Southeast Asia must quintuple its clean energy investments by 2035 to meet climate objectives, the International Energy Agency (IEA) warned on Tuesday. The agency’s latest report underscores the urgent need for regional energy investments to reach $190 billion annually—around five times current levels—to align with the Paris Agreement’s climate targets.
The IEA’s report highlights that rapid economic growth in Southeast Asia is creating competing demands between energy security and climate ambitions, putting added pressure on the region’s young coal-dependent energy infrastructure. To meet its climate goals, Southeast Asia will need to overhaul its power systems, both by significantly increasing investment in renewable sources and by introducing emissions-reduction measures for its relatively new fleet of coal-fired plants.
Efforts to accelerate the decommissioning of coal plants, backed by funding from wealthier Western nations, have already hit roadblocks. A much-anticipated pilot project in Indonesia faced delays this July when negotiators missed a deadline to finalize terms for the early closure of coal facilities, a key step toward phasing out coal in the region.
Electricity demand across Southeast Asia is projected to rise at an annual rate of 4%, according to the IEA, driven by economic expansion and rising energy needs. Renewable sources like wind, solar, bioenergy, and geothermal power are expected to cover over a third of this demand increase by 2035. Yet, despite this growth in clean energy, carbon dioxide (CO₂) emissions from energy production in the region are still forecast to rise by 35% over the same period, suggesting that current measures fall short of what’s needed.
“Clean energy technologies are not expanding quickly enough, and the continued heavy reliance on fossil fuel imports leaves countries highly vulnerable to future risks,” said Fatih Birol, the IEA’s executive director.
Despite accounting for 6% of global GDP, 5% of global energy demand, and housing 9% of the world’s population, Southeast Asia attracts just 2% of global clean energy investment. This gap, according to the IEA, underscores the need for greater financial commitment to ensure a sustainable energy transition.
To enable the shift toward renewable energy, the IEA calls for the modernization of Southeast Asia’s power grids, which will need to accommodate increased volumes of variable renewable energy. Achieving this will require annual investment in grid expansion and modernization to nearly double, reaching $30 billion by 2035, the report concludes.
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