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In recent years, corporate leaders in Southeast Asia have been increasingly prioritizing decarbonization as a critical business imperative. ASEAN, with a population of over 680 million people and a combined GDP of approximately $3.6 trillion, is one of the fastest-growing economic regions in the world, experiencing robust economic growth and increasingly establishing itself as a critical global market with significant influence in trade, investment, and supply chains.  

Along with this rapid industrialization and growth, companies in the region are facing mounting pressure from stakeholders, governments, and global markets to transition to more sustainable and environmentally friendly practices. This shift is driven by a combination of regulatory demands, investor pressure, and the clear need to mitigate the severe impacts of climate change. 

Corporate Drivers for Decarbonization 

There are several key factors driving corporates in Southeast Asia to decarbonize their operations and supply chains.  First, there is growing recognition of the risks associated with climate change, including extreme weather events, supply chain disruptions, and long-term operational risks. Companies are also responding to regulatory frameworks, such as national commitments to reduce emissions under the Paris Agreement and corporate disclosure requirements on sustainability performance. While these signals are medium and long-term, they are driving corporates to plan and begin to take action. 

In addition, consumers and investors are increasingly demanding transparency and accountability from businesses regarding their environmental impact. This shift in expectations is creating a competitive advantage for companies that can demonstrate their commitment to sustainability. 

Increasing Corporate Commitments to Net Zero 

Many multinational corporations and regional businesses are stepping up their efforts by setting ambitious Net Zero targets. In recent years, there has been a significant increase in the number of companies in Southeast Asia setting climate targets through the Science-Based Targets initiative (SBTi). SBTi helps companies set greenhouse gas (GHG) emission reduction targets in line with climate science. Its goal is to encourage companies to align their strategies with the Paris Agreement, which aims to limit global warming to well below 2°C, with efforts to stay within 1.5°C. 

Across Asia, the number of companies headquartered in Asia with validated science-based targets grew by 140% just during 2022 and 2023.  And within Southeast Asia, the momentum is catching up rapidly.  In fact, the number of corporates in Southeast Asia with SBTI targets grew 4-fold between 2021 and 2022—from 25 to 109 companies, with that growth spread relatively evenly across Singapore, Indonesia, Thailand, and Malaysia, and to a lesser extent Vietnam, Cambodia, and the Philippines.   And in Indonesia, during 2023, the number of companies with validated targets tripled.  

Clearly, the commitment to reducing emissions in line with SBTi standards is becoming a critical part of business operations in Southeast Asia, driven by both internal corporate strategy and external pressures like supply chain requirements and regulatory changes. This growth is also fueled by the increasing awareness of the need for credible climate action and the economic potential of reducing emissions. Companies based in Singapore, Indonesia, and Thailand are playing pivotal roles, particularly in sectors like manufacturing and energy, which are key contributors to global supply chains. 

This trend in corporate commitments signals that more businesses are beginning to integrate sustainability into their core operations. And the urgency to meet these goals is further amplified by corporate leaders recognizing that decarbonization is not only necessary for the planet but also beneficial for long-term business resilience  

Challenges Faced by SMEs 

As the momentum increases, it is becoming evident that the journey toward decarbonization is not without its challenges, especially for small and medium enterprises (SMEs). SMEs often struggle with limited financial resources and lack of technical expertise needed to implement decarbonization projects, and to attract the necessary investment. Unlike large multinationals, SMEs often lack access to cutting-edge technologies and face higher costs (both transaction costs, as well as the cost of capital) in adopting renewable energy solutions or improving energy efficiency. Additionally, it can be time-consuming and burdensome for smaller players to navigate the regulatory landscape and align with international sustainability standards can be particularly burdensome for these smaller players.  For example, over the past 10-15 years, the number of reporting regulations for global Environmental, Social, and Governance (ESG) have surged dramatically. Since 2011, the number of ESG regulations introduced worldwide has increased by 155%, with more than 1,255 new regulations established, compared to 493 regulations established between 2001 and 2010. 

