WORKING PAPER

WP/8/2022

WORKING PAPER

ENERGY TRANSITION: PROSPECT AND

CHALLENGES AT ASEAN PLUS THREE
COUNTRIES

Arnita Rishanty
Maxensius Tri Sambodo
Donni Fajar Anugrah
Retno Puspita K. Wicaksono

2022

This is a working paper, and hence it represents research in progress. This paper
represents the opinions of the authors, and is the product of professional research. It is
not meant to represent the position or opinions of the Bank Indonesia. Any errors are the
fault of the authors.
 ENERGY TRANSITION: PROSPECT AND
CHALLENGES AT ASEAN PLUS THREE
COUNTRIES

Arnita Rishanty, Maxensius Tri Sambodo, Donni Fajar Anugrah

Retno Puspita K. Wicaksono

ABSTRACT

This study aims to present a cross-country assessment of the transition dynamics

for the ASEAN plus three countries (Japan, China, and South Korea). Our research
shows that economic activity has a significant impact on CO2 emissions rise and
that there may be asymmetries between energy diversity and efficiency. It is argued
that Indonesia's use of renewable energy is low given its enormous potential. It is
associated with the financial viability of state-owned firms, human and capital
resources, misdirected subsidies, geographic settings, and the structural state of the
economic energy basis.

Keywords: Energy Transition, ASEAN, renewable energy, transition matrix

JEL Classifications: O33, R48, Q55

Acknowledgment: This research was conducted when Maxensius Tri Sambodo was a
visiting researcher at Bank Indonesia Institute, Bank Indonesia, Jakarta - Indonesia.

Disclaimer: The views expressed in this paper are solely those of the authors and do not
in any way represent the views of Bank Indonesia or its Board of Governors. All errors
belong to the authors.

2
Introduction

The energy transition is an important process to reduce the increase in the earth's
temperature due to carbon emissions that have grown very rapidly since the industrial
revolution. However, Salomon and Krishna (2011) show the experience of several countries,
not all transitions to more sustainable energy systems can be successful. 1 They mentioned that
globally the energy transition will be slow, this is because the political economy context in
each country will determine the attention of each country such as on the energy efficiency side,
the development of smart grids, as well as the presence of new agreements. They also
concluded that paying greater attention to the energy efficiency side would lead to a better
acceleration of the energy transition. Therefore, the efficiency of energy use is not too difficult
to do.
Learning from the energy transition carried out by Brazil, Lazaro et al (2022) concluded
two important things. 2 First, the energy transition is not only a technological process, but also
involves the construction of political, social, environmental, and economic sides for the
purpose of energy production and consumption. Second, energy policy is still the domain of
the central government, this will certainly have an impact on the debate on policy solutions,
regulations, and governance, especially if it is faced with the interests of local governments
(decentralization perspective). Thus, their views show that the dimensions of governance
starting from the side of planning, utilization and impact of energy use, as well as the domain
of energy policy at the central and local government levels are important things to consider in
the energy transition process.
What is interesting is the finding of York and Bell (2019) that a larger role of renewable
energy in the energy production mix does not mean replacing fossil fuels, but rather adding to
total energy production.3 They said this is not a 'transition', in fact it will hinder the
implementation of policies aimed at reducing the use of fossil fuels. Thus, it appears that the
transition requires not only a greater role for renewable energy, but also more supportive
policies for the use of renewable energy, to substitute the use of fossil energy.

1
https://www.sciencedirect.com/science/article/abs/pii/S0301421511006987
2
https://www.sciencedirect.com/science/article/abs/pii/S2214629621004916
3
https://www.sciencedirect.com/science/article/abs/pii/S2214629618312246

3
 Furthermore, Miller et al (2013) provide the view that the energy transition is a complex
technological social transformation process and requires major changes in many communities.4
However, they are optimistic about the ongoing energy transition process for four reasons.
First, this effort has received great support from the community. Second, there is greater
concern from the public over the extraction and production of existing energy, rather than fear
over energy supply. Third, the development of many new infrastructures for alternative energy
systems has provided many opportunities to pay greater attention to the social dimensions of
the energy transition. Fourth, greater social participation in the realization of democracy in
technological change. Thus, the social impacts or risks of the energy transition process need to
be managed properly by building good literacy on this process, including support for
infrastructure development and greater community involvement in the energy transition.
Likewise, Savacool (2016) stated that energy transitions are complex.5 He also gave his
six views. First, the energy transition can be driven by endogenous factors that exist within the
country driven by political will and stakeholder involvement, or factors from outside the
country such as military conflicts, energy disasters such as nuclear, or global crises. Second,
another transition has also occurred because it is market driven with better offers of financial
and social benefits. Third, some transitions may occur quickly due to management or
incentives, or in other conditions they occur more naturally due to changes in technology,
prices, or demand. Fourth, he also said there was no magical formula for energy transitions,
but learned from history, the transitions that have occurred are based on new discoveries, with
great impact, and in widely accessible forms of energy. Furthermore, in the future, scarcity and
'stranded assets', compared to abundance will influence decision making. Finally, energy
transitions are path dependent versus revolutionary, cumulative versus fully substitutive.
Savacool's view shows that the complexity of the transition requires a more gradual approach
and is full of in-depth reflection on institutional memory policies that have been running,
including experiences in many places.
From an economic perspective, price is an important determinant for determining the
demand for energy and Fouquet (2016) 6, said that energy prices have a major influence in
creating incentives to stimulate the energy transition, but energy price fluctuations are only a
catalyst to stimulate processes that will lead to more definite energy transitions. Furthermore,
he also said that the new technology offered is also an important factor, especially if the

4
https://www.tandfonline.com/doi/pdf/10.1080/09505431.2013.786989?src=getftr
5
https://www.sciencedirect.com/science/article/pii/S2214629615300827
6
https://www.sciencedirect.com/science/article/abs/pii/S2214629616301979

4
technology can provide value to consumers, and is able to create a market even though the
price is still relatively expensive. However, he also conveyed an important factor that could
delay the transition, namely the reaction from the incumbent and the declining industry. This
condition will certainly have an impact on economic transformation and inequality. Likewise,
the role of the government is very important to build institutional settings that can stimulate
the energy transition, but this can only happen if there is political will and alternative energy
sources are available. The interesting thing from Fouquet's argument is that the risk will come
from the position of the incumbent who has enjoyed economic rent from the use of fossil
energy. Thus, it is important to see how the incumbent is also able to transform to green energy,
and what is also important is the development of large sunk costs to start a fossil-based
production system.
The World Energy Outlook (2021) and IEA (2021) provides three important notes
related to the energy transition.7 First, the transition risk will be faced with a choice of
scenarios. There are at least four possible energy transition scenarios, namely: (1) Net Zero
Emissions by 2050 Scenario (NZE); (2) Announced Pledges Scenario (APS); (3) Stated
Policies Scenario (STEPS); and (4) Sustainable Development Scenario (SDS). NZE is the most
radical carbon emission reduction scenario, where by 2050, the world will no longer emit
carbon emissions. Meanwhile, STEPS is the mildest scenario because it is more about
stabilizing carbon emissions with a reduction rate that tends to be marginal. Meanwhile, APS
and SDS tend to be more moderate, but SDS is the second highest emission reduction scenario
after NZE. Second, the risk does not only reflect the national interest (internal), but also
concerns other countries either in the individual or group (external) scope. Third, the risks are
interconnected and interact to find a compromise point. For example, the Indonesian
government's policy to secure the supply of coal for domestic electricity needs, makes coal
exports temporarily need to be stopped. However, this policy has led to protests from other
countries, such as Japan, South Korea, and the Philippines, which view that the Indonesian
government's policies will threaten the energy security conditions in their countries.8
Furthermore, examining the search for the world risk in the World Energy Outlook
(2021), there are several things that need attention in relation to the energy transition. For
example, climate change will have an impact on increasing the vulnerability of energy

