Discussing ASEAN and India as global economic powerhouses is timely, as ASEAN and India celebrate their establishments on 8 August and 15 August, respectively. Both regions are major developing economies with significant increases in energy demand—ASEAN’s demand rose by over 80% since 2000 and projected to triple in 2050 from the 2020 level, while India saw a 7% surge, reaching a peak demand of 2,43,271 MW by the end of 2023. Coal has been on top of the ladder in fulfilling those demands in the regions.

ASEAN and India have been close allies, marking 30 years of relations in 2022 during the ASEAN-India Friendship Year. Significant events included the ASEAN-India High-Level Conference on Renewable Energy, which highlighted both regions eagerness to develop an ASEAN-India Cooperation on Energy Transition. This cooperation initiative has preceded by various active engagements through the ASEAN-India Green Fund since 2012. These progressing partnerships underscore the historical and cultural ties between the regions and offers a path for cooperative energy transition, particularly in gradually reducing coal reliance.

ASEAN and India’s dependence on coal

Discussions about coal and climate change are closely tied to the outcomes of the 2021 COP26 in Glasgow, where countries collectively committed to phasing down unabated coal power. As of 2022, global coal demand surged to 8,415 Mt, with 67.5% used for electricity generation. China, India, and ASEAN consume three-quarters of this coal, compared to 35% less than the combined total of the EU and the US at the start of the 21st century. In 2023, ASEAN and India produced 546.17 TWh and 1,480.46 TWh of coal-based electricity, respectively. ASEAN’s output came from 160 GW of coal-fired power plants and 40 GW in the pipeline, while India’s was from 211 GW. By 2050, ASEAN’s projected electricity generation will be 3,388 TWh from 959 GW of installed power capacity, with coal still holding a 33.8% share. India is expected to reach similar levels by 2037. These projections highlight the urgent need for interventions in coal management to help keep global temperatures below pre-industrial levels.

How coal as a commodity relates to the regions’ economic conditions?

Phasing down coal, and eventually phasing it out, is essential for reducing global coal consumption by 80% within the next six years and ending all coal-fired power by 2040. OECD nations must stop using coal by 2030, affecting countries like Indonesia, Thailand, and India, which have close ties with the OECD. However, Southeast Asia and India face challenges due to heavy reliance on coal for affordable electricity, with coal demand still rising. Economic growth has sharply increased energy demand in both regions, with Southeast Asia’s GDP nearly tripling since 2000 and energy demand predicted to grow significantly until 2050. CO2 emissions in Southeast Asia are expected to rise by 46% from 2022 levels, largely due to coal, which will continue to dominate electricity generation through 2050. In India, urbanisation is set to increase by 74%, and per capita income will triple by 2050, driving industrial output and boosting demand for coal. Despite the rise in solar PV, India’s draft National Energy Plan indicates that coal-based generation will remain necessary due to its cost-effectiveness, highlighting the region’s complex transition to renewables amidst growing energy needs.

Ambitious coal phase-down: at what cost?

Phasing down coal excessively in ASEAN and India presents significant socio-economic challenges. According to the ILO, several ASEAN countries like Indonesia, the Philippines, and Viet Nam will face substantial job losses from mine closures, impacting local economies and livelihoods. Similarly, in India, over 13 million people are employed in coal-related industries, making the transition complex. This figure excludes informal sector workers and those in related industries, further escalating the impact. Compensating workers, companies, and state revenues in the coal phase-down is costly. In India, aligning compensation policies with the Paris Agreement would require funding equivalent to five times the global Official Development Assistance (ODA), amounting to over $200 billion in 2023. A 1.5°C pathway would need $1 trillion, and a 2°C pathway would need $0.8 trillion in compensation. ASEAN faces similar financial burdens due to its heavy reliance on coal. Both India and ASEAN must navigate these immense costs to ensure economic stability and address the needs of millions dependent on the coal industry.

The regions’ answers towards global call in moving forward

India’s decision to push for an adjustment in the Glasgow Climate Pact, changing the wording from “coal phase-out” to “coal phase-down,” faced criticism. However, some defended this move, citing the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC). This principle acknowledges that while all countries share the responsibility to combat climate change, their capacities vary based on their economic development stages. This situation mirrors the challenges faced by Southeast Asian nations, where balancing global responsibilities with economic prosperity is crucial. This political movement by the Indian representative, in the authors’ view, cannot be judged as if India and the rest of the Global South countries neglect their responsibilities. Quite contrary, in the context of this writing, ASEAN and India are doing much better than other countries or regions despite their limitations as developing countries.

Related to the CBDR from the practical perspective, the ASEAN Centre for Energy (ACE) argue that the transition to moving away from coal should be planned strategically and carefully which shall consider the reality on the financing capability and impact on economy. The same approach is suggested for India, where regional energy outlooks should be the basis for policymaking. Moreover, in terms of technical advancement, in ASEAN-India cooperation, knowledge transfer on India’s renewable energy successes is crucial, including its 71.5% renewable power generation in early 2024. From the non-technical aspect, comprehensive strategies and interregional climate finance initiatives through the ASEAN-India Partnership for Peace, Progress, and Shared Prosperity (2021-2025) and the ASEAN Plan for Action on Energy Cooperation are required to address the socio-economic challenges in promoting a just and responsible transition in the regions.