How China can help change the game for clean energy in Southeast Asia

Among the many essential factors required to achieve these goals, securing significant and sustained investments in renewable energy projects emerges as a crucial factor.

Although opinions vary on the scale and scope of the required investment, there is a wide consensus that the investment needed for the progress of the region’s energy transition is substantial, far exceeding what the public sector can provide, despite traditionally being the main source of funding.

From 2016 to 2020, a total investment of about US$60 billion was made in clean power in the region. A large bulk of that funding has come from the public sector. This amount falls substantially short of what is needed to expand renewable energy supply to stay aligned with Paris climate goals, estimated at US$92 billion a year by the International Energy Agency.

Allocating more public funding for renewable energy projects is also challenging, especially considering that governments across the region are trying to manage public debt and spending after Covid-19 while addressing competing demands for public budgetary allocation.

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World’s largest hydro-solar farm floats atop reservoir in Thailand

This situation underscores the pivotal role of private investment in driving the region’s energy transition. Given its position as a leading investor in clean energy and the region’s major economic partner, China can provide vital support for Southeast Asian countries to mobilise private investment.

These reforms often encounter challenges, including conflicting interests and limited implementation capabilities. This is especially the case when reforms touch upon politically sensitive areas such as fossil fuel subsidies, potentially challenging entrenched interests.

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