How Alternative Fuels Could Power ASEAN's Green Energy Transition
Editor
2 June 2023 07:46 WIB
Thailand targets 30% renewable energy by 2037, with the current 14.9% primarily derived from biomass, which constitutes 30% of the total renewable production. Thailand relies on cross-sector collaborations such as the Hydrogen Thailand Group, which aims to engage public and private sector players.
With Malaysia’s top two CO2 emitters being the Energy and Mobility sectors, it has likewise embarked on the transition from fossil fuel power generation to renewable energy that could be used to produce synthetic e-fuels or power electric vehicles. More than 7,000 MW of coal power purchase agreements will expire by 2033 and will not be replaced. Malaysia's Gentari and Singapore's City Energy have entered a memorandum of understanding for a joint study of developing a hydrogen supply chain through existing gas pipelines.
Together on the Decarbonisation Pathway
Government-led initiatives are just the beginning of a challenging journey. Many experts and government bodies are still questioning this approach.
High costs are stunting the widespread adoption of advanced biofuels and synthetic e-fuels. Producing and transporting hydrogen can cost up to three times more than fossil fuels. At the same time, synthetic e-fuel is only low-carbon if it is produced from renewable electricity, which is not yet as widely available in this region. This is because NRE power can still be expensive in the ASEAN region even after the tariff changes. Furthermore, the capacity produced is not as high as the energy from CFPP hence it is more economical to purchase from CFPP.
With rising interest rates, Green Financing could potentially hit a speed bump. To mitigate risks, banks prefer to fund projects with long-term purchase agreements, with mature technologies in established markets and clear regulations. This could hamper the development of energy decarbonization projects.
The limited infrastructure is another problem. Only about 4500km of hydrogen pipelines are currently in use; to become a success, it would need additional investment for transportation, conversion, and storage. Renewable energy sources are location-specific, and building NRE power plants in rural areas would be costly and challenging. In Indonesia, many geothermal projects are heavy in Java and Sumatra because the supporting infrastructure (road, seaport, airport) is more readily available. However, combining solar, other forms of renewable energy like biogas and biomass, and microgrids may be useful for more areas outside Java and Sumatra.
Practicalism over Perfectionism
All in all, practical and pragmatic actions trump perfectionism.
ASEAN government bodies should not let perfection stand in the way of delivering affordable, accessible, and secure energy vital to the world and its citizens today.
Stakeholders need to connect and mobilize financial sources. We need dialogue with donor governments, multilateral development banks, private sector finance, and revenue support systems (e.g., contract for difference) to support and finance the means to shift investments from fossil fuels to supporting clean energy. Reallocating fossil fuel subsidies for the renewable energy needed for alternate fuels or introducing carbon pricing are just a few ways of enhancing the strong economic and financial arguments favoring the acceleration of the transition towards clean, efficient energy systems.
Overcoming these hurdles will only propel the ASEAN region towards a safer and more equitable energy system that can support its long-term growth and bring it closer to realizing the Paris Agreement’s goal of reaching net zero emissions by 2050.
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