7
https://iea.blob.core.windows.net/assets/4ed140c1-c3f3-4fd9-acae-
789a4e14a23c/WorldEnergyOutlook2021.pdf
8
https://www.thejakartapost.com/business/2022/01/10/philippines-urges-indonesia-to-lift-coal-export-ban-as-
talks-proceed.html

5
infrastructure in the form of the threat of damage, jobs, cyber security, air pollution and health.
Moreover, the effects are mismatches of supply and demand, tension on global trade and
constraints on technology transfer, pandemic and energy, volatility of energy prices, finances,
gap between the early and late adopters of clean technologies, and over-investment. This
condition shows that the risk is very complex. The current challenge is how to make the energy
transition reduce these risks, or at least make many of them easier to control.
Thus, the energy transition stands in a plural conception, and from a risk perspective it
is also complex. This is of course interesting because when measuring the risk of energy
transitions it will contain various combinations. In the energy transition literature, Savacool
(2016) mentions that Indonesia has succeeded in converting from kerosene to LPG in a fairly
fast time. On the other hand, considering the volatility of energy prices, it seems that it also
needs to be viewed critically, because the Indonesian government is still actively implementing
energy subsidies and compensation policies.
The energy transition is characterized by structural changes in the composition of the
mixed energy both in terms of consumption and production. This has an impact on changes in
energy-related CO2 emissions. Furthermore, the energy transition cannot be separated from the
condition of energy security, which includes (i) self-sufficiency and diversification; (2) energy
sustainability which includes energy efficiency and low carbon emissions, and finally (3)
energy (electricity) affordability which is measured as the ratio of electricity costs to income
per capita (Fueyo et al, 2015) 9. Thus, the energy transition process can be captured from the
decomposition of energy-related CO2 emissions.
In their study, Zhang et al. (2009) 10 performed a complete decomposition technique to
identify the factors that influence sectoral changes in CO2 emissions. In their study, they
concluded that between 1991-2006, the decline in CO2 emissions in China was due to the role
of the energy intensity effect, while the increase in CO2 emissions was caused by the intensity
of CO2 emissions and economic activity. In general, decomposition techniques are divided into
two major groups, namely structural decomposition analysis (SDA) and index decomposition
analysis (IDA). SDA uses input-output model in doing decomposition. Meanwhile, IDA can
be applied based on Laspeyres IDA and Divisia IDA. The advantage of using IDA is that this

9
Fueyo, N., Gomez, A., and Dopazo, C. (2015). Energy security, sustainability, and affordability in Asia and the
Pacific, in Asia’s Energy Challenge: Key issues and policy options, Minsoo Lee, Donghyun Park, and Harry D.
Saunders (Eds), Routledge, 81-131, Manila.
10
Zhang, M., Mu, H., Ning, Y., and Song, Y. (2009). Decomposition of energy-related CO2 emissions over 1991-
2006 in China, Ecological Economics, 68:2122-2128.

6
technique can be applied to any available data at the aggregate level, therefore IDA is widely
applied in many publications.
This study aims to measure the transition risk of energy-related CO2 emissions in two
stages. In the first stage, an analysis of the direction of investment is carried out, which is
captured from indicators of production and consumption in the energy sector that runs between
2000 and 2020, whether in the span of that year, the mixed energy structure has led to a stronger
grip on the fossil energy base or has it tended to be loosening grip on fossil-based energy.
Second, based on the energy transition that has taken place in the last twenty years, what about
the risk conditions faced, and in this case the risk will be measured in the dimensions of energy
security, sustainability, and affordability. Furthermore, through these two stages of analysis, it
will be mapped whether the transition has been, is being, and will be running with the dynamics
of the risks that will be faced. By illustrating the dynamics of the transition and risk in the
quadrant analysis, it is possible to map the direction of the energy transition that has been going
on so far. Interestingly, this study makes a comparison, not only in Indonesia, but also at the
level of ASEAN plus three countries (Japan, China, and South Korea).

Methodology
This study uses mixed-methods. A qualitative approach is taken to explore the potential,
challenges, and risks of the energy transition. In-depth interviews were conducted by several
resource persons representing the government (Ministry of Energy and Mineral Resources),
state-owned enterprises in the electricity sector (PLN), the Indonesian electricity community
(MKI), and the ASEAN Energy Center (AEC). Furthermore, a quantitative approach is taken
to measure the dynamics of energy transitions that have occurred, so that the patterns of
changes that occur can be understood.

Next, four quadrants of the energy transition matrix are constructed. The four
transitional quadrants reflect changes in terms of energy, economy, emissions, and equity.
These four aspects, both directly and indirectly, are able to capture the risk side of the transition.
The ability to maintain the performance of these four aspects indicates the country's ability to
carry out the energy transition optimally.
Two years of observation, namely 2000 and 2019, are considered sufficient to see the
energy transition in terms of energy diversity and efficiency. Considering the risk of fossil
energy availability, countries that are able to improve their energy diversity position towards
using renewable energy and becoming more efficient are considered to be better at carrying
7
out the energy transition. This is an effort made in the first stage. Thus, based on the energy
transition matrix, countries in clusters A and C, in the context of energy transition, are in a
better position than those in clusters B and D. To get a more in-depth mapping, then in the
second stage, mapping is carried out based on the results of the decomposition of carbon
emissions. In the third stage, countries which have increasing Energy Self Sufficiency (ESS)
for renewable energy will be kept in the matrices. Final step, countries which have increasing
energy equity will be kept on the matrices.

Energy Diversity
Diversify to Less Diversify
Renewable energy

Less Energy Intensity (to A B

emissions) – CI: Emission /
Efficiency

Energy Used
Energy

Less Energy Intensity (to

GDP) – EI: Energy / GDP C D

Figure 1 First Stage in Mapping Energy Transition

The quantitative process built in several stages, namely (1) decomposition of carbon

emissions; (2) energy efficiency self-sufficiency; (3) energy diversity; and (4) energy equity

(to capture affordability conditions).

