**1. Introduction**

The Mekong Subregion is linked by common energy challenges. There are challenges in maintaining economic growth and ensuring energy security, while curbing climate change and reducing air pollution. At the intersection of these challenges is the corresponding need to rapidly develop and deploy energy efficiency, low-emissions coal technology, and double the share of renewables in the energy mix towards more inclusive and sustainable growth, as the region's energy demand is expected to rise significantly over the next 30 years [1]. Such an increase is bringing both opportunities and challenges, including climate change, which is a result of fossil fuels. Despite significant progress in recent decades in terms of energy poverty alleviation, countries such as Cambodia and Myanmar are still struggling to provide energy access to their rural populations.

The coronavirus disease (COVID-19) pandemic is another major challenge of our time. It has caused a global economic downturn, with economic output set to contract by 2.5% in 2020. This economic impact has also brought about low energy demand in all sectors. As a result, daily global emission levels fell by 17% in the first quarter of 2020 [2]. However, as governments begin lifting restrictions and business activities resume, so too will the demand for energy. Economic recovery could see levels of carbon dioxide (CO2) emissions bounce back very quickly. Indeed, global data from late May 2020 show record levels of CO2 as countries started reopening their economies [3]. The post-COVID-19 economic recovery will drive increased energy demand, which emphasises the need to secure investment to fill infrastructure gaps.

**Citation:** Phoumin, H.; Meas, S.; An, H.P. Sustainable Energy-Related Infrastructure Development in the Mekong Subregion: Key Drivers and Policy Implications. *Sustainability* **2021**, *13*, 5720. https://doi.org/ 10.3390/su13105720

Academic Editor: Carlos Oliveira Cruz

Received: 13 March 2021 Accepted: 11 May 2021 Published: 20 May 2021

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**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

Quality infrastructure, connectivity, and innovation are considered key for the region to ensure prosperity and sustainable development. In fact, fast connectivity—along with high-quality infrastructure and human resources development in the Southeast Asian region—has already resulted in opportunities for growth. These developments have also lifted living standards through income generation and employment opportunities. They have enabled the region to participate in the production network at different degrees and made it ready to benefit from the global value chain in the near future as improved connectivity attracts more investment, cuts logistics costs, and creates synergies and location advantages [4]. The region is arguably fortunate to have different stakeholders supporting infrastructure improvement that has bridged the missing links in Southeast Asia. However, the influx of investment, particularly in energy infrastructure development, has raised questions about both sustainability and quality, and the identification of partners the region should prioritize working with to promote long-term development sustainability, quality, and innovation in the Mekong Subregion. This report aims to review and analyze major initiatives that drive energy-related infrastructure development in the subregion; conducts energy modeling and estimation for energy demand and supply in the subregion during 2017–2050; and, from there, draws key policy implications that guide high-quality, energy-related infrastructure development.

This paper comprises seven sections. The second section discusses the study's approaches. The third section reviews regional platforms and initiatives for infrastructure development related to the Mekong Subregion by engaging relevant literature. The fourth section examines economic impacts brought by connectivity. The region's energy landscape, the required investment to meet the rising energy demand in the region for the foreseeable future, and the region's energy transition are discussed in the fifth and sixth sections. The final section concludes with policy implications.

#### **2. The Study's Approach**

This study employs several approaches to gathering data and information. Data on economic investment, in particular energy for the Mekong Subregion, are available in different forms and for time periods. The study relies on several past studies conducted by the Economic Research Institute for ASEAN and East Asia (ERIA) for the economic impacts brought by infrastructure connectivity in the Mekong Subregion. For project infrastructure investment, the study uses data and information from past projects and studies conducted by the Asian Development Bank (ADB). For the energy data and analysis, we conducted our own energy modeling and estimation for energy demand and supply for the Mekong Subregion. We also reviewed key regional initiatives for infrastructure investment and development platforms, such as quality infrastructure initiated by Japan at the G20 in Osaka; China's Belt and Road Initiative; the United States (US) Blue Dot Network (BDN); the Free and Open Indo-Pacific (FOIP); and other subregional initiatives, such as the Mekong River Commission, Lancang–Mekong Cooperation, and Mekong– Japan Cooperation.

Our analysis of the economic impacts brought by Mekong Subregion connectivity involves the quantitative assessment of existing and proposed infrastructure development up to 2030. The ERIA study on economic impact assessment employed a geographical simulation model (GSM), which was developed to track the progress on quality infrastructure development in the Association of Southeast Asian Nations (ASEAN) and East Asia. Jointly developed by the ERIA and the Institute of Developing Economies in 2007, the model calculates the proposed infrastructure-related projects for connectivity and innovation and includes a sophisticated level of information on infrastructure development status to facilitate any assessment.

For energy demand and supply in the Mekong Subregion, we employ energy modeling using the Long-Range Energy Alternative Planning System (LEAP) software, an accounting system used to develop projections of energy balance tables based on final energy consumption and energy input and output in the transformation sector. Final

energy consumption is forecast using energy demand equations by energy and sector and future macroeconomic assumptions. For consistency, the historical energy data in the Mekong Subregion used in this analysis came from the energy balances of the International Energy Agency (IEA) for the Organization for Economic Cooperation and Development (OECD) and non-OECD countries [5]. Energy demand and supply has two scenarios: the business-as-usual (BAU) scenario, reflecting each country's current goals, action plans, and policies; and the alternative policy scenario (APS), which includes additional goals, action plans, and policies that countries could achieve with their best efforts given energy policy reforms and technological development. The APS consists of assumptions such as more efficient final energy consumption, more efficient thermal power generation, and higher consumption of new and renewable energy and biofuels.

The study also quantifies the required investment for power generation demand from 2017 to 2050, using the following formula:

$$Investment(i) = GenCapacity(i) \times Unit\ Cost\ (\\$/GW)$$

$$GenCapacity\ (i) = \frac{GWh(i)}{[24\ hours \times 365\ days \times CapF(i)]}$$

where (*i*) is the fuel type, such as coal, gas, hydropower, and renewables; *investment* (*i*) is the required investment amount of fuel type (*i*); *GenCapacity* (*i*) is the generation capacity of fuel type (*i*) in gigawatts; and *CapF*(*i*) is the capacity factor of fuel type (*i*).

The study does not consider other required investments in the power grid or connectivity costs. It only estimates the required generation to meet the growing demand from 2017 to 2050.
