The Asia Zero-Emission Community is a collaborative framework for decarbonization involving nine ASEAN countries (excluding Myanmar), Japan and Australia. It is abbreviated as AZEC. The first summit was held in December 2023. The principles of the initiative are “decarbonization through diverse pathways that take into account the circumstances of each country” and “simultaneous realization of decarbonization, economic growth, and energy security”.
Many countries in Southeast Asia rely on fossil fuels such as coal and natural gas to generate electricity. Japanese companies are driving the adoption of renewable energy, and the Japan government is also providing support through subsidies and other means. As of the end of 2023, 120 cooperation projects have been implemented between Japan and countries in the region.
There is a need to establish internationally reliable systems for calculating and reporting greenhouse gases, but the development of such rules in Southeast Asia is lagging. If Southeast Asia adopts a framework that is familiar to Japanese companies, based on the Law Concerning the Promotion of Measures to Cope with Global Warming, it will be easier for Japanese companies to enter the market.
The AZEC Leaders’ Statement will include a 10-year action plan. In addition to developing Japanese-style rules for calculating and reporting greenhouse gas emissions, it will also promote the provision of so-called “transition finance” and the decarbonization of transportation and electricity.
For companies operating across borders in Southeast Asia, the situation where the system for calculating and reporting emissions differs from country to country is a heavy administrative burden. If the rules can be unified across the AZEC region, it will be easier to track emissions across the supply chain.
This will be a springboard for Japan to take a common approach to the decarbonization efforts it is leading. Countries will also share knowledge on carbon pricing, which imposes economic burdens based on CO2 emissions.
According to the International Energy Agency (IEA), China (33%) and the United States (13%) will rank first and second in terms of their share of global CO2 emissions in 2022. When Japan (3%) and Southeast Asia (4%) are added together, the figure is 7%, which is comparable to the EU. The aim is also to ensure that Japan has some influence in the international community by coordinating its efforts with AZEC.
The Action Plan also includes a timetable for the 2026 AZEC Summit, which will be used to report on progress. Between 2029 and 2034, each country will establish a system for calculating and reporting emissions.
Source: The Nikkei
PSR Analysis: While China and South Korea are also making commitments to Southeast Asia, Japan appears to be taking the lead in formulating these standards. As the amount of greenhouse gas emissions in Southeast Asia is expected to increase due to the region’s large population if nothing changes, the move to formulate such a new system should be seen as a positive development.
Examples of Japanese companies already cooperating in the decarbonization process include the following Sojitz Corporation is producing SAF (sustainable aviation fuel) in Thailand, developing a green hydrogen supply network in Laos, introducing renewable energy systems in industrial parks in Vietnam, developing a power transmission network to connect remote islands in Indonesia, and installing ammonia-only gas turbines in Malaysia.
As protectionism spreads around the world, Southeast Asia is trying to counter this trend by clarifying the rules within the region and integrating its economic bloc. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, with Power Systems Research
