Financial Requirements for Carbon Neutrality in the Power Sector of the ASEAN: Perspectives from An Integrated Power Trade Model

Youngho Chang

Chapter 7 in Green Finance and Energy Transition in ASEAN, 2026, pp 203-234 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Carbon neutrality in the power sector implies a transition to zero- or low-carbon-emitting electricity generation technologies such as hydropower, wind energy, solar energy, geothermal energy, biofuels, and even natural gas with or without carbon capture and storage. This study aims to estimate the financial requirements of carbon neutrality in the ASEAN power sector under the assumptions of various allowed levels of cross-border power trade and explore possible policy options to meet the financial requirements. The ASEAN power sector has massive potential for renewable resources such as hydropower, wind, and solar. It appears to have applicable power technologies to achieve net-zero emissions by 2050. This study presents that “the lower the level of cross-border power trade, the greater the amount of aggregated added capacity.” However, the financial requirements of realizing added capacity to achieve carbon neutrality appear considerable. Policy implications to facilitate the financial requirements are to be drawn from the key findings.

Keywords: Green Finance; Energy Transition; ASEAN; Carbon Neutrality; Renewable Energy; Sustainable Finance; Climate Finance; Energy Policy; Green Bonds; Net-Zero; Transition Finance; Clean Energy Investment; Sustainable Development; Decarbonization; Climate Change Mitigation; ESG (Environmental; Social; and Governance); Low-Carbon Economy; Energy Markets; Financial Mechanisms for Sustainability; Energy Efficiency; Foreign Direct Investment (FDI) in Energy; Carbon Pricing; Policy and Regulation; Just Transition; Green Sukuk; Sustainable Infrastructure; Public-Private Partnerships (PPP); Institutional Investors in Clean Energy; Green Investment Strategies; Financing Renewable Energy; Southeast Asia Energy Policy; China Energy Investment; ASEAN Climate Goals; Energy Security in ASEAN; COP28 and Energy Transition; COP29; Economic Growth and Green Energy; Sustainable Power Systems; Carbon Markets in Asia; Green Hydrogen in ASEAN; Electrification and Smart Grids (search for similar items in EconPapers)
JEL-codes: G23 O13 Q01 Q40 Q50 Q56 (search for similar items in EconPapers)
Date: 2026
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