Commentary: Will a Trump Presidency Give China a Bigger Role in Southeast Asia’s Energy Transition?

With Donald Trump returning to the U.S. presidency in January, Southeast Asian countries are re-evaluating the implications for their energy transition efforts. Trump's expected policy changes, following his 2020 loss to Joe Biden, may significantly alter U.S. engagement in global climate and clean energy leadership. This shift occurs while Southeast Asia wrestles with balancing U.S. retrenchment and increased Chinese regional involvement, especially as the area seeks substantial clean energy investments for a sustainable future. [para. 1]

Historically, the U.S. has been an inconsistent climate leader, making it an unreliable partner for Southeast Asia, which needs long-term energy sector commitments. Meanwhile, China's rise as a leader in clean technology—particularly solar, electric vehicles (EVs), and batteries—has made it a formidable player in Southeast Asia’s energy future. [para. 2]

The competition between the U.S. and China in clean technology is intense. China's rapid expansion in solar panel production has significantly reduced global solar costs by nearly 90% in the past decade, facilitating widespread adoption in Southeast Asia. In contrast, U.S. clean energy investments have predominantly focused on domestic issues, with notable initiatives like the Inflation Reduction Act (IRA) emphasizing battery and limited solar or wind investments. Trump's proposed reduction of the IRA's scope and his domestic-focused approach may bolster China’s positions in Southeast Asia's clean energy transition. [para. 3][para. 4][para. 5]

In Southeast Asia’s growing EV sector, Chinese manufacturers dominate, holding over 70% of the market compared to Tesla’s meager 4% in early 2023. While the U.S. has increased domestic battery and, to some extent, EV production focused on its vast market, it lags in the Southeast Asian region where Chinese investments are expanding. [para. 6]

A successful energy transition hinges on accessing critical minerals like nickel and rare earths, abundant in Southeast Asia, with Indonesia and the Philippines holding 27% of the global nickel reserves. China dominates 80% of the global critical minerals supply chain, embedding itself as a crucial partner for Southeast Asian countries. The U.S. attempts to secure critical minerals independently could limit its Southeast Asia engagements further during Trump’s term. Potential exclusion of Chinese-affiliated products could complicate Southeast Asian exporters’ access to the U.S. market amid rising scrutiny or sanctions. [para. 7][para. 8][para. 9]

Future U.S. involvement in Southeast Asia might focus on emerging energy technologies linked to U.S. industries, such as small nuclear reactors or carbon capture, which could find support under Trump’s administration. In contrast, China is the largest provider of renewable energy finance in the region, with projects ranging from solar to hydropower, reinforcing its role as a key partner. [para. 10][para. 11]

The U.S. has tried to counter China's influence with the Just Energy Transition Partnership (JETP), leading efforts in Indonesia and alongside Japan in Vietnam, aiming to pivot away from coal. However, a potential Trump administration withdrawal from these partnerships could undermine Southeast Asia's access to essential energy transition funding. Conversely, U.S. corporations like Amazon, Google, and Microsoft could drive regional clean energy development, independent of U.S. policies, through significant investments in Southeast Asian projects. Southeast Asian leaders face tough decisions in 2025 on navigating their energy transition pathways amid these geopolitical dynamics. [para. 12][para. 13][para. 14][para. 15]

Putra Adhiguna, managing director of the Energy Shift Institute, contributes insights from an Asia-focused energy finance perspective. [para. 16]