1. Carbon Emissions Decomposition

The method for this research uses several strategies. In the first stage an analysis is carried out
to measure the decomposition of energy-related CO2 emissions. The writing in the method
section is derived from Zhang et al (2009) 11. The symbols are defined as follows:

𝐶𝐸 𝑡 total CO2 emission in year t (in tons, t);

𝐶𝐸𝑖𝑡 total CO2 emission of the ith sector in year t;
𝐶𝐸𝑖𝑗𝑡 total CO2 emission of the ith sector based on fuel type j in year t

11
Zhang, M., Mu, H., Ning, Y., and Song, Y. (2009). Decomposition of energy-related CO2 emissions over 1991-
2006 in China, Ecological Economics, 68:2122-2128.

8
𝐸𝑖𝑡 total energy consumption of the ith sector in year t (TJ);
𝐸𝑖𝑗𝑡 total energy consumption of the ith sector based on fuel type j in year t (TJ);
𝐸𝐹𝑗 carbon emission factor of the jth fuel (t-C/TJ)
𝐶𝑆𝑗𝑡 the fraction of the jth fuel is not oxidized as raw materials in year t;
𝑂𝑗 the fraction of carbon oxidized based on fuel type j;
𝑀 the molecular weight ratio of carbon dioxide to carbon (44/12);
𝐺𝐷𝑃𝑡 the value added in year t;
𝐺𝐷𝑃𝑖𝑡 the value added of the ith sector in year t;
𝐶𝐼𝑖𝑡 = 𝐶𝐸𝑖𝑡 ÷ 𝐸𝑖𝑡 the CO2 intensity of the ith sector in year t;
𝐸𝐼𝑖𝑡 = 𝐸𝑖𝑡 ÷ 𝐺𝐷𝑃𝑖𝑡 is the energy intensity of the ith sector in year t;
𝐸𝑆𝑖𝑡 = 𝐺𝐷𝑃𝑖𝑡 ÷ 𝐺𝐷𝑃𝑡 is the economic share of the ith sector in year t;

Estimation of CO2 emission

CO2 estimation is based on energy consumption, carbon emission factors and the fraction of
oxidized carbon by fuel as follows

𝑗
𝐶𝐸𝑖𝑡 = ∑𝑗 𝐶𝐸𝑖𝑗𝑡 = ∑𝑗 𝐸𝑖𝑗𝑡 × 𝐸𝐹𝑗 × (1 − 𝐶𝑆𝑖 ) × 𝑂𝑗 × 𝑀

Thus, the total CO2 emissions for all sectors of the economy at time t 𝐶𝐸 𝑡 = ∑𝑖 𝐶𝐸𝑖𝑡 , are related
to the carbon emission factors (EFs) and the share of oxidized carbon (O) given in the table
below. below. Since the fuel used as raw material for manufacturing products is excluded from
the total energy consumption, the CS value is 0. This value is assumed to be constant
throughout the study period.
Table 1. Carbon emission factors and fractions of carbon oxidized
Fuel EF (t-C/TJ) Oa
Coal 25.8 0.90
Coke 29.2 0.90
Coke oven gas 12.1 0.99
Crude oil 20.0 0.98
Gasoline 19.1 0.98
Kerosene 19.6 0.98
Diesel oil 20.2 0.98
Fuel oil 21.1 0.98
LPG (liquefied petroleum 17.2 0.98
gas) 15.7 0.98

9
 Refinery gas 20.0 0.98
Other petroleum products 15.3 0.99
Natural gas
Source: IPPC (1995); note 1000 BOE = 5.861.520.000.000 J
a
refers to Wang et al. (2005)

Decomposition of aggregate CO2

CO2 emissions can be expressed in Kaya identity, which is useful for decomposing the total
national carbon emissions, as presented in the following equation:

𝐶𝐸𝑖𝑡 𝐸𝑖𝑡 𝐺𝐷𝑃𝑖𝑡

𝐶𝐸 𝑡 = ∑𝑖 × 𝑡 × × 𝐺𝐷𝑃𝑡 = ∑𝑖 𝐶𝐼𝑖𝑡 × 𝐸𝐼𝑖𝑡 × 𝐸𝑆𝑖𝑡 × 𝐺 𝑡
𝐸𝑖𝑡 𝐺𝐷𝑃𝑖 𝐺𝐷𝑃 𝑡

Changes in CO2 emissions between the initial year 0 and the target year t, are expressed in CE,
and can be decomposed into four effects, namely: (i) the changes in the CO2 intensity effect
(denoted by CIeffect); (ii) the changes in the energy intensity effect (denoted by EIeffects); (iii) the
changes in the structural changes effect (denoted by ESeffect); and (iv) the growth in the
economic activity effect (denoted by Geffect) in the additive form, as shown in Eq.

∆𝐶𝐸 = 𝐶𝐸 𝑡 − 𝐶𝐸 0 = 𝐶𝐼𝑒𝑓𝑓𝑒𝑐𝑡 + 𝐸𝐼𝑒𝑓𝑓𝑒𝑐𝑡 + 𝐸𝑆𝑒𝑓𝑓𝑒𝑐𝑡 + 𝐺𝑒𝑓𝑓𝑒𝑐𝑡

Furthermore, Sun (1998) defines each effect as follows:

10
 CO2 intensity effect is used to evaluate fuel quality, fuel substitution, and installation
of technology to reduce emissions. Energy consumption is generally related to several variables
such as economic structure, efficiency of the energy system, energy utilization technology,
energy prices, energy conservation, and investment to save energy which consists of energy
intensity effect. Structural changes are carried out to analyze shifts in industrial structure and
economic activity that affect economic development.
CO2 Mitigation Model
The next analysis is by calculating the CO2 mitigation model. Geffect is a major contributor to
CO2 emissions, and the changes in CO2 emissions caused by Geffect are referred to as the
theoretical changes of CO2 emissions. Furthermore, the definition of theoretical decrease
(EM) is made as:

11
2. Energy self-sufficiency

The ESS indicator (ESSt) gauges the energy independency of a country or region. A value of 1
means it can meet all its primary energy demand (PED) with indigenous resources while a 0
indicates complete reliance on energy imports. The index considers that the infrastructure to
produce and transport energy takes many years to plan and develop.

where
Xr,t is the share of renewable energy sources r (hydro, wind, solar) in primary energy
consumption in year t;
Xf,t is the share of conventional fuel f (coal, oil, gas, and nuclear) in primary energy
consumption in year t;
P is the number of renewable resources, and N is the number of conventional ones;
Rf,t are the national reserves of fuel f in year t;
Cf,t is the primary energy consumption of fuel f in year t;
Ff,t is a security factor depends on the reserves to consumption ratio for fuel f in year t (see
below);
T is the typical timescale (in years) required to change the energy consumption structure of an
economy.

