On 15 May, Australia’s Minister for Foreign Affairs Penny Wong, joined Laos’ Minister of Energy and Mines, H.E. Mr Phosay Sayasone to sign the Memorandum of Subsidiary Arrangement for LASEP. The signing was witnessed by Laos’ Deputy Prime Minister and Minister for Foreign Affairs, H.E. Saleumxay Kommasith.
The energy sector is pivotal to Laos’ prosperity and the Government’s aim to pursue a green economy that will advance Laos from Least Developed Country status and help achieve its climate commitments.
H.E. Mr Phosay Sayasone, said that “LASEP responds to the development needs regarding sustainable renewable energy in the Lao PDR by assisting in the form of technical capacity building to strengthen and improve understanding of policy planning in the energy sector.”
H.E. Paul Kelly said that “Both countries are taking action on the energy transition to drive economic growth and build resilience to climate change. In Australia we are transforming our electricity sector, with 82% of electricity to come from renewable energy by 2030. We have a lot of experience to share in energy planning and low-emissions technology to support Laos’ energy ambitions.”
Australia’s Partnerships for Infrastructure initiative will implement LASEP with Laos’ Ministry of Energy and Mines (MEM). The expected budget for LASEP’s initial phase is A$3 million.
Reflecting our shared commitment to climate change and the energy transition, Australia has delivered preparatory activities which build on longstanding cooperation and establish strong foundations for LASEP. A recent visit to Australia and an ongoing research study are exploring Laos’ potential to develop a hydrogen industry. In 2022, Australia organised an energy roundtable between MEM and the Australian Energy Regulator and a visit to Thailand on sustainable energy development. We also supported The Australian National University to deliver a five week course for Lao officials on the grid integration of renewable energy.
Ahead of Laos’ 2024 ASEAN Chair Year, LASEP will also advance our shared commitment to work together to support ASEAN’s clean energy and climate agenda.
Fossil fuels have been central to Southeast Asia''s post-colonial nation-building and a key driver of global geopolitics in the last two centuries. The objective of contemporary energy diplomacy in the region is to secure fossil fuel supplies to meet national security goals. A new form of energy diplomacy is needed to drive the development of the Asean Power Grid (APG), utilise the region''s critical mineral resources, and address the compounding geopolitics of energy transition. Renewable energy diplomacy is thus the key catalyst for meeting national-level net-zero targets and limiting global warming to 1.5 degrees Celsius.
One study defines renewable energy diplomacy as "the use of foreign policy to facilitate the development and utilisation of cleaner energy sources and to enhance energy efficiency". Under this conceptualisation, energy diplomacy has two aims: to facilitate multilateral and bilateral cooperation on clean energy and to counter the geopolitics of energy transition.
There is growing evidence of the manifestation of renewable energy diplomacy as it relates to bilateral and multilateral engagement in accelerating transition. For example, Singapore is engaging with at least five regional countries to import six gigawatts of low-carbon electricity by 2035. Vietnam plans to cooperate with multiple companies in Europe and other regions to increase the contribution of wind and solar to over 61 per cent of installed capacity by 2050, while multiple regional countries have cultivated a close partnership with China to develop their renewable energy resources.
These examples show that Southeast Asian countries are beginning to align energy transition with the practice of diplomacy more closely. However, the region has yet to develop a collective response to the other priority of renewable energy diplomacy, which is to address the geopolitics of energy transition. This is manifested in two ways: first, the lack of trust and resource nationalism within the region; second, the growing competition between the US and China over critical minerals and green technology.
First, Asean needs to facilitate consensus among political actors to address impediments to energy transition at the regional level. One key pathway towards addressing trust deficits, funding gaps and resource nationalism is the development of a regional institution with legislative powers that can enforce contracts, resolve disputes, administer payments and facilitate the exchange of accurate data. This is crucial for accelerating the APG.
The main challenge to developing such an institution is political, not technocratic, as individual countries in Southeast Asia are unwilling to transfer sovereignty over their energy systems to a regional authority. Examples from Europe and Africa show that a regional institution underpinned by legislative mandates can play a key role in driving energy transition and reducing trust deficits. Asean must prioritise regional discussion with a step-by-step and multi-stakeholder approach to developing an energy institution.
Second, Asean must address the negative impacts of the US-China rivalry on the region''s energy transition. One of the key aspects to focus on is critical minerals, which are essential inputs to produce green technologies such as solar panels and wind turbines. Southeast Asia has substantial deposits of critical minerals such as copper, nickel, rare earths and bauxite. China''s domination of upstream and downstream parts of the supply chains of these essential minerals is perceived as a threat to national security by the US and its allies, which has prompted the development of the Mineral Security Partnership (MSP), an attempt by the West to develop an alternative supply chain of critical minerals that excludes China and Russia.
The US has recently asked Indonesia, the world''s largest nickel producer, to join the MSP. Meanwhile, Malaysia, Indonesia, Vietnam and Thailand have become partner countries of BRICS, which analysts say can form a critical mineral coalition to counter the MSP, leading to further stratification of global and Southeast Asian energy transition efforts. To address these geopolitical pressures, Asean can emphasise its centrality in engaging with external powers on critical minerals by implementing the collective governance mechanisms recommended in the Asean Plus Three Minerals Cooperation Work Plan.
