The authors first seek to explain why countries in Southeast Asia are making plans for – and investors are continuing to invest in – fossil-based power generation instead of renewable or clean generation options, and second, what it would take to substantially shift investment from fossil generation into renewable options in the region. The authors carried out interviews with 17 industry experts working in Southeast Asia’s power sector.
Overall, the results from the analysis suggest that there is currently a significant gap between the need to integrate climate risks within investor decision-making and the way these risks are currently being integrated and addressed in the Southeast Asia power sector. The analysis shows that climate risk is either not a significant factor, ignored in light of other concerns, or only superficially integrated into decision-making. The authors discuss the factors behind these findings and question the assumption that risk is one of the main drivers of investment decision-making. They also draw attention to other important factors, seldom reviewed in the literature, that lead investors in the power sector in Southeast Asia to either actively avoid, downplay, or ignore the potential impact of climate risks.
The results of this research point to an urgent need for action targeted at energy-sector investors in order to:
- shed light on climate-related investment risks
- share information on the likelihood and magnitude of risks
- lay out clearly the potential for stranded assets in a 10 to 15-year time frame, and
- encourage transparent, open and respectful dialogue and discussion on these critical issues.