The factor Ff,t compares the reserves for fuel f with annual consumption; if reserve will
last longer than T years, their contribution to security is 1; between T years and 1 year, the
factor Ff,t is employed to decrease the contribution to 0 if reserve will last less than 1 year. The
timescale T is taken as 20 years. However, related to the security factor the author made

12
modifications. the author uses energy security data made by the world energy council12. The
energy security index is used as a penalty factor for the achievements obtained both in terms
of renewable energy and conventional energy. The sustainability index is used as a multiplier
for the role of renewable energy. Then the energy security index is used as a multiplier for
conventional energy. This strategy is carried out to overcome the availability of data on the
position of energy reserves in each country. In its report, the World Energy Council uses 2000
as the base year, this is in line with the study analysis period that began in 2000

3. Primary Energy Diversification

The DIV indicator (DIVt) measures the degree of diversification of energy sources when all
primary energy is from one source the DIV is 0; when energy comes equally from all primary
sources considered (coal, oil, gas, nuclear, hydro, and other) it is 1. It is calculated as:

where
Xy,t is the share of energy source y in primary energy consumption in year t;
N is the number of energy sources considered (coal, oil, gas, nuclear, hydro, and others

4. Affordability of electricity

Efforts to obtain electricity tariffs are not easy, especially if these tariffs reflect economic
prices. The table below shows energy subsidies provided by several ASEAN countries. In some
countries such as Indonesia and Brunei, the amount of this subsidy is quite large in comparison
to GDP or above 1 percent. Thus, the affordability condition does not fully reflect the true cost.
Thus, good affordability conditions can occur because of the energy subsidy policy. In this
condition, the author uses the data released by the 'energy trilemma' in the concept of energy
equity. Energy equity is built by combining elements of energy access, quality of energy access,
and energy affordability. Thus, energy affordability is only one component of energy equity.

Table 2. Subsidies in ASEAN countries

12
https://trilemma.worldenergy.org/reports/main/2021/World%20Energy%20Trilemma%20Index%202021.pdf

13
Source:
https://www.researchgate.net/publication/354272161_Fuel_subsidy_reforms_in_ASEAN_c
ountries/link/6130b9ccc69a4e4879737370/download

14
Data
Energy use data per sector and the type of energy used, obtained from
https://www.iea.org/data-and-statistics/data-tables/?country=WORLD&energy=Balances.
The data indicated that 'total final energy consumption' was carried out by the industrial sector;
transports; residential; commerce and public services; agriculture/forestry; fishing; non-
specified; and non-energy used. Furthermore, the units of energy used are converted into
carbon emissions. The figure below shows the final total energy consumption by sector for the
case in Indonesia (TJ). Furthermore, this information becomes the basis for calculating carbon
emissions by sector. GDP data for the economic sector will be divided into three major groups,
namely: agriculture; industry; and services. The data source was obtained from the Asian
Development Bank (ADB) Key Indicators for Asia and the Pacific 2021
https://kidb.adb.org/kidb/. GDP data is calculated at constant 2010 prices. Calculation of
Energy self-sufficiency is carried out using production, import, export and consumption data.
Data obtained from the IEA whose aggregation includes hydro; wind, solar, etc.; biofuels and
waste; coal; crude oil; oil products; and natural gas. With the same data source, energy
diversification can also be calculated. Data for calculating energy equity, obtained from the
source https://trilemma.worldenergy.org/#!/energy-index.

Results
CE is the total carbon emissions generated from the industrial, transportation, residential,
commercial, and public sectors, as well as agriculture and fisheries. In absolute value, China
has provided the highest emission level, from around 1.3 billion tons in 2000 and increased to
about 3.5 billion tons of carbon in 2019. In 2019, Japan had the second largest carbon emission
level after China. and followed by Indonesia and South Korea. However, the changing in
carbon emission levels between 2000 and 2019, it appears that only Japan and Korea
experienced a reduction in emissions, by around 163 million tons and 7.3 million tons,
respectively. The reduction in carbon emissions that occurred in Japan occurred in all sectors,
and in Korea there was still an increase in emissions in the transportation and residential
sectors. As the largest emitter, the industrial and transportation sectors in China contributed to
the largest increase in emissions in the country, reaching 58.6 percent and 30 percent
respectively. Meanwhile, the increase in emissions from Singapore is the smallest compared to
other countries. Considering the role of changes in emissions in 2000 and 2019, it appears that
Singapore, Viet Nam, and China have shown an increasing role, respectively 0.1 percent, 1.2
percent, and 19 percent.
15
 Table 3. Carbon emissions
CE 2019 CE 2000 2019 - 2000
Country
Change in
Total Share Total Share Absolute Change share
Indonesia 301.097.630 0,061 159.906.167 0,062 141.191.462 -0,001
Malaysia 107.860.809 0,022 62.134.218 0,024 45.726.591 -0,002
Philippines 61.330.524 0,012 41.382.427 0,016 19.948.097 -0,004
Singapore 22.766.949 0,005 9.511.526 0,004 13.255.423 0,001
Thailand 130.873.637 0,027 86.690.989 0,034 44.182.648 -0,007
Viet Nam 119.394.549 0,024 30.725.306 0,012 88.669.243 0,012
Japan 473.423.104 0,096 636.485.600 0,247 (163.062.496) -0,151
People's Republic of
China 3.506.409.217 0,710 1.328.960.908 0,516 2.177.448.309 0,194
Korea 212.107.740 0,043 219.437.047 0,085 (7.329.307) -0,042
Total 4.935.264.159 1,000 2.575.234.188 1,000 2.360.029.971
Source: authors’ calculation

Table 4 shows changes in the decomposition of carbon emissions (CE) as seen from the

magnitude of changes in CI, EI, and ES both in 2000 and 2019. In general, it can be concluded

that economic activity (G Effect) has the greatest influence on the increase in CO2 emissions.

Furthermore, the CI Effect shows a negative magnitude for all countries except the Philippines.

This means that the energy used is relatively more carbon intensive. This condition reflects the

resources and capacity, which need to be optimized to develop the use of renewable energy at

an increasingly efficient level. The results of the EI Effect, require negative conditions. This

indicates that to produce one unit of GDP, the less energy sources are used. However, a positive

value was found for Singapore. Furthermore, from indications of structural changes effect (ES)

it has a negative effect on carbon emissions in many countries except Indonesia and Viet Nam.

This condition shows changes in the structure of the economy, still driving up carbon

emissions.

Table 4. Decomposition of CO Emissions (in ton) 2000 - 2019

Country CI Effect EI Effect ES Effect G Effect Delta CE
Indonesia (11.443.459) (571.474.429) 75.232.136 648.877.214 141.191.462
Malaysia (2.701.523) (35.481.088) (47.011.122) 130.920.324 45.726.591
Philippines 1.003.809 (36.465.771) (261.291) 55.671.350 19.948.097
Singapore (391.258) 2.725.644 (2.914.059) 13.835.097 13.255.423

16
 Thailand (8.588.697) (26.306.167) (1.597.378) 80.674.891 44.182.648
Viet Nam (2.046.107) (365.272.376) 107.424.000 348.563.727 88.669.243
Japan (5.637.676) (221.340.902) (15.487.810) 79.403.892 (163.062.496)
People's Republic of
China (169.785.031) (3.596.915.564) (648.144.470) 6.592.293.373 2.177.448.309
Korea (8.682.674) (157.782.550) (9.853.165) 168.989.082 (7.329.307)
Source: authors’ calculation

Based on the information from table 5, if the Delta EM is greater than 0, CO2 emissions
are mitigated, and the real change in CO2 emissions is smaller than the theoretical change,
which is caused by economic activity based on technology and economic conditions at baseline
(Zhang et al, 2008). In the context of the theoretical increase, it appears that China made the
largest contribution, followed by Indonesia and Viet Nam. However, it is important to note that
the rate of theoretical decrease shows a decrease for all countries, and Viet Nam shows the
largest decrease.

