Melissa Moi

Opinion | Southeast Asia’s energy transition is lacking both finance and policy

The bulk of funds needed will have to come from private finance, which requires a conducive environment that regulatory policy can create

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Climate activists protest at the Cop 29 UN climate change conference in Baku, Azerbaijan, on November 23. Photo: EPA-EFE

Melissa Moi

Published: 5:30am, 3 Dec 2024Updated: 5:40am, 3 Dec 2024

What can you do with US$300 billion? For Southeast Asian nations trying to build solar plants or wind farms, not that much. The conclusion of UN climate change conference Cop29 tells us the region cannot wait for developed nations to raise the bar. Solutions need to come from within, and one possibility is in policy.

At Cop29 in Baku, Azerbaijan, developed nations agreed to provide at least US$300 billion annually by 2035 to help developing nations. Southeast Asia alone needs US$210 billion annually until 2030 to meet its energy transition needs, according to the Asian Development Bank.

Investment in renewable energy is urgently required because Southeast Asia’s economic growth is highly carbon intensive. As the likes of China and India incentivise their green industries with policy support, Southeast Asia risks being unable to respond to the increasingly tough environmental requirements in Europe and losing out on growth opportunities.

Cop29 emphasised private capital solutions and country commitments to accelerate Southeast Asia’s energy transition. But private participation is contingent upon commerciality. Investment and financing decisions must be financially viable, which can happen only if regulatory policy creates a conducive environment.

According to the International Energy Agency, carbon emissions across many advanced economies have been declining since 2007, even as gross domestic product has risen. This decoupling of GDP from emissions is not as stark in emerging economies, but clear nonetheless. China’s economy, for instance, is 14 times what it was in 1990 but emissions are only five times what they were. In Africa and Latin America too, economic activity and emissions are on diverging paths.

In Southeast Asia, unfortunately, both GDP and emissions have increased by almost the same factor.