IEA: Southeast Asia set to become new center of global energy demand
Baku, June 25, AZERTAC
Southeast Asia is poised to become a new center of gravity in global energy markets, accounting for nearly 20% of the growth in global energy demand by 2035, Anadolu Agency reported citing latest outlook of the International Energy Agency (IEA).
According to the IEA's Southeast Asia Energy Outlook 2026, electricity demand in the region, which represents 4% of global gross domestic product, is growing at twice the pace of overall energy demand.
As regional economies face energy security risks stemming from instability in the Middle East, diversifying energy sources and expanding domestic renewable energy investments are becoming strategic imperatives.
The report projects that, if current policies remain in place, Southeast Asia's net energy import bill could rise from more than $80 billion in 2024 to $245 billion by 2035.
Full implementation of climate commitments could reduce that figure by half, it added.
Around 60% of the region's crude oil imports and one-third of its natural gas imports come from the Middle East, while 45% of petroleum product supplies depend on crude sourced from the region.
Eight ASEAN countries, including Indonesia and Vietnam, aim to curb emissions growth and reduce fossil fuel dependence through net-zero targets and climate pledges.
Low-emission sources are expected to account for 50% of electricity generation by 2035 and 90% by 2050, while electric vehicles could make up 75% of passenger car fleets, helping avoid demand for around 3 million barrels of oil per day.
Under the ASEAN Plan of Action for Energy Cooperation, countries also seek to cut energy intensity by 40% from 2005 levels by 2030 and expand cross-border clean electricity trade through the ASEAN Power Grid.
The report estimates these efforts could save $160 billion in fossil fuel import costs by 2050.
According to the report, electricity demand is playing a critical role in shaping the region's energy future and is expanding twice as fast as overall energy consumption.
Rising cooling needs in buildings are a key driver, with the stock of residential air conditioners expected to triple by 2035.
Coal still accounts for about half of electricity generation in the region, while relatively new coal-fired power plants continue to provide flexibility and backup capacity.
However, this reliance carries significant risks, including air pollution, which was linked to an estimated 330,000 premature deaths in 2024.
Total energy investment in the region surpassed a record $100 billion in 2025. Although clean energy investment has increased by 60% since 2015, it still accounts for only 3% of the global total.
Investments will need to nearly double over the next decade to meet climate goals.
Southeast Asia is also emerging as a strategic player in clean technology supply chains. Home to 51% of global nickel reserves, the region could see battery manufacturing capacity more than triple and electric vehicle production capacity increase more than tenfold by 2030.
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