Peter du Pont, Co-Founder and Co-CEO, Asia Clean Energy Partners

What will it take for Southeast Asia to transition from fossil fuels to renewable energy? How can Indonesia tap into its vast geothermal resources? Will the Philippines fully capitalize on its abundant solar and wind potential? How can Thailand’s progressive energy policies serve as a regional model? And as Viet Nam continues its rapid economic growth, how can it position itself at the forefront of solar and wind energy adoption?

NewClimate Institute and Agora Energiewende’s newly published research, ‘Navigating the Transition to Net Zero in Southeast Asia’, explores these questions and outlines a framework integrating policy, technology, and finance for the region’s clean energy transition.  The paper addresses the following:

Redefining Energy Security: How can we shift from ensuring a sufficient supply of energy resources to creating a reliable and flexible energy system? The report suggests minimizing demand and maximizing the use of domestic renewable sources.

Electrification and Smart Hydrogen Use: Can widespread adoption of electric vehicles (EVs), heat pumps, and electric boilers reduce fossil fuel reliance? The report advocates for electrification where possible, with selective use of hydrogen in industries where electrification is not feasible.

Accelerating Renewable Energy: What is the potential for solar and wind power in Southeast Asia? The report highlights immense opportunities, especially in countries like Viet Nam and the Philippines. But how can innovative technologies like offshore wind and floating solar panels help overcome geographical constraints?

Enhancing System Flexibility: As renewables take center stage, how can energy systems adapt? The report emphasizes the need for energy storage solutions, improved grid infrastructure, and better demand management.

Country Spotlights

The report offers tailored insights for key Southeast Asian nations, addressing specific challenges and opportunities. For Indonesia, it explores strategies to reduce reliance on fossil gas while boosting industrial electrification. In the Philippines, the focus is on prioritizing renewable energy and battery storage in light of rising costs from Liquefied Natural Gas (LNG) imports. Thailand's significant solar potential is highlighted, with recommendations on accelerating deployment to mitigate energy import risks. For Viet Nam, the report examines how the country can balance its plans to boost gas capacity with a faster increase in renewable energy capacity.

Challenges and Solutions

The path to net-zero is not without obstacles. Financial constraints, technological gaps, and political inertia present significant barriers. However, the report proposes several solutions to address these challenges. It recommends establishing clear national energy targets supported by robust regulatory frameworks and enhancing regional cooperation to share best practices and mobilize resources. Increasing investment in research and development and implementing financial incentives to attract private investments are also critical steps.

As Southeast Asia stands at this critical juncture, the question remains: Can the region successfully navigate the transition to net-zero emissions? The roadmap provided by NewClimate Institute and Agora Energiewende offers a comprehensive guide, but the journey will require collaboration, innovation, and commitment from policymakers, industry leaders, and stakeholders alike.

For more detailed insights, read the full report here.

As Indonesia works to realize its 2045 goals under the “Indonesia Emas” vision, the upcoming Indonesia Sustainable Energy Week 2024 (ISEW 2024) aims to bring together various stakeholder groups. The event will provide a platform to explore a wide range of energy transition topics. This year’s theme, “United Towards a Sustainable FutuRE”, aligns with Indonesia’s long-term objectives, aiming to elevate the country to a leading position in sustainable development by 2045.

The Indonesia Emas 2045 vision encompasses comprehensive development goals, including achieving economic prosperity, social equity, and environmental sustainability. A clean energy transition is pivotal in this journey, as reliable, low-emission energy systems are essential for sustaining economic growth while improving the quality of life for Indonesia's rapidly expanding middle class.

Organized by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, in collaboration with other German-funded organizations like Clean Affordable and Secure Energy for Southeast Asia (CASE), ISEW 2024 showcases the robust partnership between Indonesia and Germany. This cooperation, spanning over three decades, has been instrumental in advancing Indonesia’s renewable energy initiatives, from upscaling renewable energy to extending transmission grids and developing green jobs.

Elisabeth Tinschert, Energy Programme Director for GIZ Indonesia/ASEAN, views this event as a testament to the longstanding energy cooperation between the two nations. “For me, the theme stands for the spirit of collaboration, as both countries work hand in hand to support Indonesia’s unique transition towards a sustainable energy system based on renewable energy,” she told SIPET.

