IEA’s Southeast Asia Energy Outlook 2024: Balancing Growth And Sustainability In Energy Demand – Report

The “Southeast Asia Energy Outlook 2024” from the International Energy Agency (IEA) presents a comprehensive analysis of the region’s energy dynamics, future projections, and challenges as it moves toward a more sustainable energy system. Southeast Asia is identified as one of the most economically dynamic regions, expected to become a major global energy player due to its rapid population growth, industrial expansion, and increasing energy demand.

Since 2010, Southeast Asia has accounted for 11% of global energy demand growth. However, by 2035, this figure is expected to rise sharply, contributing over 25% of global energy demand. This growth is driven by multiple factors, including the region’s increasing industrial activity and population, which is set to surpass 720 million by 2030. Economies like Indonesia, Thailand, and Vietnam, in particular, are leading the rise in energy consumption, propelled by their roles as global manufacturing hubs. However, with this increased demand comes substantial challenges, particularly around energy security and sustainability.

Currently, the region is heavily dependent on fossil fuels, with coal and oil leading its energy mix. Despite efforts to transition to cleaner energy sources, coal still generates around 50% of electricity in Southeast Asia. This reliance on fossil fuels has significant implications for both energy security and climate sustainability. In 2022, fossil fuel subsidies in Southeast Asia reached a record high of $105 billion, largely due to the surge in global fuel prices following the Russian invasion of Ukraine. These subsidies represent a significant financial burden for governments while further entrenching the region’s reliance on fossil fuels.

Southeast Asia’s energy future presents a significant crossroads. The region’s governments have set ambitious goals for achieving net-zero emissions, with countries like Brunei, Malaysia, Singapore, and Vietnam aiming for net-zero by 2050. Indonesia and Thailand have set longer-term goals for 2060 and 2065, respectively. However, the current pace of clean energy transitions falls far short of what is necessary to meet these targets. While clean energy sources such as wind and solar are expected to grow, they still face numerous challenges in meeting the region’s projected energy needs. By 2035, renewables are set to account for 35% of Southeast Asia’s energy mix, but fossil fuels are also expected to continue rising, with oil demand increasing by 20% and coal and gas by over 30%.

One of the most pressing issues highlighted in the report is the energy security risk that Southeast Asia faces due to its heavy reliance on imported fossil fuels. With 60% of the region’s oil imports coming from the Middle East, geopolitical instability remains a critical threat. The recent global energy crisis underscored this vulnerability, prompting many Southeast Asian nations to reevaluate their energy strategies and seek more sustainable alternatives.

Electricity demand in Southeast Asia is projected to rise significantly, driven by growing urbanization and the widespread adoption of energy-intensive technologies, particularly air conditioning. By 2035, electricity consumption is expected to increase by 4% annually, with renewables like wind and solar providing more than half of the growth. However, the growth of renewables in Southeast Asia lags behind global trends, highlighting the need for more robust policy support and investments in clean energy infrastructure.

To ensure energy security and sustainability, the report calls for substantial investments in clean energy technologies, grid infrastructure, and energy efficiency improvements. Achieving the ambitious climate targets will require a fivefold increase in clean energy investments by 2035, primarily driven by the private sector. However, the cost of capital for clean energy projects in Southeast Asia is currently double that of advanced economies, posing a significant barrier to scaling up renewable energy production.

In conclusion, while Southeast Asia has made progress in advancing its clean energy agenda, much more needs to be done to achieve its long-term sustainability goals. The region’s governments must accelerate their efforts to reduce reliance on fossil fuels, enhance energy efficiency, and encourage private sector investments in clean energy. Collaboration on a regional and international level will also be crucial to addressing the financial, technical, and policy challenges that lie ahead in the pursuit of a more sustainable and secure energy future for Southeast Asia​.