GREEN GOLD RUSH; HOW LEGACY INDUSTRIES AND FOREIGN CAPITAL SHAPE SOUTHEAST ASIA’S ENERGY FUTURE

Abstract

This paper investigates the divergent energy transition pathways of Southeast Asian nations, with a deep focus on two nations in particular, Cambodia and Indonesia, in order to explore how structural factors, governance, and foreign investment shape national responses to climate change. The two nations have also taken very different approaches to the adoption of renewable energy, even though they are both exposed to international climate commitments and Chinese infrastructure funding under the Belt and Road Initiative (BRI). Cambodia has quickly expanded its capacity for renewable energy, especially in solar and hydro power, by utilizing Chinese investment, international partnerships, and the absence of legacy fossil fuel industries to build a green energy system from the ground up, while Indonesia continues to prioritize coal because of its well-established coal industry, strong lobbying groups, and the complexity of its geography as an archipelago, which creates major infrastructure barriers to the integration of clean energy. Drawing on policy reports, energy data from years between 2000–2023, and case studies on foreign direct investment (also known as FDI), this paper argues that economic development alone does not determine a country's energy trajectory. Instead, legacy industries, governance capacity, and geographic realities critically mediate the impact of foreign capital and climate frameworks like the Paris Agreement. Additionally, my analysis will shed light on how Cambodia’s institutional flexibility and weak fossil fuel incumbency allowed room for rapid green transition, while Indonesia’s deep-rooted coal legacy industry sector and regulatory stagnation have prevented pro-green energy reforms. I also aim to include policy recommendations emphasizing transition strategies, regional cooperation, and targeted green finance which are all imperative for Southeast Asia’s sustainable future.