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Call to Action: Responsible Energy Initiative Philippines

In 2023, REI Philippines conducted a situational analysis of the ecological and social impacts that may emerge with the scaling of renewable energy. This culminated in the first report, exploring: 

1. How these impacts are currently governed 

2. How market actors respond to these impacts, and, 

3. How the Initiative might effectively contribute towards creating a renewable energy system that is more socially just and ecologically sound. 

03-2024     |     Responsible Energy Initiative (REI)
Renewables
Industry Decarbonization Roadmaps for Indonesia: Opportunities and challenges to net-zero emissions

Indonesia is the fourth-most populous country in the world with a fast-growing economy. The industrial sector is one of the largest CO2-emitting sectors in Indonesia. Decarbonizing the industrial sector is critical to achieving Indonesia's enhanced Nationally Determined Contributions (NDCs).

This in-depth study, conducted jointly by the Lawrence Berkeley National Laboratory and the Institute for Essential Service Reforms (IESR) of Indonesia developed sector-specific roadmaps for deep decarbonization of five key industry sectors in Indonesia: iron and steel, cement, ammonia, pulp and paper, and textile industries, which are responsible for 70% of the industrial emissions in Indonesia. We analyzed the current status of the studied industries and analyzed different decarbonization pathways that can substantially reduce the CO2 emissions of Indonesia's industry sector. The results of the collaboration demonstrate that it is technically feasible to mitigate 100 million tonnes (Mt) of CO2 emissions from today's level, or 160 MtCO2 emissions from the reference scenario, and achieve near-zero CO2 emissions in the studied Indonesia’s industrial sectors by 2060, as well as 2050 in an accelerated mitigation scenario.

02-2024     |     Lawrence Berkeley National Laboratory
Decarbonization
Part 2: The Case for Power System Connectivity as a Key and Cost-Effective Enabler of Energy Transit

This blog is written by Matthew Wittenstein, Chief of Section, Energy Connectivity, UN ESCAP[1]. It is an annex part of The Case for Power System Connectivity as a Key and Cost-Effective Enabler of Energy Transition blog

Related references and further reading

- ADB (Asian Development Bank). 2024. ADB’s Support for Energy Cooperation in Greater Mekong Subregion (GMS) and ASEAN. Presentation by Hyunjung (HJ) Lee, GMS/ASEAN Energy Program Lead, ADB at launch of report by USAID Mekong for the Future Program. Towards a Green and Inclusive Power Sector in Greater Mekong Subregion. 7 February 2024, from 17:30 – 20:30 p.m., Coral Life Building, Sukhumvit 39. Bangkok, Thailand.

- Shani and du Pont. 2024. Blog: “Empowering Southeast Asia's Green Future: The Vital Role of the ASEAN Power Grid in Regional Energy”. Posted on the website of the Southeast Asia Information Platform for the Energy Transition (SIPET).

- UNESCAP (UN Economic and Social Commission for Asia and the Pacific). Presentation by Matthew Wittenstein, UNESCAP at launch of report by USAID Mekong for the Future Program. Towards a Green and Inclusive Power Sector in Greater Mekong Subregion. 7 February 2024, from 17:30 – 20:30 p.m., Coral Life Building, Sukhumvit 39. Bangkok, Thailand.

UNESCAP (UN Economic and Social Commission for Asia and the Pacific). 2023. Accelerating the energy transition through transnational power system connectivity: recommendations for the G20 energy transitions working group. Policy Brief. 2 April.

UNESCAP (UN Economic and Social Commission for Asia and the Pacific). 2023 Green power corridor for North-East Asia: Roadmap. Report. 5 December.