The event will bring together government officials, industry leaders, and civil society to explore innovative solutions for Indonesia’s energy future. Tinschert adds, “We want ISEW to be a platform for dialog, to bring new ideas, to bridge perspectives, to dare to ask, to be controversial, but also to come together and find a joint pathway forward.”

An important highlight of this year’s event is the focus on Indonesia’s state-owned power utility, PLN, which, with support from GIZ and KfW, has successfully increased the share of renewable energy in South Sulawesi’s grid to 42%.

ISEW 2024 also introduces new formats, such as the “Sustainable Energy Investment Day,” designed to foster private sector engagement and explore opportunities in low-carbon energy. Tinschert is enthusiastic about this development: “We kick-start our collaboration with private sector champions – to showcase the companies that are ready to move towards low carbon energy across their business.” The event will bring together project developers and financiers, including leading figures like Prof. Dr. Eng. Eniya Listiani Dewi from the Ministry of Energy and Mineral Resources (KESDM), PLN Rumah PATEN, PT Sarana Multi Infrastruktur (PT SMI), and financial institutions like the World Bank and KfW.

The event’s inclusive approach extends to all energy-relevant ministries and stakeholders, ensuring a comprehensive dialog on Indonesia’s energy transition. The discussions on the final day will be dedicated to the Just Energy Transition, exploring how Indonesia can create a fair and equitable path to sustainability – key to achieving the goals of Indonesia Emas 2045. Tinschert is particularly excited about the potential for these sessions to engage diverse voices, including those from youth and community groups. “For me, ISEW creates excitement, for being part of Indonesia’s energy transition journey. As a rapidly expanding economy, with an aspiring middle class, and significant renewable energy potential, Indonesia has all the right ingredients to move to a green economy based on sustainable energy,” she said.

 “I would like ISEW to be a call to everyone to take an active role in shaping the energy system of the future,” she said.

Find more information and register for the event here.

The Association of Southeast Asian Nations (ASEAN) celebrated 57 years this August with the theme, ‘Connected & Resilient Community’. Enhanced access to clean, reliable, and affordable energy is crucial to achieving a connected and resilient ASEAN community. A clean energy transition can address the region’s vulnerability to climate risks while supporting economic growth that incorporates ASEAN’s net-zero emissions goals.

Challenges

Southeast Asia faces significant challenges in transitioning to clean energy, requiring a substantial increase in investment, from the current USD 70 billion annually to USD 190 billion by 2030[1]. The region’s energy infrastructure needs modernization, supported by stable regulatory frameworks and access to adequate financing to encourage private investments in renewable technologies.

Additionally, Southeast Asia’s vulnerability to climate change, with frequent flooding and extreme weather events, necessitates the integration of climate resilience into energy planning. Technological innovation is also critical for the energy transition, requiring the adoption and scaling of advanced renewable energy systems and energy efficiency measures. Overcoming these challenges will require international support, collaboration, and a strengthened regulatory environment to foster innovation and attract the necessary investments.

Opportunities

The USAID Southeast Asia Smart Power Program (SPP) plays an important role in this scenario. The five-year initiative aims to transform the region’s energy sector by deploying 2,000 megawatts of advanced energy systems, mobilizing USD 2 billion in clean energy financing, and increasing regional power trade by 5%.

SPP recognizes that a robust transition to clean energy through collaborative efforts by member states is crucial to enhance the ASEAN community’s resilience. SPP collaborates with organizations such as the ASEAN Centre for Energy (ACE) in its efforts and prioritizes partnerships to support regional clean energy priorities and the ASEAN Plan of Action for Energy Cooperation.

Collaborating to achieve resilience

Bilateral and multilateral partnerships, such as cross-border electricity trade, enable countries to optimize renewable energy resources and reap economic and environmental benefits. Further, investment in clean energy infrastructure and capacity building is important in developing local expertise and ensuring a skilled workforce. Knowledge sharing through policy exchange programs, peer-to-peer exchange, and forums, allows countries to learn from each other’s successes. Leveraging international support can provide the technical and financial resources needed for advancing clean energy technologies. Public engagement in clean energy initiatives also strengthens community involvement, ensuring broad societal support for sustainability efforts.