Table 5. Theoretical Changes of CO2 Emissions

Rate of
Theoretical
Theoretical theoretical
Country Delta CE Decrease
Increase decrease
(Delta EM)
(%)
Indonesia 141.191.462 648.877.214 507.685.752 62,77
Malaysia 45.726.591 130.920.324 85.193.733 44,13
Philippines 19.948.097 55.671.350 35.723.253 36,81
Singapore 13.255.423 13.835.097 579.674 2,48
Thailand 44.182.648 80.674.891 36.492.243 21,80
Viet Nam 88.669.243 348.563.727 259.894.484 68,52
Japan (163.062.496) 79.403.892 242.466.388 33,87
People's Republic of
China 2.177.448.309 6.592.293.373 4.414.845.064 55,73
Korea (7.329.307) 168.989.082 176.318.389 45,39
Source: authors’ calculation

Table 6. Diversity Index

Primary Diversity
Primary Diversity Index Year 2000
Index Year 2019
Country
Without wind, Without hydro, Without
All All Tend to
solar, etc. wind, solar, etc. hydro
Indonesia 0,782 0,763 0,824 0,903 0,962 Increase
Malaysia - 0,818 0,790 0,755 0,777 Decrease
Philippines 0,808 0,702 0,718 0,884 0,934 Increase
Singapore - - 0,553 - 0,523 Decrease
Thailand 0,770 0,837 0,926 0,805 0,865 Increase

17
 Viet Nam - 0,817 0,665 0,787 0,769 Decrease
Japan 0,773 0,823 0,829 0,807 0,846 Increase
People's
Republic of
China 0,690 0,742 0,667 0,714 0,720 Increase
Korea 0,615 0,667 0,637 0,771 0,835 Increase
Source: authors’ calculation

Based on the information from Table 7, the amount of ESS in 2019, shows an increase,
and all countries have scores above 1. This means that all countries can fulfill their PED with
'indigenous resources'. However, the interesting thing is the condition of conventional fuel
(fossil fuel based), it appears that the ESS condition for conventional fuel shows an increase in
all countries, except Indonesia.
Table 7. ESS
2000 - Baseline 2019 with correction factor
Country renewable conventional renewable conventional
Value Value
energy sources fuel energy sources fuel
Indonesia 0,128 0,87 1,00 0,229 0,79 1,02
Malaysia 0,028 0,97 1,00 0,030 1,12 1,15
Philippines 0,465 0,54 1,00 0,335 0,73 1,06
Singapore 0,005 1,00 1,00 0,006 1,50 1,50
Thailand 0,200 0,80 1,00 0,181 0,91 1,09
Viet Nam 0,154 0,85 1,00 0,135 0,87 1,01
Japan 0,123 0,88 1,00 0,058 0,98 1,04
People's
Republic of 0,192 0,81 1,00 0,099 0,92 1,02
China
Korea 0,007 0,99 1,00 0,036 1,24 1,28
Source: authors’ calculation

Table 8. Equity Index (Energy access, quality of energy access, and energy
affordability)
Year Indonesia Malaysia Philippines Singapore Thailand Viet Nam Japan People's Republic of China Korea
2000 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0
2001 106,7 100,2 103,1 100,0 99,7 103,3 100,6 102,0 100,7
2002 125,9 101,9 97,6 100,9 99,7 98,9 100,7 98,7 101,3
2003 127,6 102,4 98,4 100,9 126,6 102,7 100,8 101,4 101,9
2004 124,3 102,6 93,0 90,7 124,5 101,5 100,5 99,8 99,7
2005 122,3 110,3 92,3 94,6 125,7 103,7 101,0 111,4 100,3
2006 126,4 110,3 100,5 98,6 126,7 100,4 102,0 110,3 102,5
2007 128,7 110,3 85,6 98,0 127,4 104,9 101,6 113,0 102,9
2008 150,0 110,7 90,5 97,3 137,8 108,9 101,0 116,6 102,5
2009 153,8 110,4 93,9 96,8 127,0 113,6 99,9 118,7 102,4
2010 156,7 110,7 93,7 95,1 126,3 115,5 99,2 121,1 102,6
2011 145,7 110,7 94,9 97,8 138,0 120,3 100,5 124,2 105,1
2012 153,5 112,2 116,6 97,9 151,8 140,0 100,4 136,2 105,8

18
 2013 157,9 119,9 114,6 97,1 140,7 139,3 99,8 138,9 105,2
2014 159,1 120,7 115,2 97,1 143,0 144,5 99,9 141,1 105,6
2015 159,0 121,2 119,4 97,2 152,5 148,0 99,4 143,8 105,6
2016 157,8 121,0 126,2 97,4 140,9 151,2 99,0 144,4 105,3
2017 171,4 121,3 125,0 98,5 152,2 153,4 90,0 145,0 105,8
2018 172,5 121,7 136,8 98,9 153,6 156,4 99,6 145,6 106,6
2019 170,4 136,4 134,4 98,2 153,8 171,9 99,0 146,9 106,4
Std.Dev* 21,5 9,3 15,6 2,3 17,5 23,8 2,4 18,1 2,3
Average* 143,5 112,7 106,6 97,7 132,4 123,9 99,7 122,9 103,4
Average_last_5years* 165,0 123,7 126,2 97,9 149,3 154,2 97,8 144,5 105,9

Note: *authors’ calculation

Source: https://trilemma.worldenergy.org/#!/energy-index

Furthermore, the ANOVA test was conducted to determine whether there were differences in
movement in terms of the equity index between countries, and in the context of ASEAN
countries.
Table 9. ANOVA Test
SUMMARY – All Countries
Groups Count Sum Average Variance
Indonesia 20 2869,6 143,48 463,616611
Malaysia 20 2254,8 112,74 86,8873263
Philippines 20 2131,69 106,5845 242,626689
Singapore 20 1953,13 97,6565 5,33850816
Thailand 20 2647,88 132,394 307,561183
Viet Nam 20 2478,32 123,916 567,412004
Japan 20 1994,72 99,736 5,92763579
People's Republic of
China 20 2458,94 122,947 328,307317
Korea 20 2068,05 103,4025 5,43256711
Source: authors’ calculation

ANOVA All Countries

Source of
Variation SS df MS F P-value F crit
Between
Groups 39873,403 8 4984,17537 22,2827277 0,00000 1,99289988
Within
Groups 38249,087 171 223,678871
Total 78122,4899 179
Source: authors’ calculation

SUMMARY ASEAN
Groups Count Sum Average Variance
Indonesia 20 2869,6 143,48 463,616611
19
 Malaysia 20 2254,8 112,74 86,8873263
Philippines 20 2131,69 106,5845 242,626689
Thailand 20 2647,88 132,394 307,561183
Viet Nam 20 2478,32 123,916 567,412004
Source: authors’ calculation

ANOVA ASEAN
Source of
Variation SS df MS F P-value F crit
Between
Groups 17597,3422 4 4399,33555 13,186636 0,00000 2,46749362
Within
Groups 31693,9725 95 333,620763
Total 49291,3147 99
Source: authors’ calculation

Step I
A mapping of the important conditions of the transition process was carried out, namely, the
position in terms of conditions of energy diversification and energy efficiency. Regarding
energy efficiency, the references used are the conditions of CI and EI.

