The 2023 ASEAN Chair agenda, themed “Epicenter of Growth,” highlights two crucial principles: energy security and funding stability. To bolster the energy transition in the region, ASEAN leaders underscored the need for innovative financing solutions.
During the ASEAN Chairmanship 2023 seminar titled “Sustainable Energy Financing and Mobilization of Energy Investment in ASEAN,” Plt. Secretary General of the Ministry of Energy and Mineral Resources (ESDM), Dadan Kusdiana, reaffirmed Indonesia’s wholehearted commitment to achieving significant results in the energy sector. He emphasized the importance of a clean energy future and shared Indonesia’s active efforts to meet clean energy goals, including the development of a clear concept for Energy Transitions Sustainable Finance, establishing a long-term renewable energy roadmap, bridging policy-level decisions with investment practices, and creating pathways for regional electrical interconnectivity.
Dadan Kusdiana stressed that each country’s energy transition is unique and requires consideration of various energy sources, technologies, and financing methods tailored to their specific circumstances. According to the IRENA Report, fulfilling the energy transition in ASEAN demands financing reaching USD 29.4 trillion by 2050, with a focus on 100 per cent renewable energy and a maximum temperature increase scenario of 1.5 degrees Celsius. The investment allocation includes solar PV, hydroelectric power, other renewable energies for electricity generation, national and international transmission, distribution, storage for network and flexibility, biofuels, electric vehicle charging, and more. The broader financing perspective encompasses fuel, operational, and maintenance costs.
To meet this substantial funding requirement, Dadan emphasized the need to boost clean energy investment and financial flows. Strengthening project flows, enhancing policy and regulatory frameworks, implementing risk reduction mechanisms, and preparing high-quality bankable projects while streamlining approval processes are among the key strategies proposed.
In pursuit of sustainable and inclusive large-scale financing solutions, Dadan highlighted the importance of collaboration and action between institutional investors, Multilateral Development Banks, other financing institutions, industry stakeholders, and policymakers. Such collaborative efforts are essential for identifying innovative financing options and approach suitable for supporting green energy and energy transition projects.
Dadan Kusdiana expressed enthusiasm for various cooperation and partnership initiatives, particularly those involving both developed and developing countries. He cited the AZEC initiative launched by Japan at last year’s G20 Summit in Bali, which aims to foster a broader partnership among ASEAN countries for a clean, sustainable, equitable, affordable, and inclusive energy transition towards carbon neutrality. Dadan called for action through the AZEC platform to drive the development of renewable energy infrastructure, research, affordable technologies, and strong supporting industries.
In parallel, the ASEAN momentum for transformative economies received support from the Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Kacaribu. He emphasized the urgent need for conducive collaboration among ASEAN countries and highlighted Indonesia’s Energy Transition Mechanism (ETM) and Just Energy Transition Partnership (JETP), set to launch an investment plan in August 2023, and a voluntary carbon market by year-end.
Jeffrey Sachs, President of the Sustainable Development Solutions Network (SDSN), underscored the significance of ecological transformation and sustainable financing. He stressed the need for short-term and long-term strategies towards Net Zero Emissions (NZE) for every country, emphasizing the integration of Indonesia’s energy strategies with ASEAN and Australian regions through blended financing.
The CEO of the Center for Policy Development (CPD), Andrew Hudson, echoed similar sentiments, emphasizing the importance of building trust between ASEAN and Australia as they face the challenges of climate transition. To achieve a successful transition, Andrew estimated Indonesia’s funding needs to amount to 1 trillion by 2060.
Affirming Australia’s commitment, Andrew assured that Australia, as ASEAN’s first dialogue partner, supports the region’s decarbonization journey. The seminar held in Jakarta was just one among many events planned as part of the Energy Transition Policy Development Forum, aiming to foster collaboration and promote clean energy cooperation between Australia, Indonesia, and ASEAN.
The seminar titled “Sustainable Energy Financing and Mobilization of Energy Investment in ASEAN” comprised two-panel discussions: “Mobilising Public & Private Financing for Sustaining the Energy Transition towards Net Zero Emission in ASEAN” and “Ensuring a Full Package of Energy Transition Financing in the Southeast Asia Region.” The Center for Policy Development (CPD), in collaboration with the Climateworks Center, International Institute for Sustainable Development (IISD), Indonesia Research Institute for Decarbonization (IRID), and the Institute for Essential Services Reform (IESR), organized the seminar. The event received support from the Asia Investor Group on Climate Change (AIGCC) and aimed to promote future collaboration in clean energy between Australia, Indonesia, and ASEAN.
The ASEAN region continues to prioritize sustainable energy financing and collaborative efforts to ensure a successful and inclusive energy transition that aligns with the goals of a clean, equitable, and prosperous future.