To enable this, programs such as SPP focus on capacity building for utilities, financial institutions, investors, developers, and government officials by providing technical assistance and training to improve financial and operational efficiency. Additionally, SPP works to increase regional energy trade and integration, improving infrastructure and institutional frameworks to facilitate renewable energy adoption.

Thus, clean energy development in the region and building a connected and resilient community in ASEAN go hand in hand. Overcoming the challenges of a just transition to clean energy as a community can provide ASEAN with the resilience required to thrive in an increasingly uncertain world.

[1] https://www.iea.org/reports/southeast-asia-energy-outlook-2022/key-findings

Coral Life is a trailblazer in the provision of sustainable building solutions in Thailand, and the company has been making significant strides in the design and construction of energy-efficient buildings in Asia. The company was founded by James Duan, who has extensive experience in property development and wanted to address inefficiencies in traditional construction practices. Coral Life’s mission centers on creating innovative, energy-efficient buildings that not only minimize environmental impact but also enhance living and working conditions. The company’s pioneering efforts led to the development of the first house in Southeast Asia’s certified by Germany’s Passive House Institute (PHI), which sets a new standard for energy-efficient construction in the region.

Peter du Pont and Marc Tagub of SIPET recently sat down with Thien Juengwirunchodinan, Head of Marketing for Coral Life. In our conversation, Thien offered a candid look into the company’s evolution, its revolutionary technologies, and its aspirations for energy-efficient construction in Southeast Asia. This conversation offers a glimpse into how energy-efficient construction can be a key driver in achieving a sustainable energy transition.

The Context for Efficient Cooling

In a rapidly heating world, indoor cooling energy is a fast-emerging area of concern, and also innovation. According to the International Energy Agency’s (IEA) 2016 Future of Cooling report, “space cooling is the fastest-growing energy in buildings, both in hot and humid emerging economies were incomes are rising, and in the advanced industrialised economies”. Final energy use for space cooling in residential and commercial buildings worldwide more than tripled between 1990 and 2016, to 2020 terrawatt hours (TWh) per year. With the recent increase in temperatures, especially in Asia, which has been heating faster than the global average, this figure is going to continue to rise. However, innovations are underway to reduce cooling energy demand and the consequent energy costs, including in Southeast Asia. 

The Coral Life Approach

In Thailand, the Coral Life Group has been designing and building residential buildings that have lower indoor temperatures. It does so by eliminating heat transfer through effective building envelopes and low-flow ventilation strategies, which results in buildings with high thermal comfort and very low energy use.

Coral Life founder James Duan’s experience in property development in Greater Bangkok exposed him to the inefficiencies in residential construction. Determined to innovate, he committed Coral Life to the creation of energy-efficient, sustainable living spaces.

“It has always been our strategy to think about innovative buildings, innovative ways to introduce (quality of) living, and absolutely innovative ways to create living and working spaces,” said Thien Juengwirunchodinan, Head of Marketing at Coral Life.

This approach led the company to build a demonstration home in Thailand that meets the standard levels set by the Passive House Institute (PHI), which are the world’s most stringent standards for energy usage. Originating in Germany, these standards required adaptation for Thailand’s hot and humid climate. When Coral Life executed its cooling strategy in building a house near Suvarnabhumi Airport, the 200-square-meter residence became the first PHI-certified house in Southeast Asia. “This helped us understand what it takes and what can be achieved in being super energy efficient, given what was built,” Juengwirunchodinan said.

The results of this demonstration project were extremely encouraging.  “With a highly effective  building envelope and ventilation system, the energy bills for the house dropped from 15,000 baht (USD 415) per month to less than 2,000 baht (USD 55) a month, with most of the savings resulting from reduced cooling costs”, explained Juengwirunchodinan.

The Most Energy-Efficient Building in Thailand

In May 2023, Coral Life opened a new headquarters building in Sukhumvit 39 that executes these principles on a larger scale. It is now the most energy-efficient office building in Thailand, and uses  85% less energy than conventional structures. Juengwirunchodinan said that this is not only due to using the right materials, but also the techniques to assemble these materials. “The principles of a strong building envelope and proper ventilation strategies apply universally,” he asserted.?

