AS the world shifts toward sustainable development, the concept of a circular economy has evolved globally as a comprehensive solution.

       A circular economy is defined as the restructuring of the conventional linear and extractive economy into a closed-loop recycling process that regenerates natural systems and designs out waste and its harmful by-products.

       This concept aims to balance the complex interrelationship between the three pillars of sustainability, namely economic growth, environmental sustainability and social welfare.

       Developed countries pioneered this concept, but it does not mean the least developed or developing countries cannot adopt it. A report from the McKinsey Global Institute has estimated that around 85% of opportunities to improve resource productivity lie in developing countries.

       While the broad impacts of climate change are inevitable, the enormous pressure and overexploitation of natural resources continue to escalate as the world’s population is projected to soar to 9.9 billion by 2050, or up 25% from the 2020 population.

       Despite the force majeure of the Covid-19 pandemic, Asean remains on track to become the world’s fourth-largest economy by 2030 as the overall gross domestic product (GDP) is projected to rise by 6% by the fourth quarter of this year.

       Therefore, transitioning to a circular economy is more relevant and urgent for emerging economies like Asean, as part of their post-pandemic recovery plans.

       Asean has recognised its essential path to a circular economy through achieving the Asean Community Vision 2025 and contributing to the United Nation’s Sustainable Development Goals through the recently endorsed Framework for Circular Economic for the Asean Economic Community (AEC) during the 20th AEC Council Meeting on Oct 18.

       The framework hinges on three priorities: exploring an innovative environment, social governance or ESG investments and efficient use of energy and other resources.

       The energy sector plays a significant role in fuelling economic growth. Based on the 6th Asean Energy Outlook, industry is projected to be the highest energy-consuming sector, where 58% of industrial energy demand will be met by fossil fuels.

       Hence, the development and transformation of the industry sector – mainly to implement a circular economy – will require herculean efforts in the energy sector.

       Since the objective of a circular economy in the industry sector is to minimise negative externalities, one of the principles in this economic model is the use of renewable energy (RE) and other clean and lower-carbon energy sources.

       However, in energy sector development, particularly for developing countries, switching conventional fossil fuel energy to cleaner and renewable energy systems requires gradual and holistic approaches.

       This may include all efforts to increase RE investment and competitiveness, such as eliminating fossil fuel subsidies and the price of carbon, a decentralised power system or the transformation of fossil fuel systems by deploying carbon capture utilisation and storage.

       Considering the importance of the energy transition plan to the realisation of a circular economy, governments and industries must enhance efforts to increase RE deployment and improve the conventional energy system’s efficiency.

       Balancing the energy trilemma, particularly in achieving energy security, energy equity and environmental sustainability, is the main priority of the Asean member states.

       They recognise that they may not be able to fully address their national energy challenges alone. Therefore, multilateral energy cooperation and integration is vital to support Asean member states in closing the gaps in their national energy efforts and addressing the challenges of sustainable development.

       Under the Asean Plan of Action for Energy Cooperation (APAEC), member states are committed to accelerating the region’s energy transition and have set the aspirational targets of a 23% share of RE in the region’s energy mix and 35% in installed power capacity by 2025, as well as to reduce energy intensity by 32% by 2025.

       These APAEC frameworks and commitments are critical to guide Asean toward cleaner and more affordable energy systems – which eventually can facilitate the implementation of a circular economy.

       According to the Ellen MacArthur Foundation, proper governance and synergy across the value chain and sectors are needed to transition to a circular economy successfully.

       The Organisation for Economic Co-operation and Development has developed a comprehensive checklist arranged into three critical complementary roles for the government as promoter, facilitator and enabler of the circular economy to guide governments in the transitioning process.

       The Asean Centre for Energy (ACE), as the catalyst for the integration of regional energy strategies, can further support and strengthen these three roles, particularly to synergise the energy transition actions between relevant stakeholders.

       Here are the ways and some of the challenges:

       First, to assist governments to be the promoters of a circular economy through the adoption of APAEC Phase II 2021-2025, by providing gap analysis and research-based policy recommendations, including identifying more opportunities to accelerate the energy transition that triggers the circular economy practices.

       However, the strong commitment of member states and systematic strategies in the implementation of APAEC are required.

       The plan must include long-term objectives. The goals are to shift from conventional energy systems and maintain the progress of the energy transition so it is irreversible.

       Second, ACE could support governments to be the facilitators of the energy transition and circular economy by leveraging the strategic position of ACE as a regional energy center.

       Guided by APAEC, ACE could initiate partnerships with regional stakeholders, including dialogue partners, international organisations, private sectors or business players and academics to expand the implementation of the circular economy into energy transition strategies.

       Moving forward, ACE has to ensure the cross-sectoral coordination between the energy sector, and other relevant sectors, is well accommodated to expand the energy sector’s contribution in the realisation of a circular economy.

       Lastly, ACE can assist the government to be the enabler of a circular economy by identifying and mobilising their resources to accelerate the energy transition toward a circular economy.

       This role is crucial to establish and identify the regulatory instruments that need to be adapted to enable the energy transition, accommodate economic and social growth at the same time.

       Facilitation to assess the gaps in clean energy financing and exploring more channels of access to energy finance and investment for the region are essential and need to be prioritised. — The Jakarta Post/ANN

       Veren Yoshevania Sattvadharma is a business development intern at Asean Centre of Energy, where Syahira Narizta Syahputri is a business development officer and Dynta Trishana Munardy is an Asean Plan of Action for Energy Cooperation intern. The views expressed here are the writers’ own.