Decarbonizing the ASEAN Power Sector: What Are the Investment Needs and Economic Impacts?

The ASEAN region faces challenges in reducing its reliance on fossil fuels for power generation. Using the macroeconomic model, E3ME-FTT, the projections for the Reference (REF) and Current Technology Trajectory (CTT) scenarios, based on the IEEJ 2023 Outlook, show limited growth in renewable energy by 2050. In contrast, the Nationally Determined Contribution (NDC) and Ambitious (AMB) scenarios forecast significant increases, with renewables potentially comprising 85% and 93% of the power mix by 2050, respectively. The NDC scenario includes policies such as domestic emissions trading systems (ETS), subsidies for carbon capture and storage (CCS), wind, and solar power, and feed-in tariffs. The AMB scenario introduces stricter regulations on the capacity additions of new fossil fuel power plants. The results from the E3ME-FTT model suggest that, despite potential job losses in the fossil fuel sector, the ASEAN region could experience positive GDP growth due to increased investments in renewable energy. International financial support from initiatives like AZEC and the Green Climate Fund will be crucial for achieving large-scale decarbonization in the region.