Description
This article raises an important question about the stigmatisation of resource-rich countries as climate laggards due to their slow participation in multilateral schemes. Despite this perception, they are actively working on greening their energy sector through bilateral alliances. How can we make sense of this seemingly contradictory behaviour? Instead of relying solely on multilateral governance like the UNFCCC, Indonesia and Australia take strategic bilateral approaches using trade and investment agreements to accelerate their energy sector transition. This study examines the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) and its following energy transition projects.
This article contends that the energy transition in resource-rich countries is shaped by political and institutional efforts to balance industrialisation interests. These countries seek to maintain competitive energy prices for economic growth while addressing international pressure on climate change and promoting renewable energy development. The carbon club is also trying to capture regional demand for sustainable energy to maintain its regional energy market dominance. A bilateral approach through trade and investment allows alliances to pursue more aligned and complemented aims that parallelly serve their political and economic interests. The argument is developed using primary and secondary data collected through interviews and discourse analysis of the government’s official documents, constitutions, and mass media through an international political economy lens. The findings of this study have the potential to significantly contribute to the literature on the linkages between trade agreements and energy transition, a field that has yet to explore the role of bilateral partnerships fully. This study’s findings could potentially reshape international political economists’ perspectives on the energy transition in resource-rich countries, underscoring the significance of this study.
Keywords: Energy Transition, Resource-Rich Countries, Trade and Investment, International Political Economy
