Renewable energy developments face withdrawal in Indonesia and Vietnam due to increased costs, also known as "Greenflation"
Southeast Asia, a region vulnerable to climate change impacts, is grappling with rising sea levels, floods, cyclones, heat waves, and droughts. As the world moves towards a greener future, the region faces unique hurdles in its transition to renewable energy.
Indonesia, a major economy, has announced new renewable energy targets for 2025 and 2030. However, the country, along with net energy exporter Malaysia, faces significant upfront costs during decarbonization, including carbon taxes and increased prices of metals and minerals for electric vehicle production and green investments, according to Oxford Economics.
Vietnam, another major economy, has seen a surge in coal imports despite having over 19 gigawatts of solar and wind power capacity. The Vietnamese government aims to increase the share of renewable energy in its primary energy mix by 2025, but the exact percentage is not specified.
The renewable energy target for 2030 has been lowered in Indonesia and Vietnam, raising concerns among investors and the international community about the credibility of these countries' energy transition policies.
Malaysia has an ambitious approach to decarbonization with its National Energy Transition Roadmap, expected to generate over MYR 25 billion (USD 5.5 billion) by 2030.
Singapore, despite its limited land area, requires all departing flights to use sustainable aviation fuel starting in 2026.
Thailand has been slow in transitioning to renewable energy, despite government net zero carbon pledges and EV subsidy schemes. Vietnam faces issues with electricity blackouts and slowing down its green transition due to grid constraints and policy changes.
Indonesia's carbon tax implementation has been delayed until 2026, and there are concerns over 'greenflation' when fossil fuels are discarded in favor of more expensive low-carbon technologies. Malaysia's greenflation concerns stem from the rising cost of imported parts and components for decarbonization projects due to the weak ringgit.
The Just Energy Transition Partnership, a climate financing scheme, has yet to materialize after being announced in 2022. The Institute for Essential Services Reform (IESR) has stated that Indonesia's lowering of renewable energy targets indicates a weak commitment to energy transition and a rampant interest in preserving fossil fuels.
In conclusion, Southeast Asia faces numerous challenges in its transition to renewable energy. While some countries make progress, others encounter obstacles. The region needs continued support and investment to accelerate its energy transition and mitigate climate change impacts.
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