A critical tool in Coral Life’s toolkit is its advanced humidity control system that maintains relative humidity within 40-60%. “When humidity is controlled, cooling a space becomes less energy-intensive, and people experience more thermal comfort as well,” Juengwirunchodinan said.

This approach leads to major energy savings, but the benefits do not end there. The building design also provides a high-quality indoor living experience. The electricity bills of Coral Life headquarters’ building are 70,000 baht (USD 1,900) per month, compared to 500,000 baht (USD 13,800) per month for a comparable commercial building.  These savings have been achieved without sacrificing comfort or functionality. The building is a functional office space, with lighting systems, ventilation and cooling systems, appliances and equipment, and plug loads, but the thermal comfort of the building is evident when one enters the space—with quiet, low-flow ventilation, relatively low-humidity levels and clean indoor air with near-zero levels of pollutants.

“It’s not about turning off everything that we don’t use, but about spending what (energy) we use efficiently,” Juengwirunchodinan pointed out.

The Challenges Ahead

One of the major challenges that Coral Life faces is to mainstreaming the design of efficient features into the construction of new buildings. “We are making some progress and are already developing buildings to high levels of efficiency for some of our clients”, says Juengwirunchodinan. " The biggest challenge is communication and awareness. It’s not a question of whether the efficient construction works. It’s a question of understanding how it works and convincing the client of the benefits and the win-win nature of this approach.”

Juengwirunchodinan also highlighted the importance of supportive government policies and financial incentives, such as green loans and tax breaks, which he says are crucial to facilitate much broader adoption of energy-efficiency building techniques. 

Coral Life’s journey underscores the huge potential of energy-efficient buildings in driving the energy transition. By demonstrating substantial cost savings, enhanced thermal comfort, and alignment with larger environmental goals, the company is setting a benchmark for sustainable urban living, and creating an inspiring vision for a future in which energy-efficient buildings will be the norm.

Peter du Pont is the Co-Founder and Co-CEO and Marc Tagub is the Team Leader – Knowledge Management and Stakeholder Engagement, for Asia Clean Energy Partners, a Bangkok-based company.

The 19th Asia Clean Energy Forum (ACEF) 2024, held from June 3-7 at the Asian Development Bank (ADB) Headquarters in Manila, gathered more than 1,200 clean energy practitioners from 71 countries under the theme “Accelerating the Clean Energy Transition and Ensuring Energy Security and Affordability – Time for Urgent Action Now.”

ADB President Masatsugu Asakawa opened the Forum by highlighting ADB's commitment to mobilizing $100 billion of financing for climate initiatives over the next decade. Keynote speakers reinforced the need for immediate climate action and shift to clean energy.

The forum featured 50 sessions, including 16 Thematic Track Sessions that discussed important aspects of the energy transition, particularly how we can triple renewable energy capacity and double progress in energy efficiency by 2030.

• Sessions in Thematic Track 1 (Renewable Energy) covered strategies for prioritizing renewable energy and accelerating investments to achieve this goal.

• Sessions in Track 2 (Energy Efficiency) outlined strategies to double progress on energy efficiency, focusing on regulations, incentives, and comprehensive policy packages to drive market transformation.

• Sessions in Track 3 (Electricity Transmission and Distribution) highlighted the need for significant investments in grid infrastructure to integrate renewable energy, emphasizing the importance of governance frameworks and financial planning.

• And finally, sessions in Track 4 (Hard to Abate Sectors) explored a range of innovative clean energy solutions, including green hydrogen; carbon, capture, utilization and storage (CCUS); and advanced digital solutions for industrial decarbonization. Speakers stressed the need for improved policy frameworks and effective financing mechanisms.

ACEF 2024 also featured Regional Sessions covering clean energy initiatives across the subregions of Asia and the Pacific. A significant area of focus was the role and importance of cross-border electricity trade to enhance regional energy security. Meanwhile, Spotlight Sessions covered emerging topics such as comprehensive energy planning, clean energy integration, and the role of women in bridging the clean energy financing gap.

