An Energy Policy for ASEAN? Lessons from the EU Experience on Energy Integration, Security, and Decarbonization
26 Pages Posted: 19 Mar 2021 Last revised: 24 Mar 2021
Date Written: February 19, 2021
The European Union (EU) has redefined the energy sphere in Europe over the last 3 decades. Transnational policies targeting liberalization and integration, energy efficiency, renewables, carbon pricing, and energy security have led to major steps forward in terms of a more secure, integrated, and environmentally friendly energy supply. We explore, through the lenses of a paradigm shift and transition pathways, how the Association of Southeast Asian Nations (ASEAN) grouping might advance its own energy trilemma through greater energy cooperation. We provide evidence that ASEAN has lagged behind in energy transition, representing considerable risks in multiple forms ‒ most notably, political and physical climate risks from failing to meet the Paris Agreement targets and the risk of stranded assets if accelerated transition is achieved. However, accelerated transition could come in many forms. By drawing on the EU experience, we argue that an energy policy for ASEAN should explicitly pursue a dual transition pathway strategy to yield the best outcome in terms of the energy trilemma. First, an "ASEAN supergrid" supported by a single energy market and by common carbon pricing would "green" urban and industrial demand. Second, "distributed smart grids" would help reap the social and economic benefits of providing electricity to the rural/remotely located population that have hitherto not had access to electricity. This is a dual transnational and local approach that contrasts with energy transition defined at national level. This interconnected approach should yield security, environmental, and economic dividends.
Keywords: energy transition, EU, ASEAN, energy policy, carbon pricing, renewable energy, climate risk, smart grids
JEL Classification: O44, O52, O53, Q40, Q54
Suggested Citation: Suggested Citation