UNESCAP (UN Economic and Social Commission for Asia and the Pacific). 2022. Toward sustainable energy connectivity in Asia and the Pacific: status, trends, and opportunities. Flagship Report. 22 September.

https://www.unescap.org/blog/role-power-system-connectivity-energy-security

https://www.unescap.org/blog/considering-energy-security-transition-low-carbon-world

https://www.unescap.org/blog/accelerating-sdg-7-through-private-investment-transmission-infrastructure

https://www.unescap.org/blog/role-power-system-connectivity-times-high-energy-prices

https://www.greengridsinitiative.net/post/principles-for-interconnection

_______________________________________________________________________

[1] This blog is based on several recent reports and papers by the author. Some of this information was also presented at the launch of a recent USAID/WWF report on regional power interconnectivity in Bangkok in February 2024 (see UNESCAP 2024).

03-2024     |     UN ESCAP
Energy Transition
The Case for Power System Connectivity as a Key and Cost-Effective Enabler of Energy Transition

Written by Matthew Wittenstein, Chief of Section, Energy Connectivity, UN ESCAP[1]

Power interconnectivity in Southeast Asia means more than just infrastructure development; it's a catalyst for the Energy Transition that the region, and indeed the world, needs. At the United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP), we've been working closely with our member States to observe and contribute the efforts to leverage power system connectivity as a tool for sustainable development. 

In this blog, I'd like to share my view on why integrating power systems across borders is a crucial enabler for ASEAN’s Energy Transition. I describe a key economic benefit—that, by one estimate, every $1 spent on grid infrastructure reduces system costs by $7.4. But I also describe benefits of a regional power grid in terms of energy security and democratization.

This blog builds on an excellent and very informative blog featured in last month’s SIPET newsletter (February 2024) by Nadhilah Shani of the ASEAN Centre for Energy, which described recent progress on the ASEAN Power Grid; the priority that the ASEAN Power Grid is getting from ministers across the region, and the role that ACE is playing to support this process.

About ESCAP

UN ESCAP is one of the five UN regional hubs promoting collaboration on a regional and subregional basis. With 53 member States and 9 associate members, UN ESCAP's mandate is to foster inclusive and sustainable economic growth within Asia and the Pacific while championing the 2030 Agenda for Sustainable Development. Within its framework, ESCAP’s Energy Division is tasked with two primary areas of work: achieving Sustainable Development Goal 7, which is centered on affordable and clean energy, and fostering energy connectivity to streamline integration across the region. Increasingly, we are also supporting member State efforts to achieve the energy transition in tandem with managing the extractive industries, particularly as demand for minerals and materials critical to the energy transition increases.

ESCAP’s Regional Road Map

In 2021, ESCAP member States endorsed a Regional Road Map on Power System Connectivity,[2] which includes among its nine strategies a call for increased coordination of grid planning and mobilization of investments in grid infrastructure. ESCAP is working with member States to implement these strategies, for example by identifying opportunities to unlock private and climate financing for green grids – ones that are fully aligned with and supportive of sustainable development by enabling the integration of high shares of renewable energy – including across borders.

Significant and Growing Number of Multilateral Initiatives with a focus on electricity

Over the past few decades, there has been a gradual but inexorable increase in initiatives to connect power grids across Asia.  Figure 1. Multilateral Power Connectivity Initiatives across Asia maps initiatives that either focus directly or otherwise enable collaboration on power system connectivity, within and across four sub-regions: Central and North Asia, South and South-west Asia, East and North-east Asia, and South-east Asia, which primarily includes the ASEAN Member States.

The Benefits of an ASEAN Power Grid

Interconnecting power systems across Southeast Asia offers a trifecta of benefits: economic, security, and sustainability. Economically, it allows access to lower-cost resources, opens up new opportunities for export revenues, and allows developers to leverage increased economies of scale for investments.

From a security standpoint, interconnected grids lower reserve margin requirements and enhance resource diversity.  And most importantly, on the sustainability front, such connectivity facilitates access to high renewable energy (RE) potential areas, enabling the integration of variable renewable resources through resource smoothing or leveraging larger grids to take advantage of natural variations in weather patterns.

The economic rationale for interconnectivity and multilateral power trading is clear. A fully integrated ASEAN Power Grid, for example, can jump-start the journey of ASEAN countries to their net-zero targets by enabling the integration of low-cost clean energy resources. According to analysis done for ESCAP by TransitionZero,[3] a fully integrated ASEAN Power Grid would enable the accelerated integration of renewable energy resources while reducing overall electricity costs by 8%. Moreover, for the power system itself, the economic benefits of integration are significant: for every $1 spent on grid infrastructure, system costs are reduced by $7.4.

