Big potential: South-East Asia is one of the few regions globally where GDP and emissions continue to march on shoulder to shoulder. — The Straits Times/ANN
IT is impossible to consider the world’s energy future without looking to South-East Asia, a dynamic region and increasingly influential force in global energy trends.
Following two decades of remarkable growth, the countries of Asean are collectively poised to become the world’s fourth-largest economy by 2030. At that point, the region – with a population of over 720 million – is set to be home to nearly one in every 12 people globally.
Given this trajectory, South-East Asia will cement its position as an energy heavyweight. According to the recent South-East Asia Energy Outlook from the International Energy Agency (IEA), the region is projected to account for 25% of the global increase in energy demand by 2035, and is on track to surpass overall consumption in the European Union by 2050.
The upshot is clear: for conversations on the biggest energy issues of the day, from ensuring energy security to accelerating clean energy transitions, South-East Asian countries must have a seat at the table.
That is why the IEA has taken the major step of opening a centre in Singapore, which was inaugurated on Oct 21. It is the IEA’s first new office outside its Paris headquarters in the agency’s 50-year history. The centre in Singapore will deepen and expand the IEA’s longstanding collaboration with countries in the region and beyond, as they navigate the significant energy opportunities and challenges ahead. Singapore, as South-East Asia’s sustainable finance hub, is the natural home for the centre.
Rapid growth will require a new energy approach. South-East Asia is one of the few regions globally where gross domestic product and emissions continue to march on shoulder to shoulder. At the same time, energy security and affordability are in the spotlight following the recent energy crisis.
High energy prices since 2022 – which exposed the risks of the region’s heavy dependence on imported fossil fuels – have been a burden for households as well as businesses, and put pressure on public finances after subsidies to support struggling consumers reached a record high.
This has underscored the potential advantages of technologies like solar, wind, batteries, low-emissions fuels, electric vehicles and interconnected grids, all of which can play a key role in meeting rising energy demand, improving energy security and advancing decarbonisation in a cost-effective manner. Fossil fuels, particularly coal, have met nearly 80% of South-East Asia’s rising energy use since 2010, but output from renewable sources is set to double by 2035, increasing their share to a quarter of the energy mix.
In parallel, the region is gaining an important foothold in the new clean energy economy that is swiftly emerging. In 2023, Vietnam, Thailand and Malaysia were the largest makers of solar panels after China. The region also has substantial manufacturing capacity for electric vehicle batteries – especially in Indonesia, which thanks to its mineral resources is South-east Asia’s largest manufacturing hub for lithium-ion batteries and components.
Meanwhile, as the world’s largest bunkering port, Singapore is key to decarbonisation efforts in shipping. By continuing to develop these industries in a responsible and sustainable fashion, the region can deliver quality jobs to more people who need them and construct a powerful economic engine to propel further growth.
The policy choices made by countries in South-East Asia in the coming years will have a big impact on the pace of energy transitions.
IEA analysis shows clearly that well-designed clean energy policies will deliver a more inclusive and affordable energy system than what we see today. And new data makes it abundantly clear: The quicker we move on clean energy transitions, the more money it saves governments, businesses, households and vulnerable communities. That is especially true as new drivers of demand emerge, from growing cooling needs to data centres supporting the uptake of artificial intelligence.
But the speed of transitions is not only a question of ambition and strong implementation. It also hinges on investment. Today, South-East Asia’s share of global clean energy spending is only 2%, far below its weight in the global economy and population.
For the region to close this gap and meet its announced energy and climate goals – including net-zero commitments from eight countries – easing access to capital and bringing down financing costs are vital. So is improving regulatory and financing frameworks. International development finance institutions, as well as alliances of investors – which are uniquely situated to mobilise more private sector funds – must also play their part.
South-East Asia is undergoing a remarkable period of transformation. With strong policies and sufficient financing, the ground-breaking changes can be extended to its energy system as well – delivering huge benefits to people across the region, and serving as a model internationally for what energy transitions can accomplish. — The Straits Times/ANN
Dr Fatih Birol is the executive director of the International Energy Agency.
