Climate Change | Report

Toward a Regional Energy Modernization Investment Agenda

August 2019


Southeast Asia is among the fastest growing economic regions in the world, with a large population of young people that is driving increased demand for energy. Growth in the region provides a tremendous economic opportunity to build a modern, renewable grid system with increased fiscal and energy security, and benefits to health, water management, and environmental protection.

ASEAN countries have set renewables targets, but policymakers must do more to align with the Paris Agreement as well as regional climate goals. This includes removing many hidden barriers to clean energy in the form of guarantees and power purchase agreements that favor incumbent fossil fuel interests, lack of transparency in market structures that fail to reduce costs for ratepayers, and state capital subsidies for fossil fuel projects from Northeast Asia. Meanwhile, as market structures favor fossil fuels, they will continue to be a major drag on economic growth, as they typically increase national debt, devalue currency, and grow inflation.

Policymakers, development finance institutions, investors, and philanthropies can support clean energy investments and on-the-ground projects by funding development costs and de-risking with loan guarantees and blended finance. The ASEAN Ministers on Energy Meeting can raise clean energy targets. The ASEAN Capital Markets Forum can further support sustainable finance and address stranded asset risks. Further cooperation between policy, market, and technical institutions can accelerate opportunities to demonstrate the energy transition is prevailing in Southeast Asia.