cent of what is expected under current plans and policies.
The growth of renewables has already seen some progress. Total renewable energy capacity in the region today stands at around 62 GW, having more than doubled in the last decade. Vietnam, Thailand and Indonesia account for the largest shares of installed capacity, most of which comes from hydropower and bioenergy.
South-east Asian countries will need to substantially scale-up the deployment of renewables to reach the aspirational target of 23 per cent renewables in primary energy by 2025. In wind energy alone, the region has the potential to scale up capacity to around 19 GW – from 2 GW today – through increased investments. This would align its plans with 2050 climate goals.
South-east Asia is not alone. Around US$19 trillion of global capital is earmarked for fossil fuels over the next 30 years, and will need to be redirected into low-carbon technologies to fully transform the energy system. This reallocation of investments will not only mitigate the risk of stranded assets, but it also amounts to around half of the total investment necessary to reduce the effects of climate change.
By meeting energy demand growth with renewables, ASEAN can enter a new age of long-term sustainable development - creating jobs, improving air quality and avoiding the socioeconomic costs associated with temperature rise. To do otherwise may threaten our global ambitions and strain economic prospects. Now is the time lead the change with renewables.
The writer is the Director-General of the International Renewable Energy Agency (IRENA).
He delivered the opening address at Singapore International Energy Week on 29 October 2019, which focussed on how the adoption of renewables can help to improve economic growth and create more jobs.
This was originally published in the Straits Times on 29 October 2019.