Southeast Asia COP26 achieve net zero by 2050

How can Southeast Asia meet the commitments of COP26 and achieve net zero by 2050?

Many of the leaders who attended COP26 at the end of 2021 made clear commitments to achieving net zero by 2050. While this is something to celebrate, there have already been criticisms of greenwashing, claiming governments and multinationals are merely spouting empty words and are not willing to take action.

Many of the leaders who attended COP26 at the end of 2021 made clear commitments to achieving net zero by 2050. While this is something to celebrate, there have already been criticisms of greenwashing, claiming governments and multinationals are merely spouting empty words and are not willing to take action. These criticisms often come from people who can see that governments don’t necessarily have a clear path towards their target – and as some decarbonisation plans clearly won’t meet the targets in time, people are right to be doubtful. Although it is good to see countries making the necessary commitments, time now needs to be taken to establish the roadmap to get there – because with the right technology and expertise it can be done.

The current state of play in Southeast Asia

Southeast Asia has some of the fastest growing economies in the world, with rapidly increasing demands for power. This coincides with the need for radical reductions in emissions and increasingly strict decarbonisation targets. These conflicting forces are proving challenging for countries and making it essential for the region to rethink its energy production to achieve an optimal transition to a low-carbon system.

Countries in the region are heavily dominated by coal but are finding it harder to find financing for new coal projects. Indonesia, Vietnam and to a lesser extent Thailand have all recently reversed their trend towards more coal-fired plants and now have net-zero targets on the horizon. The Philippines has had a moratorium on new coal projects since 2020, Indonesia aims to have no new coal projects commissioned by 2023, and Vietnam is looking to phase out coal by 2040. With many major banks no longer investing in coal projects and China no longer financing coal projects outside its borders, even planned projects may not be realised because of a lack of financing. On the other hand, with international banks pledging to support the sustainable economy there has never been a better time to invest in renewables backed up by flexible generation from balancing gas and energy storage systems to ensure stability of supply.

Australia is more advanced in terms of installed renewable capacity compared to SEA, making it a good example for the region to emulate. To reach the net-zero target in time we need to accelerate progress in Southeast Asia, and countries that have not yet started on their transition need to get going. To reach net zero by 2050 you cannot invest in 2049 – the coming ten years are going to be critical in terms of investment and will be when most investment is needed.

The crucial first step: energy system planning

All countries are at a different starting point and have access to different resources, which affects their optimal pathway for transitioning to renewable energy as their options for balancing and flexible generation vary. Thailand, for example, has access to pumped hydro for balancing, but most other countries in the region will need to rely on balancing gas or batteries to ensure stability of supply. Exactly how much balancing is needed and what type can be determined through detailed power system modelling.

This is the important first step that all countries must take. The energy systems of the future are complex puzzles that need to balance intermittent renewables with backup capacity and flexible generation; the optimal asset mix will not be arrived at by chance. Energy storage systems help ensure you can maintain grid frequency and reliability for daily variations with second and minute-level balancing, but they cannot currently take care of long-term storage economically. They can, however, minimise the risk of needing to pay neighbouring countries to take surplus power away once an interconnected ASEAN power grid becomes reality. Negative electricity prices are something already seen in interconnected regions with multilateral power trading and high amounts of renewables, such as in Europe.  

Gas power plants, on the other hand, are needed in the system for longer-term weekly and seasonal balancing. Increasing renewables integration will require multiple forms of flexibility – in fact flexibility could be said to be the key enabler for the energy transition. Hybrid power plants offer another way to introduce greater renewables penetration with the essential flexible balancing needed.

Identifying the right technology for your country before investing is essential in order to future-proof your power grid. Choose a non-optimal technology and you face the risk of it becoming obsolete; take a ‘wait and see’ approach and you run the risk of being left behind. In 2014, coal and gas were the cheapest source of bulk generation across most of the world, but renewables are now the cheapest source of electricity in 75% of world GDP. In the next five years, wind and solar PV are on track to be cheaper than running existing coal and gas across most of the global economy. This is the time to seize opportunities, not a time to be left behind.

Ensuring the right market mechanisms for success

Once you have your plan in place, regulatory and policy updates will be needed to put it into action. For example, in many markets right now there aren’t clear regulations for balancing capacity or the right market mechanisms in place, which will prevent the system as a whole from being effective. Policies need to incentivise flexibility while establishing well-functioning ancillary services markets. There also might need to be land development regulation for solar and wind. Once these have been established it’s time to get support from the financing community and the private sector, with engagement from technology companies to work through what is technologically feasible and when new technology will be available. Then more renewables can be introduced, flexibility can be added into the system, inflexible assets can be retired and remaining thermal capacity can be converted to sustainable gas when available.

It's time for action

This decade will be critical for planning and investment in order to turn talk and targets into action and achievements. The goals set at COP26 are admirable and necessary, but without a solid plan and roadmap they will never be achieved. To make sure the right action is taken, countries need planning, regulatory updates and engagement with technology companies. Wärtsilä has a clear roadmap and we have carried out over 150 country and system studies around the world, with modelling that shows how the power system can evolve over the years, with the optimal technology mix developing over time. Together we can turn promises into performance and make the power systems of Southeast Asia net zero by 2050.

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Frederic Carron is the Vice President, Middle East & Asia for Wärtsilä. He has over two decades of experience in accelerating the energy transition by optimising power systems with flexible power generation in Asia and the Middle East.

Written by

Frederic Carron
Frederic Carron
Vice President, Middle East & Asia, Wärtsilä Energy