Jakarta—Over the past decade, China has invested USD2.7 billion in ASEAN’s renewable energy sector, making it the leading player in the region. However, Japan and South Korea are not standing still, actively strengthening their presence with increasingly sharp investment strategies and focus.
The findings are presented in Zero Carbon Analytics’ (ZCA) latest briefing, “The Race to Invest in Southeast Asia’s Green Economy.” The report breaks down clean energy investment and policy trends in five key regional countries: Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.
“China dominates on an overall scale, but Japan and South Korea have penetrated important segments such as solar power, electric vehicles, and battery components,” said Yu Sun Chin, ZCA researcher, in an official statement, Tuesday, 20 May.
China’s strategy: Infrastructure and technology
China sees the ASEAN region as an important part of its new economic growth agenda. It relies on clean energy technologies such as electric vehicles, lithium-ion batteries, and solar panels. A total of USD2.7 billion in funding is being allocated to clean energy projects in countries such as Indonesia, Vietnam, and the Philippines.
China’s approach relies on the power of mass production and long-term bilateral cooperation. Beijing’s mainstay in expanding its influence in the region is large-scale solar energy projects, battery factories, and electric vehicle ecosystems.
In contrast to China, which emphasises industrial power, Japan takes a partnership approach to the energy transition. The country is a major partner in two major schemes: the Just Energy Transition Partnership (JETP) and the Energy Transition Mechanism (ETM).
The ZCA report says that Japan has taken the lead in funding the USD20 billion JETP in Indonesia, and is also supporting Vietnam’s JETP.
Through ETM, Japan even disbursed USD25 million to accelerate the closure of 5 to 7 power plants in Indonesia, the Philippines, and Vietnam by 2021.
Japanese investment is also flowing into specific solar and geothermal power projects, with cumulative investment reaching USD1.3 billion by 2023. Last year alone, Japan invested USD 142 million in projects focused on five ASEAN countries.
Japan is also pushing for transport electrification and is a major supplier of electric buses and vehicles in the Philippines.
South Korea: Supply chain and EV focus
South Korea has chosen a different path. The country is focused on strengthening its electric vehicle supply chain position, particularly by exporting battery components.
According to ZCA, South Korea exported battery components worth USD143.37 million to Malaysia and USD52.99 million to Indonesia, making it the second largest exporter of electric vehicle batteries in Indonesia after China.
South Korea’s role is vital in driving green industrialisation in ASEAN, given that the electric vehicle industry is an essential pillar in the global energy transition.
ASEAN, a new magnet for green energy investment
With rapid economic growth and huge renewable energy potential, ASEAN is becoming a key global clean energy investment battleground. Renewable energy is now cited as the cheapest source of electricity in most regional countries.
ZCA researchers say this potential creates a huge opportunity not only for economic growth but also for long-term energy security. With sufficient investment, ASEAN could become the centre of the global clean energy industry, attracting up to USD180 billion to achieve the region’s energy transition targets.
The report was released before the 46th ASEAN Summit in Malaysia, which is expected to see new regional commitments to strengthen the renewable energy industry. Moreover, amid tariffs on clean energy products from the United States, intra-Asian collaboration is considered the key to a successful, sustainable energy transition in the region. (Hartatik)
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2024)
