As with any major international projects, the clean energy transition in Southeast Asia is intensely political, both domestically and internationally. Befitting a region as diverse politically and economically as Southeast Asia, the political factors in its clean energy transition are disparate. At the national level, one of the primary political factors is the role of entrenched interests. A particularly prominent example is Indonesia, where its coal sector, which generated 63% of the country’s electricity in 2023, is notoriously rife with corruption. A secondary issue at the national level that will need to be addressed is the lack of supportive regulatory systems in many Southeast Asian nations.
Greater competition, fostered through reforms of national electricity systems, will be required to drive the region’s transition. Currently, competition in the electricity market is almost entirely within the generation segment, with regulated monopolies in its transmission and distribution.
The region’s energy transition is also caught in the strategic rivalry between China’s dominance in the sector and its desire to remain non-aligned or aligned more with the US. Further complicating matters is Beijing’s geopolitically difficult relations with some countries in Southeast Asia, which makes it risky for businesses and policymakers to rely on the import of large amounts of clean energy from China or its client states. Meanwhile, the US has done little beyond the Indo-Pacific Economic Framework for Prosperity Clean Energy Framework to counter China. In fact, there is little the US can do in terms of actually providing supply of clean energy.
