Cost of Transitioning to Clean Energy Sparks Risk of Losing Support

Political risks stemming from potential loss of public support due to rising power tariffs pose significant challenges to the transition to cleaner electricity sources, as highlighted by ministers from New Zealand and Cambodia during the Singapore International Energy Week conference on October 21.

Shane Jones, Associate Minister for Energy in New Zealand, emphasized the importance of public support in transitioning to sustainable energy. He noted that New Zealand's power tariffs are among the highest in the Asia-Pacific region, comparable to those in Singapore. Jones cautioned that if the public does not perceive the long-term benefits of climate-positive outcomes and feels the burden of the transition, it could lead to political turmoil: “If the public feel that they can't see the upside of the medium- to long-term climate-positive outcomes, and they're suffering disproportionately on the journey, it leads to political mayhem.”

Keo Rottanak, Cambodia’s energy minister, echoed these concerns, stating that the transition to net-zero emissions in Southeast Asia would be costly and prolonged. He warned that if costs are not reduced, public support could wane, jeopardizing the entire initiative: “If we don't bring costs down, we may lose the public support, and therefore it will just make the whole thing go away.”

In a related discussion, Amin Nasser, CEO of Saudi Aramco, pointed out the limitations of current transition plans. He highlighted that developing countries face significantly higher costs of capital, which complicates the necessary investments for the energy transition. Nasser asserted that all energy sources would be required for decades and criticized the notion that a single transition plan could satisfy the diverse needs of over 200 countries.