The Middle East crisis has exposed Southeast Asia’s vulnerability to fossil fuel supply shocks and the limits of short-term emergency responses. Before the crisis, around 60% of the region’s crude oil imports and a third of its gas imports came from the Middle East, while 45% of its oil product supply was linked to Middle Eastern crude once refinery feedstocks and indirect product trade are included. Governments have responded with demand-reduction measures, tax relief, subsidies, price caps and targeted support to cushion households and firms from higher fuel and electricity costs. However, these measures add to fiscal pressure without addressing underlying exposure. The region’s energy import bill could rise from over USD 80 billion in 2024 to around USD 245 billion by 2035; reaching announced climate pledges would cut the 2035 fossil fuel import bill to around half this level. Renewables, electrification and efficiency therefore offer long-term security as well as emissions benefits. Developing domestic oil and gas resources where geologically and economically viable, and enhancing the resilience of oil supply through diversification and refinery system flexibility also contribute region’s resilient energy system. Some countries turn to coal when gas prices spike, but coal use entails broader risks, including CO₂ emissions and air pollution, which contributed to an estimated 330 000 premature deaths in 2024.

Interest in nuclear power is growing as Southeast Asian countries look for firm, low-emissions electricity to meet rising demand and diversify power systems. Indonesia, the Philippines and Viet Nam have set development targets, while Malaysia, Singapore, Thailand and Myanmar are considering nuclear. Nuclear could strengthen electricity security by providing firm power, reducing fossil fuel imports and complementing renewables. However, projects require strong regulatory institutions, skilled workforces, public trust, clear financing models and careful partner choices, since reactor technology, fuel supply and financing arrangements can create decades-long dependencies. Competitiveness depends heavily on construction costs and financing conditions: nuclear supports affordability only if projects are delivered on time and on budget, with policy frameworks that reduce investment risk.

The ASEAN Power Grid is central to a more connected, secure and flexible regional power system. Interconnectors can move low-cost renewable electricity from resource-rich areas to demand centres, smooth variable renewable output and strengthen reliability. Momentum has grown through the Enhanced ASEAN Power Grid memorandum of understanding, the Submarine Power Cable Development Framework, financing initiatives and expanded cross-border power trade. To 2040, an estimated USD 27 billion is required to realise planned cross-border interconnections under the ASEAN Power Grid. Delivering this pipeline will require stronger regional power-trade rules, new financing models, better risk allocation and early engagement with supply chains for subsea cables, transformers and high-voltage equipment.

Fair and inclusive energy transitions remain essential as Southeast Asia balances emissions reductions, energy access, affordability and jobs. Emissions continue to rise in the CPS and STEPS but fall substantially in the APS as renewables, electrification and efficiency accelerate. Electricity access is close to universal, though gaps remain in Myanmar and the Philippines, while clean cooking access still lags in Lao PDR, Myanmar and the Philippines. Affordability has become more acute as crisis-related fuel price increases hit lower-income households hardest, particularly those reliant on transport fuels or unable to afford cooling. The transition also creates opportunities: In terms of employment, the energy sector has added 800 000 jobs since 2015, with future growth increasingly linked to low-emissions power, efficiency, electric vehicles and clean technology manufacturing. Robust indicators and stakeholder engagement are needed to ensure affordable energy, decent jobs and social acceptance.

Southeast Asia has a strategic role in critical minerals and clean technology supply chains, though opportunities differ sharply across sectors. Indonesia anchors regional supply, accounting for 63% of global mined nickel production, while the Philippines is also a major nickel producer. For magnet rare earth elements, upstream mining is concentrated in Myanmar, which accounted for just under 20% of global mined supply and over 40% of heavy rare earth elements. These resources can diversify global supply chains, but also expose the region to processing, ownership, environmental and logistics risks. In clean technology manufacturing, solar PV faces trade measures and global overcapacity, while batteries and EVs continue to expand. Battery cell manufacturing capacity reached 26 GWh in 2024, and committed projects would lift it to over 80 GWh by 2030, led by Korea- and China-headquartered producers. Around 90 000 electric cars were produced in the region in 2024, with production capacity expected to exceed 1 million units by 2030.

Mobilising investment and finance is the enabling condition for these shifts. Across all scenarios, total energy investment rises: from around USD 100 billion in 2025 to around USD 130 billion by 2035 in the CPS and STEPS, and close to USD 190 billion in the APS. By 2050, energy investment more than doubles from today’s level to around USD 250 billion in the APS. The APS requires much larger investment in low-emissions power, grids, storage, efficiency and end-use electrification, while fossil fuel spending falls more rapidly. Transition finance frameworks are moving from rule-making to implementation, with ASEAN Taxonomy Version 4, Thailand’s taxonomy expansion and Singapore’s transition planning guidelines helping to reduce ambiguity for investors. Commercial finance already provides most energy investment, but development finance institutions, guarantees, concessional capital and transition credits can play a catalytic role where technologies, markets or cross-border infrastructure remain hard to finance commercially.