Table 10. Transition Matrix – Step I

Energy Diversity
Diversify to Renewable Less Diversify
energy
Indonesia; Philippines; Malaysia; Singapore; Viet
Thailand; Japan; China; Nam;
Korea
Less Indonesia Indonesia; Thailand; Malaysia; Singapore; Viet
Energy Malaysia Japan; China; Korea Nam
Intensity Singapore
(to Thailand
emissions) Viet Nam
– CI: Japan
Energy Efficiency

Emission / China
Energy Korea
Used
Less Indonesia
Energy Malaysia
Intensity Philippines
Indonesia; Philipines;
(to GDP) Thailand
Thailand; Japan; China; Malaysia; Viet Nam
– EI: Viet Nam
Korea
Energy / Japan
GDP China
Korea

20
Step II In the context of efficiency; choose a country that has both CI and EI negative values
Table 11. Transition Matrix – Step II
Energy Diversity
Diversify to Renewable energy Less Diversify

Indonesia; Philippines; Malaysia; Singapore;

Thailand; Japan; China; Korea Viet Nam;
Less Indonesia Indonesia; Thailand; Japan; Malaysia; Viet Nam
Energy Malaysia China; Korea
Intensity Singapore
(to Thailand
emissions) Viet Nam
– CI: Japan
Energy Efficiency

Emission / China
Energy Korea
Used
Less Indonesia
Energy Malaysia
Intensity Philippines
(to GDP) Thailand
– EI: Viet Nam
Energy / Japan
GDP China
Korea

Step III We dropped countries that have declining ESS in Renewable Energy
Table 12. Transition Matrix – Step III
Energy Diversity
Diversify to Renewable Less Diversify
energy
Indonesia; Philippines; Malaysia; Singapore;
Thailand; Japan; China; Korea Viet Nam;
Less Energy Indonesia Indonesia; Korea Malaysia
Intensity (to Malaysia
emissions) Singapore
– CI: Thailand
Emission / Viet Nam
Energy Efficiency

Energy Japan
Used China
Korea
Less Energy Indonesia
Intensity (to Malaysia
GDP) – EI: Philippines
Energy / Thailand
GDP Viet Nam
Japan
China
Korea

21
 Thus, based on the results of the mapping based on these criteria, it appears that three
countries, namely Indonesia, Malaysia, and Korea, which in the last twenty years have shown
relatively good energy transition conditions, and furthermore, if we pay attention to countries
with conditions of diversity to renewable energy, then two countries are selected, namely
Indonesia and Korea. Thus, in terms of transition risk, both Indonesia and Korea has relatively
low transition risks.

Step IV We dropped countries that showed declining energy equity – none dropped
Table 13. Transition Matrix – Step IV
Energy Diversity
Diversify to Renewable Less Diversify
energy
Indonesia; Philippines; Malaysia; Singapore; Viet
Thailand; Japan; China; Nam;
Korea
Less Energy Indonesia Indonesia; Korea Malaysia
Intensity (to Malaysia
emissions) Singapore
– CI: Thailand
Emission / Viet Nam
Energy Japan
Used China
Energy Efficiency

Korea
Less Energy Indonesia
Intensity (to Malaysia
GDP) – EI: Philippines
Energy / Thailand
GDP Viet Nam
Japan
China
Korea

By comparing the results of the analysis with several clean energy transition indicators
issued by the International Energy Agency, three indicators were selected for comparison,
namely: Energy Intensity Economy 2019 (GJ/thousand 2015 USD PPP) [A]; CO2 emissions
per unit of real GDP PPP, 2019 (kg CO2/2015 USD PPP) [B]; and CO2 intensity of energy
mix, 2019 (t CO2/TJ) [C]. However, not all countries presented in the data processing results
were previously reported by the IEA and the conditions obtained were only for 2019.

22
 The table below shows the relative position between countries for several energy
intensity and emission indicators. The lower the intensity value, the better. Comparing
Indonesia with Korea, it appears that Korea's position is relatively better in terms of CO2
intensity of energy mix, and Indonesia is relatively better in terms of energy intensity economy
and CO2 emissions per unit of real GDP PPP.

Table 14. Clean Energy Transition Indicator 2019

Country [A] [B] [C]
China 7.39 0.43 69.5
Korea 5.44 0.23 49.92
Thailand 4.64 0.2 43,23
Japan 3.23 0.2 60.67
Indonesia 3.13 0.18 57.8
Singapore 2.67 0.09 32.96
Source: International Energy Agency

In terms of generation from low-carbon power sources, it appears that China's position
has the largest share among other countries, which is around 31.7%. Meanwhile, Indonesia's
position is in the range of 16.8%. Table 9 also shows the four main sources of low-carbon
power generation in the region, namely nuclear, hydro, biomass, and solar PV.

Table 15. Low-carbon electricity generation share by sources, 2019 (%)

Type China Korea Japan Thailand Indonesia Singapore Total (%)
Nuclear 4.7 25.2 6.2 3.4 - - 39.5
Hydro 17 0.5 7.7 - 7.2 - 32.4
Biomass 1.6 1.6 4.3 9.7 4.6 2.6 24.4
Wind 5.4 0.5 0.7 1.9 0.2 - 8.7
Solar PV 3 2.3 6.7 2.7 - 0.8 15.5
Solar TH - - - - - -
Geothermal - - 0.3 - 4.8 - 5.1
Marine - 0.1 - - - 0.1
Total 2 31.7 30.2 25.9 17.7 16,8 3.4
Source: International Energy Agency

Discussion
The awareness of energy transition in the ASEAN, Japan, China, and South Korea cannot be
separated from the global action of climate change in COP 26 conference. In recent years, the
renewable energy mix in ASEAN regionals is significantly increasing. The target share of
utilized renewable energy in 2025 for whole ASEAN is set to 33 percent. The energy transition

