Southeast Asia’s dependence on fossil fuel subsidies ‘like crack cocaine’

(Eco Business, 5 Nov 2019) If Southeast Asia is to wean itself off fossil fuels, it must phase out subsidies to allow clean energy to flourish, experts said at the Singapore International Energy Week. Meanwhile, will the oil and gas majors aid the transition by investing in renewables and new technology?

Southeast Asia’s fast-growing economies need to drop generous subsidies for fossil fuels if the region is to make the transition to clean energy at the speed needed to hit climate targets, experts have said.

Speaking last week at the Asian Clean Energy Summit, which was part of Singapore International Energy Week 2019, Fred Burke, managing partner of law firm Baker & McKenzie, said that countries such as Indonesia, Southeast Asia’s largest economy, are “addicted” to fossil fuels subsidies as if they are “crack cocaine”. Subsidies have helped support the country’s polluting coal sector while stunting the rise of renewable energy, he said.

Fossil fuel subsidies in Southeast Asia were worth US$35 billion in 2018, or almost 0.5 per cent of gross domestic product, according to new data from the International Energy Agency. Subsidies have helped the regional bloc’s share of global renewable energy capacity to fall over the last decade, to 2.8 per cent.

Burke, who has worked on the financing and construction of solar and wind energy projects in the region, added that the energy transition required a lot of investment and new infrastructure, but “vested interests” in fossil fuels such as coal and oil were holding back investments in clean energy.

Reports have noted that coal mining groups in Indonesia receive sizeable government support in the form of loan guarantees, tax exemptions and other fiscal support. 

External link

Eco Business, 5 Nov 2019: Southeast Asia’s dependence on fossil fuel subsidies ‘like crack cocaine’