Governance Capacity and Climate Policy Credibility in Southeast Asia's Energy Markets: Implications for Climate Transition Risk and Investment

Key Points

• This research aims to explore how governance capacity impacts climate policy credibility and transition risk exposure in energy markets.
• Comparative analysis of governance capacity in Indonesia, Malaysia, and Vietnam.
• Development of a governance-sensitive framework linking various regulatory factors to climate policy outcomes.
• Examination of implications for investment and financial risk in energy sectors.
• Identified strong links between governance quality and climate policy credibility.
• Found that low governance capacity correlates with high transition risk for investors.
• Demonstrated that effective governance can reduce policy volatility and stranded-asset risk.