IEEJ：June 2021©IEEJ 2021
Special Bulletin
A Japanese Perspective on the International Energy Landscape (538)June 24, 2021

Growing Strategic Importance of Cooperation in ASEAN Energy Transition
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
We should recognize the shift of the international energy market’s gravity center to Asia as
the most important basic fact for considering global energy issues. How to view and address Asianenergy issues is the most important factor for global energy security, energy geopolitics and global
environmental issues including climate change. China has driven the shift of the gravity center toAsia over the past two decades. Substantial growth in China’s energy demand and imports since thebeginning of this century has symbolized the shift and dramatically raised China’s significance forand presence in the international energy market.
China has become a great presence in the international energy market and willundoubtedly retain its significance in the market. Due to the maturing economy and falling
population in China, however, it is noted that China’s energy demand would decelerate growth andpeak out in the future. In place of China, India and the Association of Southeast Asian Nations(ASEAN) are expected to drive global energy demand growth in the long run. India and ASEAN aregrowing important for a long-term energy market outlook towards 2050. How to address energy andenvironmental issues in India and ASEAN is vitally important for them and for the entire world.
India and ASEAN are important for future global energy and environmental issues and ofstrategic importance for Japan regarding international politics, economy, industry and other areas.
This report focuses on issues in ASEAN that has developed extremely deep and close relations withJapan. As a growing market, a manufacturing base, an economy with great potential for futurebusiness expansion and opportunities of human exchange and networking, ASEAN is a vitally
important region for the Japanese economy. Key challenges emerging in ASEAN include how toensure energy security in response to its growing dependence on imports amid long-term growth inenergy demand, how to address grave environmental issues such as CO2 emissions and air pollution
through fossil fuel consumption growth and how to realize sustainable and affordable energy supply
to balance economic growth with social development. At a time when ASEAN and its members areseriously tackling these challenges, deepening cooperation with ASEAN in energy andenvironmental areas would serve the national interests of Japan that gives priority to ASEAN.
In such situation, Japanese and ASEAN energy ministers held a special online meeting on
June 21 as proposed by Japan. They reaffirmed that it is important for ASEAN to steadily promotedecarbonization initiatives in response to accelerating global decarbonization, with due considerationgiven to the unique ASEAN conditions. Japan pledged to support ASEAN decarbonization initiatives.
The meeting was chaired by Vietnamese Industry and Trade Minister Nguyen Hong Dien andcochaired by Japanese Economy, Trade and Industry Minister Hiroshi Kajiyama, who pointed outthat ASEAN should consider its members’ various energy conditions and geographicalcharacteristics and differences in their development stages and utilize all available energy sources
and technologies to promote diverse and realistic energy transition measures for decarbonization.
Kajiyama also offered the Asia Energy Transition Initiative for Japan’s comprehensive support for1

energy transition in ASEAN member countries. The initiative includes (1) support for each ASEAN
member to formulate an energy transition roadmap towards carbon neutrality, (2) $10 billion in
financial support for renewable energy, energy efficiency improvements and liquefied natural gas,(3) support for each ASEAN member’s technological development and demonstration utilizing
achievements under a 2-trillion-yen fund for Japan’s environmental technology development
assistance and (4) human resources training and knowledge sharing regarding decarbonization
technologies. ASEAN members welcomed Japan’s basic understanding and support for ASEAN
decarbonization initiatives, as clarified in a joint statement to sum up the meeting.
The special meeting was significant because Japan and ASEAN reaffirmed that it isimportant to steadily and realistically promote decarbonization initiatives meeting ASEAN members’
realities in addressing energy and environmental issues in ASEAN that is extremely important forJapan. Japan and ASEAN also shared the significance of best utilizing all options including
innovative technologies for decarbonization initiatives. The decarbonization trend has accelerated as
major countries have offered carbon neutrality goals since last year. Amid the trend, developing andemerging economies that have yet to offer carbon neutrality goals have come under growinginternational pressure to realize carbon neutrality at the earliest possible timing. In May, theInternational Energy Agency released a report titled “Net Zero by 2050” depicting a future scenario
for the world to reach net-zero greenhouse gas emissions by 2050, attracting great attention fromenergy stakeholders in the world.
Under the trend, interests in carbon neutrality in ASEAN have grown within and outside
ASEAN. As a matter of course, ASEAN members have recognized that it is important for them toenhance climate change countermeasures and pursue sustainable development. The promotion ofenergy efficiency improvements and renewable energy, the use of nuclear energy, the utilization ofinnovative technologies such as CO2-free hydrogen/ammonia and other decarbonization initiatives
have become key policy challenges in ASEAN. However, ASEAN is in a phase to promoteeconomic growth and development in the future, with per capita GDP in ASEAN countries being farlower than in advanced economies. Even among ASEAN countries, development stages and energy
markets are far different. It is indispensable for ASEAN countries to consider their respective
realities before formulating decarbonization scenarios. If ASEAN attempts to follow the suit ofJapan, the United States and Europe to pursue carbon neutrality in 2050, such attempt may conflictwith ASEAN’s sustainable development because of the goal’s great gap with the current realities.
Media reports state that the Economic Research Institute for ASEAN and East Asia
provided a cost analysis for ASEAN’s achievement of carbon neutrality between 2050 and 2070 atthe special meeting. The analysis indicates that if ASEAN were to reach carbon neutrality in 2070,
additional costs would total some 100 trillion yen amounting to 4.8% of ASEAN GDP in 2070, withASEAN electricity prices almost tripling. Realizing carbon neutrality even by 2070 would bechallenging for ASEAN where electricity and other energy prices would have to be stable andaffordable for sustainable development. If ASEAN attempts to move up the realization, its costs may
increase further.
As noted above, ASEAN countries have recognized the importance of enhancing
decarbonization initiatives and have been prepared to implement the enhancement. The problems are
how to enhance the initiatives steadily and realistically and how to support the enhancement
internationally. Support for ASEAN decarbonization initiatives is the key to global GHG emission
cuts. Support of ASEAN’s sustainable development is significant for the global economy including
the Japanese economy. Given that ASEAN represents a key region for the concept of a free and open
Indo-Pacific, Japan may be required to deepen cooperative relations with ASEAN from a wide rangeof viewpoints such as energy security, climate change and energy geopolitics.
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