**5. Implications of the Scenario Results**

In 2020, fossil fuels (oil, coal, and natural gas) have the largest share of ASEAN's primary energy mix, at 78%. They are expected to continue to have a dominant share in the BAU scenario in 2050, at 86%, but could drop slightly to an 82% and 80% share under the APS and APS emission reduction target (APS\_EmT) respectively in 2050, when considering more efficient power generation, an increasing share of renewables, and energy efficiency measures (Tables A1–A8). Although oil has the largest share in the primary energy mix, natural gas and coal are the dominant energy sources in the power generation mix, at 37% and 44% respectively in 2017; and their share is projected to be 46% and 36% respectively in 2050.

**Need for cleaner use of fossil fuels and clean technologies.** The composition of the future energy system depends on the current actions, policies, and future policy changes. However, all decisions need to be weighed against potentially higher energy costs, affordability, and energy security risks. Coal consumption has dropped globally in recent years, but Southeast Asia has seen the opposite trend—coal consumption has been concentrated in power generation although its share of the primary energy supply remains the same from the BAU scenario to the APS, while the actual quantity of coal consumption is predicted to increase significantly from 143 Mtoe in 2017 to 251 Mtoe in 2050. The relatively high level of coal consumption in ASEAN could be attributable to affordability and energy security issues. As coal will be the second most dominant source of energy for power generation, there is a real concern that many ASEAN countries cannot afford clean technologies such as CCT (advanced ultra-supercritical (A-USC) or ultra-supercritical (USC) technology) due to the higher up-front cost of these technologies compared with conventional high-emissions coal power plants (subcritical technology). At the same time, ASEAN as a bloc has lower emissions standards for coal-fired power plants than advanced countries such as Germany, Japan, and the Republic of Korea, where CCT is mandatory (Figure 17) [26]. This means that ASEAN countries have relatively high allowable emissions in terms of sulphur oxides (SOx), nitrogen oxides (NOx), and particulate matter (PM).

**Figure 17.** Emissions Standards for Newly Constructed Coal-Fired Power Plants in Selected Countries. Lao PDR = Lao People Democratic Republic, mg/m3 = milligram per cubic metre, NOx—nitrogen oxides, PM = particulate matter, SOx—sulphur oxides. Source: Motokura et al. (2017) [26].

For ASEAN, the reliance on fossil fuel will be expected in the foreseeable future by 2050, even though ASEAN member states will invest in new infrastructure for cleanerburning fossil fuels such as Clean Coal Technologies or Carbon Capture, Utilization and Storage (CCUS). However, the introduction of cleaner burning fossil fuels will help mitigate the pollutants nitrogen oxides, particulate matter, and sulfur oxides which are the major source contributing to direct human health such as respiratory system and cancer. Further, it also can help to cut down the carbon dioxide emissions if compared with traditional and inefficient coal-fired power generation.

**Promoting natural gas uses in ASEAN's energy transition.** Natural gas has a significant role to play in ASEAN's transition to a cleaner energy system. ASEAN as a group is forecast to continue to be a net natural gas exporter until 2030, but the situation will change due to declining domestic natural gas production and increasing domestic energy demand in ASEAN (Kobayashi and Phoumin, 2018) [27]. Demand for liquefied natural gas (LNG) in ASEAN is driven by increasing demand from the power generation and industrial sectors. Most AMS will see rising LNG imports in the foreseeable future because of sustained growth in electricity demand, the public preference for a cleaner fuel, and depleting domestic production. Prospects for the use of natural gas in ASEAN are optimistic, and demand is likely to increase 3.5 times in the BAU case (from 129 Mtoe in 2027 to 450 Mtoe in 2050)—depending on the future stability of gas and LNG market prices, and whether ASEAN and East Asia can create a competitive gas/LNG market in the future, with potential supply of gas/LNG from Australia, US, and other sources. Thus, ASEAN is expected to be a key market for future gas demand, so investment in gas infrastructure (such as gas pipelines and LNG receiving terminals) is crucial to support the increasing demand for gas in ASEAN.

