SE Asia reliance on fossil fuel to stay high at 70% by 2030

SINGAPORE (ICIS)–Fossil fuels will still account for a huge portion of southeast Asia’s energy mix, projected at 70% by the end of the decade, but carbon capture and storage (CCS) projects should help the region achieve its emissions goal.

• SE Asia not hitting renewable energy targets
• CCS deemed most cost-effective means to hit emission targets
• Subsidies key to promote CCS investments

Currently, the region relies on coal, oil and gas for about 80% of its energy requirement amid strong economic growth, with the share of renewable energy low at less than a fifth of the total.

Southeast Asia has only achieved 16% of renewable energy in its current energy mix, well below the 22% target by 2035, ASEAN Centre for Energy (ACE) deputy executive director Beni Suryadi at the recently concluded Asian Downstream Summit in Singapore.

The Asian Downstream Summit on 23-24 October was held during the Singapore International Energy Week (SIEW) conference, which ends Friday.

Economic development and geopolitical uncertainties have played roles in the region’s inability to achieve the targeted energy mix, he said.

Southeast Asia is expected to become the world’s fourth largest regional economy in 2030, he said.

Against this backdrop, CCS is expected help the region ensure energy security while helping it to become carbon neutral, Suryadi said.

CCS will be the “most cost-efficient” support for energy security in the region, but the energy transition will need significant financial and technical support, said Pattabhi Raman Narayanan, advisor at engineering consultancy Becht Canada.

Raman also stressed the importance of international cooperation in this undertaking.

GOVERNMENT SUPPORT NEEDED FOR CCS PROJECTS
The main challenges facing countries in southeast Asia in implementing CCS include cost of capture, cost of shipping and bankability.

To encourage more investment in carbon capture technology, governments may be required to step in and offer subsidies, as is currently the case in Europe, said Neeraj Kumar, director of commercial chemicals and business development at Vopak Terminals Singapore, a unit of Dutch logistics firm Vopak.

Infrastructure also needs to be built up, he added.

“To begin any project, to have a long-term infrastructure … we do need a long-term commitment. We are talking about 15, 20 years of commitment to make that value chain sustainable, to pay for it,” Kumar said.

“The government needs to step in and coordinate the first three people to make that jump (and invest in CCS).”

Singapore has taken the first step. The city-state announced in March this year that it is partnering a consortium formed by global energy majors ExxonMobil and Shell to study the feasibility of a cross-border CCS project and start development by 2030.

Indonesia’s state-owned energy company Pertamina is also working with ExxonMobil to advance an evaluation on a CCS hub as of May 2024, while its government has agreed with Singapore to collaborate on cross-border CCS.

Meanwhile, Malaysia’s state-owned Petronas in June 2024 agreed to collaborate with Norway-based risk management firm DNV to develop CCS value chains across southeast Asia.

Separately, the Paris-based International Energy Agency (IEA) said on 22 October that southeast Asia needs to increase its clean energy investments to $190 billion by 2035 to achieve its climate goals.

Focus article by Jonathan Yee