23
is a dynamic process and developments in the last twenty years have shown that many countries
have been quite successful in improving their state of energy efficiency, although in terms of
energy diversification, it has not been running optimally. In other words, the efficiency and
energy diversification side are still running asymmetrically. It is not easy to justify that one
country is superior in the energy transition because of the unequal condition of resources and
capabilities. The energy transition should ideally not hamper economic development, and on
the contrary, be able to direct development to be greener and more inclusive.
As stated by Lazaro et al. (2022), policy direction will determine the energy transition.
As discussed by the National Development Planning Agency, Republic of Indonesia (Badan
Perencana Pembangunan Nasional / Bappenas), it appears that there are three low-carbon
policies to support the GEI (Green Economy Index), namely: decreasing energy intensity
(energy efficiency), gradually by 1-2% per year until 2030 for all demand sectors; the role of
new and renewable energy (EBT) to close to 100% by 2060; full transition to electricity and
hydrogen from fuel. Likewise, Bappenas conveyed 8 (eight) challenges that will be in the
transition to a green economy, namely the amount of investment needs, policy reforms to
manage stranded asset risk, technology and innovation gaps, preparation for migration to green
jobs, creation of green jobs, decarbonization of the energy sector and transportation,
implementation of carbon pricing, increasing trend of ESG (Environmental, Social, and
Governance) in the industry.
Although in terms of energy mix, Indonesia has huge potential of renewable energy
compared to other ASEAN countries, but the utilisation is considerably low. According to
Ministry of Energy and Mineral Resources (2022a), the potential of renewable energy is 3,686
GW, but only 0.3 percent of it have been utilized, and fossil fuel has still become the main
energy resources. Table 10 shows Indonesia’s renewable energy potentials and how many it
has been utilized. Hydro power is the most utilized renewable energy, although it is still small
number, followed by the utilization of bioenergy and geothermal power for energy sources.
Table 16. Indonesia's Renewable Energy Potential 2021
Energy Potential Utilization
(GW) (MW)
Solar 3,295 229
Hydro 95 6,602
Bioenergy 57 2,284
Wind 155 154
Geothermal 24 2,286
Ocean 60 0
Total 3,686 11,555
Source: Ministry of Energy and Mineral Resources, (2022b)

24
 Although Indonesia, in fact, has huge potential of renewable energy, and huge amount
of nickel mining for battery material, but the utilisation of renewable-resource-based power
faces some obstacles. The coal power plant in Indonesia is still considerably new, which have
not reached its economical state yet. Moreover, the electricity supply in Java and Bali are
oversupply, therefore it will be a high cost to invest the renewable-resource-based power plant.
In fact, the use of coal power plant contributes in higher carbon emissions. So, even though we
realize that switching to more environmentally friendly energy sources is more profitable in
the long run, the high cost will become a barrier.
Another major obstacle to utilized the renewable energy in Indonesia is the high
economical cost due to social and environmental issues. This is also why the electricity
distribution in the country is considered exclusive. This constraint is supported by several
factors. First, Indonesia is the largest archipelagic country with thousands of islands, but the
economic activity is located in bigger islands, mostly in Java. Most of the coal plants located
in Java and Bali to power the industrial areas, and currently Java becomes oversupply in
electricity. Meanwhile, the other small islands, or even in remote areas, are still lack of it. In
order to distribute the electricity evenly, Ministry of Energy and Mineral Resources plans to
build the smart grid system, called Nusantara grid, to connect the power plants that located in
Java and Bali to the grid in remote areas (Figure 2). However, the investment of this project
will be expensive. Another option is to build micro grid in each smaller local area, such as
wards or cluster areas, although it needs more skilled-labor to do the maintenance (Masyarakat
Ketenagalistrikan Indonesia, 2022a). Second, most of Indonesia’s lands covered by forests and
difficult terrains, making it more challenging to build electricity or power facility in those areas.
Moreover, the development will also have a trade off with the environment issue, where many
of the trees will be cut down and threatening the biodiversity. Third, lack of awareness and low
education of local people, especially in remote areas, resulting in higher risks of rejection from
the people or not well-maintained by them.

25
Source: Masyarakat Ketenagalistrikan, (2022b)
Figure 1. The Distribution Planning of Nusantara GRID

Indonesia is expected to have net zero emission in 2060. However, in order to shift from
fossil-based energy to renewable energy, Indonesia needs a lot of investment. Financing will
be one of the major obstacles to the energy transition process. The Ministry of Energy and
Mineral Resources said that a budget of around USD 1 trillion is needed to achieve the EBT
target in 2060 and this amount could increase if efforts to accelerate early retirement coal are
carried out13. On the other hand, information from the IEA, shows that both Indonesia and
China provide subsidies on fossil energy, respectively 0.2% and 0.6% of GDP in 202014. The
IEA said that oil and electricity subsidies in China reached USD 25.5 billion, while oil subsidies
in Indonesia reached USD 6.9 billion. Thus, taking part in the financing of NRE investment
will be a big challenge from a policy perspective and a great political commitment from the
government is needed (Salomon and Krishna, 2011).
Further, in the discussion with the Indonesian state own enterprises in power sector
(PLN), it was stated that the transition to carbon neutral 2060 is divided into two parts, namely
(i) power plants that are more environmentally friendly; (ii) new technologies and businesses.

13
https://ekonomi.bisnis.com/read/20221014/44/1587338/menteri-esdm-transisi-energi-butuh-bantuan-
pembiayaan-ini-penyebabnya
14
https://www.iea.org/commentaries/consumption-subsidies-for-fossil-fuels-remain-a-roadblock-on-the-way-to-
a-clean-energy-future

26
In the short-term (2021-2030), PLTN aims to achieve the enhance NDC; and long-term (2031-
2060), the carbon neutral 2060 becomes the objectives. The short goals such as, new and
renewable energy (NRE) development, diesel power plant (PLTD) conversion, steam coal
power plant (PLTU) phase I retirement, PLTU cofiring, energy efficiency and grid loss
improvement; gas expansion; and clean coal. Meanwhile, the long-term goals include
development of NRE + battery + interconnection; hydrogen cofiring; retirement steam coal
power plant stage 2, carbon capture storage (CCS) / carbon capture storage and utilisation
(CCSU). Furthermore, in the context of new technologies and businesses, including electric
vehicles, roof top solar panels, induction cookers, carbon credits, and emissions trading. As
seen from Table 11, the shifting demand based on the energy resources, and in 2060 targets to
shift from majority using coal and fossil oil in 2020 to more than 50 percent using electricity
and other renewable resources to generate the energy.

Table 17. Energy Transition Planning Based on Energy Demand

Source: Ministry of Energy and Mineral Resources, (2022a)

Energy transition from fossil-based resource to renewable energy also will potentially
create a new job. However, according to a discussant from ASEAN Center for Energy, majority
of universities and colleges in ASEAN member countries do not have specific curriculum about
energy transition, even the technicality of the renewable energy. They only found one
curriculum in Bandung Institute of Technology (ITB), but it is taught in master degree. It results
in the availability of current labour’s skill in renewable energy. Although in terms of
technicality may not need high-skilled labour, but universities, colleges, and even vocational
schools, have to soon create relevant curriculum, so that the energy transition process through
investments and power plant establishments are in the same track with the labour’s skills.

