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

See all articles by Ivan Diaz-Rainey

Ivan Diaz-Rainey

CEFGroup & Department of Accountancy and Finance, University of Otago

Daniel J. Tulloch

University of Oxford - Smith School of Enterprise and the Environment

Iftekhar Ahmed

University of Otago

Matthew McCarten

University of Oxford - Smith School of Enterprise and the Environment

Farhad Taghizadeh-Hesary

Tokai University

Date Written: February 19, 2021

Abstract

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

Diaz-Rainey, Ivan and Tulloch, Daniel James and Ahmed, Iftekhar and McCarten, Matthew and Taghizadeh-Hesary, Farhad, An Energy Policy for ASEAN? Lessons from the EU Experience on Energy Integration, Security, and Decarbonization (February 19, 2021). ADBI Working Paper 1217, Available at SSRN: https://ssrn.com/abstract=3807085 or http://dx.doi.org/10.2139/ssrn.3807085

Ivan Diaz-Rainey (Contact Author)

CEFGroup & Department of Accountancy and Finance, University of Otago ( email )

Dunedin
New Zealand

Daniel James Tulloch

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom
1865614934 (Phone)

Iftekhar Ahmed

University of Otago ( email )

PO Box 56
Dunedin, 9054
New Zealand

Matthew McCarten

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Farhad Taghizadeh-Hesary

Tokai University ( email )

3-20-1 Orido
Shimizu-ku
Shizuoka, 424-8610
Japan

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