While the U.S. and China meet at the climate table, the countries of Southeast Asia have their own table set for an energy-consumption feast.
Last week, in an effort to reinstall the United States to a position of diplomatic visibility, Joe Biden convened a virtual meeting of political leaders from three dozen countries to discuss global climate strategy. The feather in Biden’s cap was that China’s Xi Jinping agreed to attend and deliver an address.
The conventional wisdom holds that the U.S. and China, acting in concert, can begin to curb global emissions and that this meeting was a hopeful start. As Reuters put it, the U.S. and China have “rediscovered a common interest in battling climate change.” Yew Wei Lit, a postdoctoral fellow at Singapore’s Yale-NUS College, says, “Sealing a cooperative pact with China on climate will be a crucial first step toward [the United States] reclaiming a leadership role on climate action.”
Detractors, on the other hand, have expended much ink in explaining that Biden’s carbon plans will be swamped by continued emissions growth from China, despite Beijing’s commitment to the Paris Agreement and its 2060 carbon-neutral pledge.
What the two camps share is an acute focus on Sino-U.S. bargaining and trajectories. When attention does wander away from China, it is typically trained on its up-and-coming rival, India, a source of rising emissions in its own right and a country that Biden’s climate envoy, John Kerry, visited earlier in April.
All but forgotten in this discussion, however, are the ten countries that compose the Association of Southeast Asian Nations (ASEAN): Indonesia, the Philippines, Vietnam, Thailand, Myanmar, Malaysia, Cambodia, Laos, Singapore, and Brunei.
Today, the ASEAN population stands at about 650 million — almost exactly half of China’s. But unlike the giant to the north, ASEAN countries are young and, by comparison, have growing populations. By the middle of the next decade, ASEAN could add close to 100 million more people and eclipse Japan and the European Union to become the world’s fourth-largest economy.
With that growth will come enormous emissions increases that the global climate movement tends to ignore. Among the Biden climate-bash invitees, only three came from ASEAN countries: Indonesia’s Joko Widodo, Vietnam’s Nguyen Phu Trong, and Singapore’s Lee Hsien Loong. Glaringly omitted was Rodrigo Duterte of the Philippines, a country that exemplifies the economic (and emissions) potential of the region.
ASEAN is a booming economic market that will see faster growth than China over the coming decades. As in China, the ASEAN regions that are most urbanized and globally integrated are decades ahead of the less connected regions. In ASEAN’s case, Singapore, Malaysia, and Thailand are the wealthy cohort, while Laos, Cambodia, and Myanmar make up the least-advanced group (with oil-rich Brunei typically lumped in among the latter). That leaves the three largest ASEAN countries by population: Indonesia (population 265 million), the Philippines (population 105 million), and Vietnam (population 95 million). It is thanks mostly to this emerging economic trio that the World Economic Forum (WEF) describes ASEAN as “on the cusp of a tremendous leap” in socioeconomic progress.
The World Bank reports that in Indonesia alone, 115 million people are poised to enter the middle class. This population, which it calls the “aspiring middle class” (AMC), is distinguished from the poor as well as the economically secure. As Indonesia’s AMC reaches the middle class, it will spend increasing sums on durable, energy-intensive goods such as refrigerators, automobiles, air conditioners, and water heaters. Since 2002, middle-class consumption in Indonesia has increased by an astonishing 12 percent annually.
WEF projects that over the next decade 140 million people across ASEAN will ascend to the consumer strata. Further, it says that, as regional per capita GDP surpasses $6,600 in 2030, ASEAN will “reach inflection points where consumption takes off.” Of course, those already in the middle class will get richer, too. By 2030, WEF estimates that there will be a regional near-doubling of high- and upper-middle-income households, which currently amounts to 30 million.
Unlike in China, demographic trends give ASEAN reason for optimism. Thanks to its former one-child policy (and now the remaining cultural stickiness), China is approaching a demographic winter. China’s working-age population (WAP) had already peaked and by 2050 China will have 200 million fewer working-age people than it has today.
ASEAN, meanwhile, is youthful. Indonesia, the Philippines, and Vietnam had median ages of 31.1, 24.1, and 31.9 in 2018, respectively, compared with China’s 38.4. ASEAN will add 40 million potential workers this decade, while China’s WAP is now quickly slipping into decline.
