China is the leading source of public clean energy investments in Southeast Asia over the last decade, channeling over US$ 2.7 billion into projects across the region, according to a report by international research organisation Zero Carbon Analytics.
Most of the country’s funding between 2013 and 2023 went to hydroelectric and wind projects, with Indonesia as the biggest recipient, researchers said.
But despite the increase in green financing in the region, it might not translate into a renewables shift as uncertainties caused by United States-driven tariff plans could see Southeast Asian countries like Indonesia leaning back on extractive industries as they scramble to adjust, according to a sustainable finance and climate governance analyst.
Indonesia, in particular, has a strong motivation to achieve its vision to become a developed country by 2045 by achieving 8 per cent GDP growth annually, said Sharon Seah, senior fellow and coordinator of the Asean Studies Centre and the Climate Change in Southeast Asia Programme at ISEAS-Yusof Ishak Institute.
“But if tariffs and other protective measures come into play, the growth of Southeast Asian countries like Indonesia will be stymied. It would be easier to go back to old economy models than to try pivoting to a green transition,” Seah told Eco-Business.
If countries in the region find that trade-offs of investing in green energy are too high, they will revert to “tried and tested methods of their old industrial strategy” instead of bearing the short-term pains of decarbonisation, said Seah.
A 90-day tariff truce was agreed upon by the US and China in May. However, the 10 per cent tariff baseline is here to stay, she added.
But China’s green growth has been a “very good and positive example” for its Asian neighbours that has shown that the green transition will not be slowed down by global developments, as it intends to carry on with its own domestic climate transition, noted Seah.
For instance, the Zero Carbon Analytics study cited how China’s Belt and Road Initiative (BRI) has increasingly focused on green development.
A state-led initiative designed to connect the super power with the rest of the world through trade routes, it has also supported a wide range of green projects in Asean, such as solar projects in Indonesia and Myanmar, hydropower plants, solar farms and transmission networks in Cambodia.
Japan is Southeast Asia’s second biggest public financier of clean energy with US$2.45 billion over the last decade, mostly in geothermal and solar projects in Indonesia and Vietnam. South Korea invested US$583 million mainly in Indonesia and the Philippines.