Beyond these obvious economic benefits, the ASEAN Power Grid will democratize energy through cross-border trading, promising to level the playing field, allowing countries with high renewable energy potential to play a larger role in the regional energy market. This not only fosters economic growth but also drives the adoption of sustainable practices across the region.

The Challenges of Developing the ASEAN Power Grid

At the same time, the reality is that interconnecting power grids anywhere in the world, including Southeast Asia is challenging. First, there's the matter of political will: while there are some fervent "champions," the levels of support vary widely across the region. The amount of capital needed for transmission and distribution infrastructure poses another hurdle—it is essential to estimate the benefits, allocate costs, and then attract significant amounts of private capital, since public budgets alone will struggle to finance all the required power interconnection infrastructure.

Institutional arrangements further complicate matters, with many institutions either completely absent or possessing limited capacity and authority. For example, in contrast to other parts of the world, Asia lacks any regional power pools, or market frameworks to enable multilateral, multidirectional power trade.

Lastly, the alignment of connectivity initiatives with sustainability objectives is hampered by the absence of frameworks or explicit policies that link connectivity directly with sustainability goals. These challenges underscore the complexity of achieving interconnected power grids, yet they also point to some critical areas where concerted effort and collaboration are essential.

How Does Grid Infrastructure Enable the Energy Transition?

In the context of the Energy Transition, the importance of grid infrastructure cannot be overstated. It is a capital-intensive, long-term development that underpins the secure and cost-effective integration of variable renewable energy sources like wind and solar PV. Investments in grid infrastructure are often perceived as a lower priority compared to investments that have more directly measurable climate benefits, in particular renewable energy resources, but grids are fundamentally important for sustainable development, as they enable renewable energy to be utilized wherever and whenever it is produced.

Importance of Developing Regional Markets

Grid infrastructure is only part of the story. Ensuring renewable resources are integrated securely and efficiently requires appropriate market frameworks as well. ASEAN is made up of a diverse range of countries, from least developed and landlocked developing countries with state owned, vertically integrated utilities, to developed economies with liberalized power market structures. A fully developed ASEAN Power Grid must include some form of regional market framework to enable the optimization of generation and demand resources across borders. This is particularly important as the share of renewable energy resources in power systems increases.

The International Energy Agency (IEA) examined the question of developing a regional power market in South-east Asia in their 2019 report “Establishing multilateral power trade in ASEAN”.[4]

The IEA report highlights different stages of market development. In nascent markets, cross-border power trading is limited to bilateral arrangements, which may, in turn, be unidirectional (such as Thailand importing hydropower from Lao PDR via dedicated transmission lines) to bidirectional, grid-to-grid trading, such as the interconnection between Malaysia and Singapore.

Secondary markets are multilateral power trading arrangements that exist in addition to, or on top of, national market frameworks. These are often useful for enabling multilateral power trading among countries with different market structures, for example, in the case of the West African Power Pool or the Central American Electrical Interconnection System (Sistema de Interconexión Eléctrica de los Países de América Central, or SIEPAC). In ASEAN, the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project could also be considered in this category, though it is currently limited to unidirectional trading.

Finally, primary markets involve the establishment of multilateral trading arrangements that replace national or other jurisdictional market frameworks as the primary mode for organizing trades. These are found in Europe, India, and across parts of the United States.

Further development of the ASEAN Power Grid will require the establishment of a secondary market arrangement among at least some ASEAN Member States. As the IEA report notes, it is possible to have different market models operating in parallel, meaning that some countries could develop and participate in secondary market arrangements while other ASEAN countries establish a primary market arrangement. However, it is important for all ASEAN Member States to participate in the development process for these market arrangements, and to meet certain minimum requirements for multilateral power trading. This will ensure seamless connectivity across all countries regardless of their level of integration.