27
 While in Vietnam, most of its energy resources sourced by solar energy and becomes
the largest contributor country for renewable energy mix in the regional. In Figure 1, Vietnam
is contributing almost 56 percent of its renewable energy, or about 12 GW, and solar power
has a significant contribution. However, the success story of renewable energy in Vietnam also
bring another side effect. The Vietnam government regulates the price of solar energy, but not
regulating the quota of selling the excess energy. This regulation results in many private
companies that want to invest in solar panel. While the investment cost is considerably low due
to using local manufactured-tools, the investors can sell their excess energy with a good price.
The selling of excess of solar energy makes the Vietnam’s state electricity company, the one
who is regulated to buy the excess energy, to buy the energy from the private companies,
although they already have excess energy supply. This results in their financial failure of the
state own enterprises.

Source: ASEAN Center for Energy, (2022)

Figure 3. Renewable Energy Share in ASEAN Member's Installed Power
Capacity 2020
Meanwhile, Singapore becomes an important key for energy sectoral in ASEAN. It is
known to had severe limitations in adopting renewable energy and was heavily dependent on
fossil fuels (Masyarakat Ketenagalistrikan Indonesia, 2022a). Currently, 90 percent of its
electricity is generated from LNG, although its energy mix is considered low compared to the
other ASEAN Members. Singapore is planning to invest on sun cable project that will be the
longest submarine solar cable to bring the power from Australia to Singapore. The estimated
cable is 4,200 km long (Sun Cable Energy, 2022), and potentially enough to “close” the whole
cable industries to fulfil its needs. This investment could increase the energy mix of renewable
energy in the regional. However, since the cable will pass through the Indonesia’s territories,
28
the government still find the best way to join this project. The Government of Indonesia plans
to join, through their investment, to build a station in Bali, discharge the energy to PLN’s grid
in Java, and then connect to Singapore through Jakarta. This investment will also benefit PLN.
Another plan is that Singapore should invest the solar power plant in Sumatera instead of
investing in this sun cable. According a discussant from ASEAN Centre for Energy, Sumatra’s
solar panel plant will be enough to power electricity from Aceh to Lampung and export some
of them to Singapore.
Compared to ASEAN member countries, China, Japan, and Korea seem have planned
their own transition to renewable energy (ASEAN Center For Energy, 2022). China targeted
to achieve lower their carbon emissions to 65 percent of GDP in 2030, as well as increasing
forest stock by 6 billion cubic meters, increasing the consumption renewable-based power plant
to around 25 percent, and installing both wind and solar power to over 1,200 GW in the same
year. Meanwhile in the same year, Japan declared to aim net zero emissions in 2050 by using
Green Growth Strategy, which incorporates policies in budgeting, taxation, financing, and
regulatory reforms. They also declare to shift to electricity fuels that powered by offshore
wind/solar/geothermal power to total 30-45 GW, hydrogen to 20 million tons, next-generation
heat energy by injecting synthetic methane to 90 percent of their infrastructures, and lastly
using nuclear power. Still in the same year, South Korea targeted to cut the carbon emission to
more than 40 percent by increasing their share of renewable energy power to 20 percent and
accelerating the use of electric vehicle (EV). They also set different goals of carbon emission
reduction for each sectors, which the significant reduction is set to power sector (44.4 percent)
and transportation (37.8 percent).
Indonesia needs to consider including nuclear in its energy mixed. One interesting
option is PLN to build a nuclear power plant. It is relatively more environmentally friendly
even though the cost is expensive, but the power generated can be very large. However, the use
of nuclear power is not easy because of an internationally sensitive issue. Developed countries
that produce nuclear strongly object if we try to use nuclear power for electricity generation.
This is because the potential abuse of nuclear power will be very easy for countries that have
it.

Conclusion
This study aims to measure the transition risk of energy-related CO2 emissions in two stages.
First, an analysis of the direction of investment is carried out which is captured from indicators
of production and consumption in the energy sector that runs between 2000 and 2019. In the
29
span of that year, the mixed energy structure has led to a stronger grip on the fossil energy base
or has it tended to be loosening grip on fossil-based energy. Second, based on the energy
transition that has taken place in the last twenty years, what about the risk conditions faced,
and in this case the risk will be measured in the dimensions of energy security, sustainability,
and affordability. Furthermore, through these two stages of analysis, it will be mapped whether
the transition has been, is being, and will be running with the dynamics of the risks that will be
faced. By illustrating the dynamics of the transition and risk in the quadrant analysis, it is
possible to map the direction of the energy transition that has been going on so far. This study
makes a comparison, not only in Indonesia, but also at the level of ASEAN plus three countries
(Japan, China, and South Korea). This study also uses a qualitative approach to elaborate on
the findings of quantitative approach.
From the analysis, we find that economic activity has the greatest influence on the
increase in CO2 emissions. The CI Effect shows that the energy used is relatively more carbon
intensive. This condition reflects the resources and capacity, which need to be optimized to
develop the use of renewable energy at an increasingly efficient level. The results of the EI
Effect indicates that to produce one unit of GDP, the less energy sources are used. However, a
positive value was found for Singapore. Furthermore, from the ES Effect aspect, only Indonesia
and Viet Nam have positive values. In the context of the theoretical increase, it appears that
China made the largest contribution, followed by Indonesia and Viet Nam. However, it is
important to note that the rate of theoretical decrease shows a decrease for all countries, and
Viet Nam shows the largest decline. While the transition matrix shows how the combination
of energy diversity and efficiency is established, the results indicates that Indonesia and Korea
have more energy diversity than the other countries, and Malaysia has less energy diversity.
Through quadrant analysis, there are two general patterns of energy transition, energy
efficiency and the development of new and renewable energy. The results of the analysis show
that both can run asymmetrically. Countries that are able to achieve better conditions in terms
of energy intensity and emissions, can achieve it without significant changes in terms of the
renewable energy mix or even a decrease in the renewable energy mix. Thus, a good transition
needs to do both symmetrically.
The results of this study are also supported by the results of discussions with experts in
the energy field. From the results of discussions with experts, it is known that although the
energy transition has taken place, various risks still need to be considered. First, related to
financing for infrastructure to support the development of new and renewable energy. This
includes network related. Second, the bias in supporting large subsidies for fossil fuels. Third,
30
geographical challenges that require network support and system reliability. Fourth, green job
opportunities that also need to be supported by capacity building through certification. Fifth,
excess capacity in fossil power plants (particularly coal) which makes the choice of transition
not easy and costly. Sixth, the feed in tariff policy, which if not managed properly can
jeopardize the business resilience of many states electricity companies that have to buy
renewable energy.
This transition analysis has two weaknesses and can be used as a reference for further
studies. First, the analysis has not included the cost risks that must be considered for early
retirement from coal plants. Second, the investment costs that need to be prepared so that the
electricity and transportation systems can absorb renewable energy supplies or to support the
use of electric vehicles.

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