Executive summary
The International Energy Agency (IEA) and the Institute of Energy Economic, Japan (IEEJ) have developed and published long-term decarbonisation pathways for Southeast Asia and Indonesia. This paper provides a comparison of modelling approaches, quantitative drivers, and results from the IEA and IEEJ pathways, highlighting areas of agreement, as well as identifying and explaining differences, and thereby to derive implications. The IEA pathway used in the comparison is the Announced Pledges Scenario (APS) from the World Energy Outlook 2022 and the Energy Sector Roadmap to Net Zero Emissions in Indonesia. The IEEJ pathway is the net zero CO2 emissions in 2050 or 2060 case (CN2050/2060) from the Decarbonisation of ASEAN Energy Systems: Optimum Technology Selection Model Analysis up to 2060 study. The IEA and IEEJ apply unique energy modelling frameworks, differ in their regional granularity and approaches, and reflect different sets of inputs in their respective scenarios, including the policy settings by country, which can and do lead to the development of different pathways. The two decarbonisation pathways compared in this paper also reflect uncertainties around the pace of technology development, commercialisation and cost, as well as the prevailing fossil fuel prices. These differences are important considerations for the comparisons.

International cooperation and finance International cooperation on financing clean energy transitions is a critical component of accelerating energy transitions in emerging economies, to implement plans and fulfil domestic ambitions, while opening opportunities for even faster transitions. Landmark agreements have been reached in recent months in Southeast Asia that mark major steps forward in international cooperation. In November 2022, a Just Energy Transition Partnership was launched between Indonesia and a group of leading economies, informed by IEA analysis and which targets an ambitious and equitable power sector transition in Indonesia. In December 2022, a Just Energy Transition Partnership was launched with Viet Nam, set to mobilise an initial USD 15.5 billion of public and private finance over 3-5 years to support Viet Nam’s green transition. In both partnerships, ambitions were set to peak power sector emissions in 2030, followed by substantial declines in unabated coal-fired generation.

Global Energy and Climate Model overview

The IEEJ-NE model shows the entire energy system, starting from energy imports, secondary energy conversion, intraregional energy trade, CO2 capture and storage (CCS), and final consumption. The model assumes various types of energy to be consumed.

Modelled energy system

Modelling of the end-use sectors is based on data from the ERIA Energy Outlook and Energy Saving Potential in East Asia 2020, the IEA energy balance table, and the IEEJ outlook 2021. However, some sectors are not simulated due to lack of data availability. In the model, the power supply-demand is divided by time to express the power variations of solar or wind energy and the system integration cost. One year for power supply-demand is divided into 2 190 time slices (4-hour resolution). In addition, international trades of energy and CO2 are explicitly modelled. This is important in order to incorporate the measures for strengthening natural resource sharing within ASEAN countries.

Key drivers Gross domestic product and population by country in Southeast Asia and Indonesia

Change in economic output, energy consumption and energy-related CO2 emissions in Southeast Asia and Indonesia

In the IEA APS, GDP, total energy supply and CO2 emissions decouple to 2050, breaking from recent trends. Total energy supply decouples from GDP growth – total energy supply growing at 1.5% per year compared with GDP growth of 3.8%. This reflects gains in energy efficiency in end-uses through electrification and more efficient appliances, and the transition towards non-combustion renewable technologies. At the same time, CO2 emissions peak around 2030 and then decline to 2050, with an average change of -1.7% per year from 2020 to 2050 in Southeast Asia. Indonesia demonstrates similar trends with continuous growth for GDP, a plateauing of total energy supply after 2040 and peak CO2 emissions in the early 2030s. For Southeast Asia in total, the IEA and IEEJ projections for economic growth, energy consumption and CO2 emissions are similar to 2030. After that year, economic growth and total energy supply growth are notably higher in the IEEJ scenario, while CO2 emissions are slightly lower to 2040 and 2050.

Gross energy-related CO2 emissions by sector, carbon dioxide removals and net emissions in Southeast Asia and Indonesia

Electricity generation by source

Southeast Asia coal-fired power plant capacity today stands at 90 GW, with an average age of 12 years. Coal meets close to 45% of electricity supply in Southeast Asia. Coal-fired units in Thailand are older, with 19 years on average while units in Viet Nam’s fleet are only 8 years on average. Malaysia, Indonesia and Philippines coal fleets have an average age of 13 years. Those five countries concentrate over 95% of Southeast Asia installed coal-fired capacity and generation. In the APS additions of unabated coal slow from an average of 5.5 GW/year over the 2011-20 period to less than 2 GW/year over the period to 2030 before coming to an end, while alternative sources of low emission electricity are scaled up. The share of unabated coal in electricity generation drops to 33% in 2030 and only 6% in 2050. In the CN2050/2060, the IEEJ projects that the existing coal-fired power plants will start co-firing with biomass/ammonia and CCS installation in the 2040’s and that unabated coal-fired power plants will no longer operate in 2050.

Electricity generation by source in Southeast Asia and Indonesia

The electricity sector is critical in any decarbonisation pathway, and achieving a decarbonised electricity mix while meeting increasing electricity demand is challenging yet crucial. The IEA APS scenario outlines key elements for decarbonisation in Southeast Asia and Indonesia, including scaling up renewable energy technologies – led by solar PV and hydropower, complemented by wind, geothermal and bioenergy – complemented by nuclear power, low-emissions hydrogen and ammonia. In addition, the scenario envisions a peak in unabated coal-fired generation around 2030, followed by a long-term decline, and moderate growth for the unabated use of natural gas until 2030, followed by reduced use. The IEA and IEEJ scenarios share points of agreement, including strong growth in total generation until 2050, declining share of fossil fuels, nuclear power gaining a foothold in Southeast Asia, and renewables being the central pillar of electricity decarbonisation. However, there are key differences between the scenarios. The IEEJ scenario envisions a stronger growth in total electricity supply, partly linked to the assumed economic growth in the region, with a 46% higher increase by 2050 compared to the IEA APS. This also implies that while total generation from renewable sources is 17% higher in IEEJ scenario than in the IEA APS, their share is lower, reaching 63% in 2050, compared to 79% in the IEA APS. The IEEJ also includes a faster and immediate decline in coal-fired generation, which would be 36% lower than in the IEA APS by 2050 for Southeast Asia. This is partly due to faster introduction of co-firing in coal-fired generation under the IEEJ scenario. Furthermore, higher electricity supply means that natural gas-fired generation peaks later in the IEEJ scenario, in 2040, and at a higher point for both Southeast Asia and Indonesia. Nuclear power is also less central to the IEA decarbonisation pathway in Southeast Asia, with 2.5 times higher growth from zero in IEEJ for Southeast Asia and four times for Indonesia.

Source:http://IEA