In conclusion, the path to a sustainable, economically vibrant, and secure energy future in Southeast Asia lies in the interconnection of its power systems. UN ESCAP, along with numerous other international donors, are working with ASEAN Member States, the ASEAN Centre for Energy, and the ASEAN Secretariat to support the development of a comprehensive set of strategies that will realize the long-delayed benefits of having a regionally interconnected power system for ASEAN. It's a journey that holds promise not just for the region but for the global community as well, as we strive to meet the challenge of transitioning to clean energy systems while also contributing to our shared development and sustainability goals across Southeast Asia.

For related references and further reading, please click here.

_______________________________________________________________________

[1] This blog is based on several recent reports and papers by the author. Some of this information was also presented at the launch of a recent USAID/WWF report on regional power interconnectivity in Bangkok in February 2024 (see UNESCAP 2024).

[2] https://www.unescap.org/our-work/energy/energy-connectivity/roadmap

[3] https://www.transitionzero.org/

[4] https://www.iea.org/reports/establishing-multilateral-power-trade-in-asean

03-2024     |     UN ESCAP
Energy Transition Energy Investment Analysis
The Potential of Hydrogen for Decarbonizing Iron and Steel Production in Vietnam

Nghiem Thi Ngoan highlights the potential of green hydrogen for decarbonizing iron and steel production in Vietnam and illustrates the potential to reduce carbon emissions through the use of green hydrogen as an alternative to coal.

For full deatils, please click here.

03-2024     |     CASE
Hydrogen
Co-benefits of energy transition in Viet Nam’s industrial development

The study on "Co-benefits of energy transition in Viet Nam's industrial development" aims to provide an overview of the localisation of the industrial sector amid the energy transition. It examines various aspects, including policy framework, international experience, current status and the localisation potential of two key technologies: wind and solar power for the period of 2025-2050. On the other hand, this study also serves as a foundation for CASE to conduct more detailed and in-depth policy framework research for localisation in the next stages.

Download to read full report. 

01-2024     |     Clean, Affordable and Secure Energy for Southeast Asia (CASE)
Renewables Energy Technologies Energy Policy
Capacity building needs assessment for Energy trasition in Viet Nam

This study on Assessment of Capacity Building Needs has overall objective of identifying the needs from the key stakeholders and then providing suggestions on feasible measures to better support the main actors involving into energy transition (ET) progress in Viet Nam. To achieve this objective, gaps in terms of legal frameworks, institutional capacities of actors involved into state governance, implementation and supporting the process of energy transition (including but not limited to RE development and energy efficiency measures) will be analyzed. Consequently, capacity building measures will be provided to support the related parties in better performing their mandates, enhancing their voices and participation in energy transition progress.

06-2023     |     Clean, Affordable and Secure Energy for Southeast Asia (CASE)
Energy Transition Energy Education
Transitioning away from coal in Indonesia, Vietnam and the Philippines with IESR and ICSC

Southeast Asian countries such as Indonesia, Vietnam, and the Philippines are highly vulnerable to climate change impacts but also still heavily reliant on coal. The three countries have made important policy commitments to accelerating the shift from coal to clean energy in recent years. These commitments play a positive role in global efforts to limit climate change. However, all three countries lack concrete policy instruments to phase out coal.

The task is daunting, as the structural changes to transition away from coal represent significant
economic and societal challenges.

The international community has committed to financially supporting the transition efforts in the region through the so-called Energy Transition Mechanism and the Just Energy Transition Partnership. These commitments are an initial step toward accelerating financial assistance, technology transfer, and capacity building.

To guide policy decisions, Agora Energiewende, the Institute for Essential Services Reform and the Institute for Climate and Sustainable Cities have examined the political, economic and social dynamics that influence coal use in Indonesia, Vietnam and the Philippines. This publication aims to contribute to filling certain gaps that exist in the evidence base of the clean energy transition to support the development of strategies and mechanisms to phase out coal in a just and speedy manner.

Read full report: click here.

11-2023     |     Agora Energiewende, IESR, ICSC
Energy Policy