Renewable energy diplomacy is vital in addressing internal and external challenges to the energy transition in Southeast Asia. Yet, a broader appreciation of the geopolitics of energy transition within Asean is sorely missing. Renewable energy is mentioned in the Economic Community Blueprint and the Socio-Cultural Blueprint for 2025 but is missing in the Political-Security Community Blueprint. Given that energy in general and transition, in particular, is driven by geopolitics, the 2045 iteration of the Asean Political-Security Community Blueprint should recognise the need for a collective diplomatic response to the geopolitics of energy transition and highlight some avenues towards confidence building on energy issues between regional and external actors.
Mirza Sadaqat Huda is Lead Researcher in the Climate Change in Southeast Asia Programme, ISEAS - Yusof Ishak Institute.
This article was first published in Fulcrum, ISEAS – Yusof Ishak Institute''s blogsite.
As a leading international research organization, ERIA is actively conducting quality research on numerous issues. With its partnership network of organizations and strong relations with governments in the region, ERIA is well positioned to support regional initiatives for sustainable growth and quality of life for the people in ASEAN and East Asia
Vientiane, 23 September 2024:ERIA, in collaboration with the Ministry of Energy and Mines of Lao PDR, successfully hosted the 7th East Asia Energy Forum in Vientiane. Themed ‘Energy Policy Directions for Inclusive and Sustainable Development for ASEAN,’ this year’s forum brought together energy experts from various ASEAN countries to discuss energy security policies that support sustainable development.
Tetsuya Watanabe, President of ERIA, emphasised that the forum is a crucial platform for sharing solutions to global energy challenges. ‘This forum is an opportunity for Lao PDR and ASEAN countries to collaborate and develop policies that promote energy security and energy sustainability in the region,’ he said.
H.E. Phoxay Sayasone, Minister of Energy and Mines of Lao PDR, opened the forum with a message about the importance of collaboration and cooperation to foster Lao PDR’s energy security. ‘In the face of global challenges of addressing climate change while maintaining economic growth, collaboration on all levels is essential for Lao PDR and ASEAN to achieve energy security and a more sustainable energy future,’ he stated.
Dr Han Phoumin, Senior Energy Economist at ERIA, presented a white paper on energy policy directions, highlighting the need for a rapid transition to clean technologies and renewable energy. ‘With rising energy costs, growing energy demand, and the impacts of climate change, it’s crucial for countries in the region to adopt clean technologies, leveraging renewable energy, and securing investment and financing for these technologies,’ explained Dr Phoumin.
‘Implementing environmentally friendly technologies, developing an integrated regional energy market, and implementing sustainable financing will be key to achieving energy security and carbon neutrality,’ he added.
The forum addressed several key issues, including energy supply security, energy access, and renewable energy development. Discussions focused on how ASEAN countries can enhance energy resilience by diversifying energy sources and strengthening existing infrastructure.
ASEAN has committed to becoming carbon-neutral by 2050, yet its growing population and diverse economies are driving a surge in energy demand. Most power plants are expected to adopt CCS technology from 2030, yet even if the carbon neutrality goal is achieved, coal and gas will still make up over 40% of the power mix. The continued reliance on coal and gas by 2050 is attributed to the relatively young age of coal-fired power plants in Southeast Asia, which have an average age of only 11 years.
The growing demand for electricity, coupled with the urgent need to reduce greenhouse gas emissions, necessitates significant investments in renewable energy and power system expansion. A key strategy is the development of the ASEAN Power Grid, which can help meet electricity demand at the lowest possible cost. The shift to cleaner energy will also depend on smart grid technologies, such as real-time monitoring and AI-driven predictive analytics.
Funding for clean technologies and innovation is crucial for transitioning to a more sustainable energy system. The forum explored how public and private partnerships are encouraged to finance new and emerging technologies in the foreseeable future, and how de-risking mechanisms along these technologies'' value chain is key for financing and bankability.
Sustainability in renewable energy development was also a major focus of the forum. Countries in the Mekong subregion (Thailand, Myanmar, Lao PDR, Cambodia, and Viet Nam), along with other ASEAN nations like Indonesia and Malaysia, have significant potential in hydropower and biomass resources. This potential can be maximised through energy connectivity and trade across the region, including for hydroelectric, solar photovoltaic, wind, and biomass power.
In terms of policy instruments, establishing a comprehensive measuring, reporting, and verification (MRV) system to generate accurate and reliable data is fundamental for carbon pricing policies and carbon trading mechanisms is necessary. ASEAN countries such as Indonesia, Malaysia, Singapore, and Thailand have launched carbon trading platforms, with Viet Nam expected to follow suit in 2025. It is highly recommended that the region strives for the ASEAN common carbon market soon.
The discussions also highlighted the importance of energy efficiency in end-use sectors, the role of innovation and technology in reducing energy consumption across various industries, and the development of electric vehicles (EVs). EVs play an important role in reducing carbon emissions and dependency on fossil fuels, yet there have been challenges in building infrastructure to support EV adoption across the region. Apart from EVs, it is essential to develop biofuels, improve public transport and intercity rail systems, and advance logistics and distribution centers as part of a comprehensive approach in building a sustainable transportation system.
Additionally, the forum discussed the need to strengthen emergency and energy reserve institutions, with the ASEAN Petroleum Security Agreement (APSA) being a key solution. Though vital for regional energy security during supply disruptions, APSA remains non-operational due to the absence of an operational manual and defined roles for the Secretariat. Once implemented, APSA could bridge ASEAN and Asian-Pacific Economic Cooperation (APEC) on oil stockpiling and emergency response measures.
The 7th East Asia Energy Forum reaffirmed ASEAN’s commitment to addressing global energy challenges with sustainable and collaborative solutions, providing valuable guidance for member countries to formulate more effective and innovative policies.
27 November 2024
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