Geopolitics also provides tailwinds to ASEAN economic expansion. By its own doing, China has begun to scare off economic partners, both public and private. “ASEAN will become a popular destination for foreign direct investment (FDI) as multinationals rebalance supply chains to diversify geopolitical risk,” WEF describes in a veiled allusion to China. In 2018, it notes, FDI inflows to ASEAN exceeded those to China by 20 percent. Vietnam, with its less expensive labor, has become a major manufacturer just beyond China’s southern border. The current atmosphere of heightened geopolitical tensions will only add to that trend. And it is worth adding, of course, that ASEAN is not a passive beneficiary of investors souring on China; the Philippines, Malaysia, and Vietnam have each recently faced aggression from China in disputed territorial waters.
The economic, demographic, and geopolitical trends cited above have a multitude of implications. An obvious one is that while the U.S. and China meet at the climate table, the countries of Southeast Asia have their own table set for an energy-consumption feast.
ASEAN’s Energy Appetite
Indonesia gets about three-quarters of its total energy from oil, gas, and coal. Though at first blush, Indonesia’s production and use of biofuel would appear climate-beneficial, the country faces widespread international condemnation for the forest-clearance practices it deploys to produce the palm oil it then turns into biodiesel. Further, the country has been accused of polluting the region’s air with toxic haze from its forest fires. The emissions-policy watchdog group Climate Action Tracker (CAT) deems Indonesia’s plans highly insufficient for meeting Paris Agreement goals.
The Philippines gets almost two-thirds of its total energy from oil and coal. The country did, however, recently announce a moratorium on new coal power, despite more than 5 million people in the Philippines still lacking electricity at home. Vietnam uses coal for more than half of its electricity generation and three-sevenths of its total energy, with fossil fuels cumulatively composing four-fifths of it. According to CAT, Vietnam “lacks policy action for a green economic recovery and has not focused efforts on emissions reductions.”
Led by Indonesia, the Philippines, and Vietnam, Southeast Asian electricity consumption will double by 2040, the International Energy Agency (IEA) projects. Though renewables will play a part in meeting new demand, much of it will be met by fossil-fuel sources, contributing to significant emissions increases.
If the three emerging ASEAN countries follow similar energy patterns to reach levels of development comparable to Malaysia’s and Thailand’s, it would mean a doubling of per capita emissions. Based on stated policy scenarios, IEA forecasts that emissions from the Southeast Asian region as a whole will rise from around 1,500 metric tons of CO2 in 2020 to over 2,300 metric tons by 2040 — an increase of more than 50 percent.
An intractable challenge to renewable-energy primacy in Southeast Asia is geography. The two most-populous countries, Indonesia and the Philippines, are archipelagos made up of thousands of inhabited islands. Among the geographic ramifications are challenges to electricity transmission and distribution, which particularly plague dispersed utility-scale wind and solar generation and the establishment of electric-vehicle networks. Similarly, national electrified rail networks, such those that unite much of China, are a nonstarter.
The region’s geography makes air travel the more viable option for most domestic trips. Indonesians in particular have already shown a strong inclination toward commercial air travel. Indonesia’s air traffic data show that Indonesian carriers transported around 100 million passengers in both 2018 and 2019 — three times more than a decade earlier. Growth in the Philippines has been similar. By 2039, the International Air Travel Association projects Indonesia will be the world’s fourth-largest-air-travel market, thanks in large part to its newly minted middle class.
As the projected growth of the ASEAN countries demonstrates, China is not the climate end-all-and-be-all. Hundreds of millions of Southeast Asians hunger for the amenities of the global middle class and are positioned to seize them. The sovereign governments of the region, most starkly Indonesia’s and Vietnam’s, will act to further that ambition, not to suppress it with costly climate and energy policies.
Moreover, the framing of climate as a challenge that the U.S. and China can solve only together serves to elevate China’s prestige in the very ways it seeks. As noted in a National Review editorial, China can utilize platforms such as Biden’s summit to present itself as an arbiter of global norms and to exploit cleavages in the critical alliances that would otherwise unite to counter China.
No matter what Biden and Xi hash out, global economic trends are afoot that are beyond the reach of either.
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