Southeast Asia’s energy sector is navigating a fine balance between ensuring energy security and addressing the pressing environmental challenges that arise from its fossil fuel-dominated energy mix. According to the 2024 Southeast Asia Energy Outlook from the International Energy Agency (IEA), the region faces significant risks related to both energy affordability and environmental sustainability, particularly in light of rising global energy prices and the impacts of climate change.
Energy security remains a top priority for Southeast Asian countries, especially in light of heightened geopolitical tensions and disruptions to global energy markets. The IEA report highlights that the 2022 global energy crisis and Russia’s war in Ukraine exposed the region’s vulnerability to supply chain disruptions and price volatility. Fossil fuel consumption subsidies in Southeast Asia soared to a record $105 billion in 2022, a 60% increase from previous years.
Southeast Asia's heavy dependence on imported oil and natural gas presents ongoing challenges for energy security. With 60% of its oil imports coming from the Middle East, the region is highly exposed to geopolitical risks. The sharp increase in energy prices during 2022 strained public budgets and raised the cost of electricity, exacerbating the financial burden on low-income households.
Southeast Asia’s dependence on fossil fuels, particularly coal, has resulted in significant environmental degradation. The region continues to see rising levels of CO2 emissions, with the IEA estimating that energy-related emissions could increase by one-third by 2050 if current policies remain unchanged.
Air quality has also become a critical issue for Southeast Asia’s densely populated urban areas. In 2023, around 85% of the region’s population was exposed to unsafe air quality levels, exceeding World Health Organization guidelines. Poor air quality is linked to 300,000 premature deaths from outdoor air pollution and 240,000 deaths from indoor pollution caused by the use of polluting fuels for cooking.
Southeast Asia is also highly vulnerable to the effects of climate change, including rising sea levels, extreme heat waves, and frequent flooding. The 2024 report underscores the need for resilience planning and adaptation strategies to mitigate the impacts of climate-related disasters, which disproportionately affect low-income communities.
Efforts to address these environmental challenges are underway, with governments placing a greater emphasis on cleaner energy sources and energy efficiency measures. However, the pace of change remains slow. Fossil fuels continue to dominate the energy landscape, with coal accounting for the largest share of electricity generation in countries like Indonesia and Vietnam.
Transitioning away from coal while ensuring energy security is a delicate balance. Countries are exploring strategies such as co-firing coal plants with low-emission fuels like biomass and ammonia to reduce carbon emissions without compromising energy availability. Additionally, several Southeast Asian countries are working to operate coal plants more flexibly, allowing for better integration of intermittent renewable energy sources like solar and wind.
Southeast Asia’s energy and environmental challenges are not isolated. The region’s efforts to address these issues require coordinated action at both the national and regional levels. Initiatives like the ASEAN Plan of Action for Energy Cooperation (APAEC) provide a framework for regional collaboration on energy efficiency, grid interconnection, and the deployment of renewable energy technologies.
International cooperation will also be essential. As Southeast Asia becomes more integrated into global clean energy supply chains, it will need to leverage international financing and technical assistance to accelerate its clean energy transition. The establishment of the IEA’s Regional Cooperation Centre in Singapore is a testament to the growing importance of Southeast Asia in global energy and climate discussions.
Southeast Asia’s energy transition will require careful management of both energy security and environmental sustainability. While the region’s economic and population growth drives energy demand, its reliance on fossil fuels presents significant challenges for CO2 emissions and air quality. The road ahead demands ambitious policy reforms, enhanced regional cooperation, and substantial investments in clean energy to ensure a secure and sustainable future for the region.
