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’Greenflation‘ has become a factor to countries in Southeast Asia, including Indonesia and Vietnam, in lowering their commitments to renewable energy targets. Meanwhile, in Malaysia, the weakening currency is hindering the funding for decarbonization efforts, according to Nikkei Asia.
On Mar. 26, The General Director of New and Renewable Energy and Energy Conservation (EBTKE) at the Ministry of Energy and Mineral Resources (ESDM), Eniya Listiani Dewi, expressed concerns regarding Indonesia’s ability to achieve the target of 23% renewable energy sources by 2025 due to failure to meet last year’s realization, which stood at only 13.2%.
Previously, the Indonesian National Energy Council has also highlighted the plan to revise the renewable energy mix to 17%-19% by 2025. It emerged shortly after the authorized reveal a further postponement of carbon tax implementation to 2025.
Fabby Tumiwa, Executive Director for Essential Services Reform (IESR), believes that the Indonesian government is only half-hearted in accelerating the national energy transition and regrets this decision, because the country will fall behind in boosting the renewable energy mix.
Indonesia has revised its renewable energy goals downward, citing increased costs of green transformation. This move has raised concerns among observers who fear that transitioning away from fossil fuels towards low-carbon technologies could inevitably lead to green inflation.
Malaysia Faces Similar Issue. The Malaysian Deputy Prime Minister, Fadillah Yusof, highlighted the challenge of green inflation in the country’s decarbonization efforts in an interview with Nikkei Asia.
He pointed out that the dependence on more expensive imported components, exacerbated by the weakening of Malaysian Ringgit, poses a significant hurdle. Despite the country’s flagship projects in the National Energy Transition Roadmap, currency depreciation hampers the funding for carbon-free technologies or other investments in decarbonization projects.
Despite Vietnam's substantial renewable energy capacity, costs continue to rise. Coupled with government efforts to prevent a repeat of power outages, the country is increasingly reliant on imported fossil fuels. Additionally, grid overload and the discontinuation of renewable energy subsidies in some cities are hindering local green energy transitions.
Southeast Asia, is widely recognized as one of the regions with most vulnerable to the impact to climate change, has seen slow progress in green transformation despite pledges by multiple governments to achieve net-zero emissions. Analysts suggest this sluggish pace may affect the future of the "Just Energy Transition Partnership," potentially leading to the loss of significant funding injections.
