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Southeast Asia boosts energy transition with investment of US$76 billion by 2025

Source:Adsale Plastics Network 2023-08-22

Southeast Asian national oil companies (NOCs) and traditional upstream players are progressively focusing on cleaner and more environmentally friendly energy initiatives with investments set to exceed US$76 billion from 2023 to 2025, according to Rystad Energy, an independent research and business intelligence company.


Rystad Energy also anticipates a continuous upward trend with a projected total outlay of US$119 billion by the end of 2027, which will be driven by investments in wind, solar and geothermal projects.


“Asia is currently making significant strides in prioritizing the shift towards greener energy sources, supported by the renewed focus of NOCs. This strategic approach will be pivotal in driving Southeast Asia's transition forward to sustainable energy,” says Afiqah Mohd Ali, senior supply chain analyst, Rystad Energy.


Afiqah Mohd Ali underlines that effective collaboration between private and public sectors becomes crucial to ensure Southeast Asia's sustainable long-term growth..

GGGI_solar panels_480.jpg

Green finance facilities are being used as alternative sources of funding for low-carbon investment in Indonesia. (Source: GGGI)


National oil companies expanding participation


Regional NOCs like Indonesia’s Pertamina are expanding their participation in geothermal. Pertamina Geothermal Energy (PGE), a subsidiary of the Indonesian NOC, demonstrates its dedication with investments of about US$1.6 billion between 2023 and 2026.


Malaysia’s Petronas announced ambitious plans to build the world's largest carbon capture, utilization and storage (CCUS) facility by 2025. Rystad Energy estimates the total project cost of the Malaysian NOC’s project could reach US$260 million by 2025.


Besides, Gentari, a wholly-owned subsidiary of Petronas, has made substantial investments in solar capabilities, seeking to harness Malaysia’s renewable energy potential.

Malaysia Petronas_CCS.jpg

Petronas’ carbon management journey. (Source: Petronas)


Vietnamese NOC PetroVietnam is collaborating with Danish company Orsted and T&T Group to launch the country’s first offshore wind projects, says Rystad Energy. The estimated investment in the project is between US$11.9-13.6 billion.


National strategies building the foundation


Southeast Asian countries' strategies and incentives form the foundation of their energy transition goals, with an emphasis on attracting third-party investments, remarked Rystad Energy.


Nevertheless, energy transition efforts are propelled by different countries, each leveraging its unique advantages. Vietnam's Power Development Plan VIII is geared towards significantly reducing reliance on fossil fuels by expanding both onshore and offshore wind capacity.


Meanwhile, the Philippines has made a resolute commitment to boosting the share of renewable energy in its generation mix. In contrast, Indonesia is offering fiscal incentives to catalyze investments across various low-carbon sectors, including geothermal, CCUS, solar and wind, with the aim of achieving net-zero emissions by 2060.


In addition, Malaysia and Thailand have their sights set on achieving net-zero greenhouse gas emissions by 2050 and 2065, respectively.


Southeast Asia
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