Decarbonization and energy transition align closely with the Asian Development Bank’s (ADB) Strategy 2030, which prioritizes addressing climate change, strengthening climate and disaster resilience, and promoting environmental sustainability. Asia and the Pacific are uniquely positioned to drive global climate action, as the region is expected to account for half of the projected global growth in electric power capacity over the next decade.

Significant strides have been made in expanding energy access across Asia and the Pacific, with overall electrification reaching 95%. However, disparities persist in the reliability and affordability of energy. While renewable energy capacity is rising rapidly, the region has backslid in decarbonizing energy use and reducing greenhouse gas emissions.

Fossil fuel-based energy generation continues to grow at a faster rate than renewable energy deployment. The energy sector remains a major contributor to greenhouse gas emissions, exacerbating climate risks that disproportionately affect the poor and vulnerable.

Digital Transformation for the Sustainable Development Goals notes that accelerating climate action will require innovation, particularly through digital solutions. Many developing member countries (DMCs) recognize the potential of digital technologies in climate efforts. Two-thirds of developing nations include technology in their nationally determined contributions (NDCs) to mitigate or adapt to climate change. This underscores the urgency of scaling digital solutions to reach vulnerable populations while simultaneously decarbonizing the digital sector itself.

Key Decarbonization Challenges

Greenhouse gas emissions are projected to rise alongside population growth, economic expansion, urbanization, increased land use, and heightened demand for transport and energy. The primary challenges facing DMCs include:

• Achieving universal, reliable, and affordable energy access;
• Ensuring energy security to support economic growth and urbanization;
• Accelerating energy efficiency improvements;
• Scaling renewable energy and low-carbon technologies.

Digital and smart technologies are transforming the energy sector, fostering decarbonization by integrating renewable energy, stabilizing grids, minimizing technical and commercial losses, and enhancing efficiency. However, the proliferation of digital solutions introduces new operational risks, including cybersecurity threats and IT supply chain vulnerabilities. Additionally, the energy consumption associated with digital technologies is on the rise, contributing to emissions.

These challenges threaten sustainability and exacerbate inequalities, placing marginalized populations at greater risk from climate change. Addressing these issues requires boosting energy efficiency, expanding renewable energy, and reducing the carbon footprint of the digital infrastructure.

4 Energy Transition Strategies

The energy sector is undergoing rapid transformation driven by decentralization and increasingly multidirectional power flows. Grid-connected distributed energy sources, such as electric vehicle (EV) chargers and residential solar panels, make energy management more complex.

Digital technologies play a crucial role in managing this decentralized landscape, balancing supply and demand, and mitigating uncertainties. DMCs can adopt just transition and circular economy approaches to foster equitable and sustainable growth.

Notable examples include India’s innovative business models for smart meter deployment and the UK’s digitalization strategy to achieve net-zero emissions. ADB is assisting Uzbekistan in modernizing and digitalizing its power distribution to improve efficiency and integrate renewables.

Four digital transformation strategic focus areas can drive decarbonization and energy transition:

1. Enhance User Participation

User-centered digitalization is essential, transforming consumers into prosumers who generate and trade energy. This shift drives demand for smart meters, energy management apps, peer-to-peer energy trading platforms, and EV infrastructure. Smart meters, for instance, encourage behavioral changes that reduce energy consumption by providing real-time feedback.

2. Enable Sustainable Energy Generation

Integrating decentralized, intermittent renewable energy requires greater system flexibility. Digital tools help capture and integrate data, facilitating real-time energy exchange. AI-powered visualizations and digital twins support remote monitoring, predictive maintenance, and optimized energy generation. Smart grids enhance renewable integration, improve stability, and reduce losses.

3. Strengthen Energy System Resilience

The frequency and severity of climate events are increasing, posing significant risks to energy infrastructure. Digitalization, while enhancing resilience, also introduces new vulnerabilities. Cyberattacks on digital infrastructure can disrupt power systems and cause economic and social harm. To mitigate these risks, energy systems must prioritize both physical and digital resilience through:

• Real-time monitoring and anomaly detection;
• AI-driven threat detection and pattern recognition;
• Network segmentation to isolate critical components;
• Redundancy and backup systems;
• Security-by-design principles integrated from inception;
• Collaborative information sharing within the industry.

Resilience plans should address both physical threats (natural disasters) and digital threats (cyberattacks). Digital technologies, such as early warning systems, geospatial mapping, and remote sensing, support disaster response and enhance infrastructure resilience.

4. Build a Robust Value Chain

Decarbonization and digital transformation require resilient supply chains for energy-related digital components and technologies. The COVID-19 pandemic and geopolitical tensions have exposed vulnerabilities in global supply chains. DMCs reliant on imports face potential disruptions, underscoring the need to diversify supply sources and build domestic capacity. Establishing local industries, industrial hubs, and technology clusters can enhance supply security and foster economic growth.

Digital tools also improve cost efficiency and performance in renewable energy projects. Smart grids and distributed energy resources integrate renewables seamlessly. Predictive analytics anticipate market trends and demand shifts, while remote monitoring reduces operational costs. Digital platforms enhance supply chain transparency, ensuring more efficient procurement and cost management.

A comprehensive digital transformation, aligned with energy transition goals, will enable Asia and the Pacific to lead global decarbonization efforts, fostering sustainable development and greater resilience against climate change.

Just Energy Transition Program Case Study

Just Energy Transition Programs (JETPs) aim to accelerate the energy transition in Indonesia and Viet Nam by promoting a partner country-led model that aims to phase out or phase down unabated coal-fired power generation capacity.

The official goal is to mobilize $20 billion for Indonesia and $15.5 billion for Viet Nam over the next 3–5 years with digital transformation solutions including smart grids, data-driven decision-making to inform rollouts, pricing strategies, and investment decisions, supply chain optimization, remote monitoring and predictive maintenance, and increased transparency and competition via online platforms.

JETPs aim to ensure just, equitable, and inclusive outcomes for consumers, workers, and vulnerable communities in coal-dependent regions as well as companies by:

• Diversifying the local economy through the creation of quality jobs and regional value chains;
• Support of social protection schemes for affected groups;
• Mitigation of vulnerabilities of carbon-intensive industries.
• Promote energy justice to ensure affordable electricity for low-income groups.
• Attract large-scale domestic and international private investments to increase the capacity to deliver these programs.

A successful JETP implementation requires a significant increase in the deployment of low-carbon technologies in addition to introducing or upgrading energy storage systems (such as batteries or pumped hydro storage), demand response programs to manage peak demand, innovative technologies to modernize the transmission and distribution grids, and measures to advance energy affordability.

A synopsis of the ADB publication: Digital Transformation for the Sustainable Development Goals