**ASEAN's scaling up renewable share and adoption of smart grid.** Energy sustainability in ASEAN and around the globe requires an increased share of renewables in the energy mix to decarbonize emissions. Currently, ASEAN's power generation mix is dominated by coal, gas, and hydropower (Tables A1–A8). Intermittent renewables (solar and wind) comprise the most abundant energy resources in ASEAN, but have contributed negligible amounts (1.4% in 2017, 2.4% in 2020, and 10% and 12% in 2050 for the APS) to the power mix. Many ASEAN grid operators hold misperceptions about intermittent renewable energy. Although the production cost of renewable energy has dropped dramatically in recent years, its share in the power generation mix remains small. The misperceptions about renewable energy stem from its variable and intermittent nature, which adds costs to grid systems as it requires back-up capacity from conventional gas power plants. Technically, wind and solar power output varies depending on the strength of the wind or the amount of sunshine. However, this risk of variable energy output can be minimized if power systems are integrated within countries and within the ASEAN region. The aggregation of output from solar and wind from different geographical locations has a balancing effect on the variability (NREL, 2020) [28]. However, the ASEAN Power Grid is making slow progress and the integrated ASEAN power market may remain unrealized due to several reasons, such as regulatory and technical harmonization issues between the ASEAN Power Grid and utilities.

**Challenges of power system integration in ASEAN.** In the recent development of the power mix in ASEAN, some countries have accelerated the increase in the share of solar in the power mix without properly considering the poor gird infrastructure and power system integration challenges. As a result, electricity from solar has been curtailed. It is important to note that the shift from fossil fuels towards renewables in the energy transition will involve costs and investments for all energy-related infrastructure, which will hugely affect energy affordability. For AMS that can afford significant investments in renewable energies, an important concern is the need for electricity storage and smart grids to support higher renewable energy penetration levels in the electricity sector. Smart grid technologies are already making significant contributions to electricity grids in some developed countries of the OECD. However, these technologies are undergoing continual refinement and hence are vulnerable to potential technical and non-technical risks. Renewable energy growth will thus be constrained by infrastructure development as well as by the evolution of technology, including the capacity to assess and predict the availability of renewable energy sources (Kimura, Pacudan, and Phoumin, 2017) [29]. These capacities of smart grids offer additional benefits, notably the promise of higher reliability and overall electricity system efficiency.

**Long-term emissions reduction and COVID-19.** Due to the drastic decline in energy consumption, daily global emissions dropped by 17% in the first quarter of 2020 compared with 2019 levels (Le Quéré et al., 2020) [30]. However, an economic recovery could see the levels of CO2 emissions bouncing back very quickly. Indeed, global data from late May 2020 show an all-time high for CO2 levels, as countries started to reopen their economies. The sudden drop in current emissions has nothing to do with low-carbon energy policy measures—it is just the impact of the pandemic slowing down all economic activities. It is also understandable that the energy structure cannot be changed overnight, given its large dependence on fossil fuels. The results have shown that ASEAN emissions will be 1217 Mt-C in the BAU and 565 Mt-C to 876 Mt-C in the APSs, in which they are supposed to fall to zero emissions if the rise in temperature is to keep within 1.5 ◦C by the end of this century. This means that ASEAN will not be able to achieve the emissions reduction targets. This necessitates a serious review of the commitment in the NDCs or INDCs to limit the emissions to half by 2030 and reach net zero emissions by 2050. It also points to the urgent need for carbon sink technologies such as CCUS.

ASEAN's energy transition from a system based on fossil fuels to a system based on cleaner energy use will rely on investment in quality infrastructure—including renewable and cleaner use of fossil fuels, and CCUS—to reduce global GHG emissions and avoid the most serious impacts of climate change. Clean technologies and CCUS are the obvious choice to reduce fossil fuel emissions in ASEAN, while accelerating the use of renewables and the application of energy efficiency in all sectors.

**Need for quality energy infrastructure and investment.** To satisfy the growing energy demand in ASEAN, huge energy-related infrastructure investment is necessary between now and 2050. This study estimates that about \$500 billion–\$550 billion will be necessary in the power generation sector, of which combined variable renewables (wind and solar) will require \$68 billion–\$168 billion from the BAU scenario to the APSs, respectively. More broadly, the IEA (2017) [2], projected that \$2.1 trillion will be required for oil, gas, coal, and power supply infrastructure in ASEAN. More than 60% of investment goes to the power sector, with transmission and distribution accounting for more than half of the total necessary investment. Globally, the Ministry of Finance of Japan (2019) estimated that the infrastructure investment gap is estimated to be \$15 trillion from now until 2040. Asia alone will have a \$4.6 trillion investment gap from now until 2040 (Ministry of Finance, Japan, 2019) [31]. the huge potential for energy infrastructure related investment will need to be guided by appropriate policies to promote quality infrastructure and resilience in ASEAN for growth and sustainability. Thus, ASEAN will need to prepare an array of policies suited to specific conditions to facilitate investment opportunities.