The forum concluded with speeches and panel discussions on how we can achieve a clean energy transition that leaves no one behind.

As with previous ACEFs, this year’s event successfully fostered an environment for clean energy stakeholders to connect and share knowledge, innovative approaches, and financing solutions. The outcomes shared and the commitments made at ACEF set a strong foundation for achieving a just and inclusive energy transition for Asia and the Pacific.

For more details and insights from ACEF 2024, you can access the video recordings by visiting the session pages: https://asiacleanenergyforum.adb.org/agenda/full-agenda-2024/

There is a significant decline reported in production in Thailand’s major gas fields, primarily located in the Gulf of Thailand. Recent reports indicate that Thailand's gas reserves are depleting, leading to a need to re-evaluate the country's energy strategy (Global Energy Monitor, 2024).

The depletion of domestic gas reserves has the following implications:

1. Energy Security: Reduced domestic production increases Thailand’s reliance on imported energy, particularly liquefied natural gas (LNG). This dependence exposes the country to global market volatility and geopolitical risks.

2. Economic Impact: Higher import costs for LNG can lead to increased energy prices for consumers and businesses, straining the economy. Moreover, investing in gas infrastructure for long-term contracts diverts funds from renewable energy projects.

3. Environmental Concerns: Transitioning from domestic gas to imported LNG has environmental impact, including the increased carbon footprint associated with LNG transport and lifecycle emissions from gas-fired power plants.

To address the decline, the Thai government has outlined strategic responses through its National Power Development Plan (PDP) 2018-2037. The plan aims to enhance energy security by significantly increasing natural gas’ contribution to the energy mix, reflecting a 13% rise from previous projections (Global Energy Monitor, 2024).

The PDP includes expanding LNG imports to offset declining domestic production. Thailand is boosting its LNG import capacity with significant investments in new terminals and infrastructure to maintain gas’ share at about 60% of the energy mix by 2030. However, an expected revision of the PDP will incorporate Thailand’s carbon neutrality targets.

While the transition to LNG imports provides a temporary solution, it introduces challenges such as vulnerability to global market fluctuations and the need for substantial infrastructure investments.

This implies that investments in new gas-fired power plants should account for the evolving roles of gaseous energy carriers in the power sector. It is essential to ensure that these power plants are prepared to switch from fossil fuel-derived gas to hydrogen when it becomes economically feasible, as hydrogen-fueled power plants necessitate different technical designs from those using fossil gas.

The Climate Finance Network Thailand (CFNT) released its recent study on the valuation of stranded assets in Thailand’s oil and gas sectors on 21 June 2024.

Stranded assets are investments that have become obsolete or non-performing due to changes in the market, regulatory environment, or technological advancements. Our study focuses on coal and gas-fired power plants in Thailand, which may need to be decommissioned earlier than their intended lifespan due to the country’s shift towards renewable energy.

The study employs a comprehensive discounted cash flow model to forecast the financial impact of decommissioning coal and gas power plants under three scenarios: Business-As-Usual, Rapid Transformation, and 100% Renewable Energy. Utilizing data from the GEM and financial records, the study calculates the potential values and the net present value (NPV) of stranded losses.

The results indicate significant risks of stranded assets from 2025 onwards. Under the Rapid Transformation and 100% Renewable Energy scenarios, a substantial portion of coal and gas-fired power plants may be decommissioned early, resulting in potential stranded losses of up to 360 billion THB and 530 billion THB, respectively. These figures highlight the financial overvaluation risks for major energy utilities in Thailand.

The transition towards a low-carbon economy, while environmentally essential, poses significant financial challenges. For investors, particularly those involved in the stock market and bond issuances, this transition could lead to substantial stranded losses. Major energy companies in Thailand, such as BGRIM, EGCO, GPSC, GULF, and RATCH, could face downside risks ranging from 6% to 61% of their market capitalization.

For policymakers, these findings emphasize the importance of strategic adjustments, including the need for a credible fossil phaseout plan. Engaging in global initiatives like the Just Energy Transition Partnership (JET-P) could provide financial support and facilitate a just and equitable energy transition.

For more detailed insights, please refer to the full report.