Southeast Asia’s energy transition: Balancing growth and sustainability
Southeast Asia, one of the world’s fastest-growing regions, faces the challenge of meeting rising energy demand while reducing carbon emissions. The International Energy Agency’s (IEA) Southeast Asia Energy Outlook 2024 highlights the need for bold policies, increased investment, and regional collaboration to ensure a secure and sustainable energy future.
The Association of Southeast Asian Nations (ASEAN) is home to a rapidly growing population, projected to reach 790 million by 2050. With expanding urbanisation and industrialisation, energy demand is expected to increase significantly, with ASEAN accounting for 25% of global energy demand growth by 2035.
Currently, coal dominates the energy mix, providing 50% of electricity generation. Without intervention, energy-related CO₂ emissions could rise 30% by 2050, making decarbonisation a pressing priority.
The push for net zero
Eight ASEAN nations have committed to net zero emissions, with Brunei, Malaysia, Singapore, and Vietnam targeting 2050, Indonesia aiming for 2060, and Thailand for 2065. Achieving these goals requires cutting emissions by two-thirds by 2050 and accelerating the shift to renewable energy.
However, ASEAN remains highly dependent on fossil fuel imports, making it vulnerable to price shocks. The 2022 global energy crisis saw fossil fuel subsidies hit a record USD105 billion, highlighting the need to redirect resources towards clean energy investment.
Renewables are projected to meet 35% of energy demand growth by 2035, with Vietnam leading solar and wind expansion. However, coal remains deeply embedded, with many plants still in operation. Strategies such as biofuel and ammonia co-firing, plant efficiency improvements, and early retirements could reduce coal dependency, but these require significant financial backing.
Despite making up 9% of the global population, Southeast Asia received just 2% of global clean energy investments in 2023. For every dollar spent on fossil fuels, only 80 cents goes to clean energy—far below the global 2:1 ratio in favour of renewables. The IEA estimates the region must double clean energy investment to USD190 billion annually by 2035 to meet climate targets.
To attract private investors, ASEAN governments must reduce regulatory uncertainty and implement clear, stable policies. Initiatives such as the Just Energy Transition Partnership can provide international funding and technical support.
Regional cooperation and the path forward
Given the diversity of ASEAN’s energy landscape, regional collaboration is critical. Initiatives such as the ASEAN Power Grid and the IEA’s new Regional Cooperation Centre in Singapore aim to modernise energy infrastructure and expand clean energy connectivity.
International partnerships will also play a key role in financing the transition, particularly for phasing out coal and enhancing climate resilience.
The Southeast Asia Energy Outlook 2024 underscores the urgent need for policy action, investment, and cooperation. By accelerating renewable adoption, reforming fossil fuel subsidies, and modernising energy infrastructure, ASEAN has the potential to become a global leader in clean energy innovation.
