As energy transition to respond to the global climate crisis has emerged as an important issue not only in developed countries but also in developing countries, the Association of Southeast Asian Nations (ASEAN) region is also expanding their efforts to build an energy system centered on low-carbon energy. The ASEAN is facing various challenges in pursuing such energy transition while responding to increasing energy demand arising from rapid economic growth and rising population. In addition, most ASEAN countries currently rely on fossil fuels such as coal and gas for 80-90% of their energy supply, urgently demanding ground-breaking but realistic alternatives for low-carbon energy transition. Therefore, the objective of this study is to identify the potential for establishing a low-carbon energy infrastructure in the ASEAN region by analyzing the current status of the region’s energy sector, greenhouse gas emission trends, and the member countries’ low-carbon policy goals, and to explore the direction of cooperation in the low-carbon energy sector between the ASEAN and Republic of Korea with focus on areas where cooperation with Korea can be further expanded.

In the ASEAN region, as of 2020, fossil fuels account for about 83% of primary energy consumption and play a pivotal role in the energy consumption structure. In the power generation sector, despite the dramatic increase in installed solar power generation capacity from 1MW to 22.9GW during the period of 2005-2020, as of 2020, fossil fuels (coal 33%, natural gas 30%, and oil 5%) still account for more than 60% of the region’s power generation capacity. Moreover, slow investments due to high costs of clean energy projects, low reduction targets, limited readiness to accept low-carbon technologies, weak policies and regulatory frameworks, and lack of flexibility in power systems are obstacles to establishing a low-carbon energy infrastructure in the ASEAN region. However, all nine ASEAN members except the Philippines have declared to reach carbon neutrality, and most ASEAN countries are strengthening their policies to achieve each of their greenhouse gas emission reduction targets through expansion of renewable energy, energy efficiency improvement, decarbonization of transportation sector, increase of electric vehicles, and decarbonization of industrial sector. In addition, through the ASEAN Plan of Action for Energy Cooperation (APAEC), the region is conducting seven multilateral cooperation projects to build a low-carbon energy infrastructure including ASEAN power grid project, and continuously carrying out bilateral cooperative activities in joint projects, technology development, human and policy capability building, and financing in low-carbon energy area with major countries including Korea, Japan, China, the US, Germany and Denmark.

Considering Korea’s experience in entering the ASEAN in related areas, and the low-carbon energy implementation plans and measures of ASEAN countries, this study suggests the following six areas as promising ones for low-carbon energy cooperation between the ASEAN and Korea: ① solar power, ② energy storage system, ③ clean cook stove, ④ wind power, ⑤ biomass and ⑥ hydrogen. For solar power, where the most active investments are made in both Korea and the ASEAN, various business models can be considered for all ASEAN countries from utility-level large-scale solar power generation complex to floating solar model, agricultural solar model and hybrid model with energy storage system. Energy storage system connected to renewable energy can be built in inland areas or on islands where power price is high and power supply is not reliable. For clean cook stove, a business model suitable for local circumstances needs to be developed for those ASEAN nations which have been heavily using traditional biomass fuels by utilizing Official Development Assistance (ODA), support funds for developing countries, and funds from international organizations and banks. In case of wind power, since the ASEAN region is not rich in wind resources because wind speed is slow in many areas and Korea’s domestic wind turbine manufacturing technology and cost competitiveness are somewhat lagging behind overseas countries, pursuing joint small-scale projects with companies or countries in and outside of the region which have sufficient technology capabilities and experiences in wind sector is recommended. Biomass energy needs to be considered from the perspective of forming a stable supply chain of wood pallets rather than entering markets. Lastly, hydrogen seems to have high cooperation potential in production in the region and in domestic trade sector for green hydrogen based on renewable energy as well as blue hydrogen combined with natural gas and carbon capture and storage (CCS) technology.

In addition, this study analyzes the long-term ripple effect of connecting ASEAN-Korea carbon markets through a computable general equilibrium (CGE) model. The analysis shows stronger positive effects are created in many economic indicators when Korea and major ASEAN countries cooperate jointly by connecting carbon markets rather than independently implementing their NDC. At the COP26 held in November 2021, major negotiations between the Parties to utilize international carbon market mechanism were completed, so it is expected that individual countries’ efforts to achieve their reduction goals using the international carbon market will become active in the coming years. Therefore, preemptive efforts to expand cooperative relations in carbon markets with major trading partners such as the ASEAN should be strengthened.

Finally, in order to strengthen implementation to expand cooperation in ASEAN-Korea low-carbon energy sector, it is required to ① craft more sophisticated and specific policies and strategies for ASEAN energy cooperation; ② expand and strengthen financing support for the ASEAN and bilateral cooperation channels; ③ rebuild cooperation system to promote cooperation in the low-carbon energy sector with the ASEAN countries; and ④ consolidate efforts to expand and discover ASEAN-Korea cooperation projects by leveraging multilateral energy cooperation initiatives in which ASEAN countries participate including ASEAN+3, East Asia Summit (EAS) and Indo-Pacific Economic Framework (IPEF).