Energy transition pathways will differ between countries. Identifying and implementing solutions that balance energy security, decarbonisation and affordability will be vital.
Myth
Asian countries should be more aggressive with decarbonisation and the renewables rollout.
Fact
Energy security is paramount. Decarbonisation must co-exist with economic growth and fit each country’s unique circumstances.
Asia’s energy transition must be realistic
The energy trilemma – balancing reliability, affordability and sustainability – looms large throughout Asia. While Asia’s transition to lower-carbon and more renewable energy will be vital to progress on global climate goals, it should not come at the expense of reliability and affordability of energy that sustains economic growth.
Pursuing decarbonisation more aggressively in South and Southeast Asia would pose risks to energy security and economic growth, which is required to carry hundreds of millions of people in these nations out of poverty. More than 660 million people globally lack access to electricity and 2.1 billion lack access to clean cooking fuels and technologies, with around half of the latter living in Asia.
Asia cannot rely on renewables alone
Widespread expansion of renewable energy in Asia is essential, but implementation and integration are complex and capital intensive. Challenges vary between countries. Vietnam for example has encountered significant grid constraints in integrating renewables, while Japan’s land availability and terrain issues are a barrier for physical infrastructure.
Although many Asian nations have ambitious targets and renewable energy capacity has grown considerably, it has not kept pace with rapidly rising electricity demand. A report from the International Energy Agency highlighted that only 25% of electricity supply in ASEAN member states came from renewables in 2024. Most of this was hydropower, with wind and solar making up less than 5% of generation in all countries except Vietnam.
Energy security is essential to ongoing economic growth. With many economies in South and Southeast Asia growing at more than 4% per year, reliable power production is critical. The intermittent nature of wind and solar power means they cannot be relied upon as primary sources of energy security. When sunlight isn’t available and wind speeds aren’t sufficient, power sources that run continuously or can quickly be made available are critical to meeting demand. Hydropower partially fills this need in some Asian nations but is also weather dependent.
Asia’s major source of secure power production is thermal – generation from nuclear, natural gas and coal, the latter of which made up 56% of the region’s electricity in 2023. Reducing coal consumption and switching to lower-emitting fuels like natural gas will be a key to efficiently achieving emissions reduction targets throughout Asia. Importantly, this shift would not risk energy security.
Gas-fired power, which produces less than half the emissions of coal, can be stepped up or down quickly to manage fluctuations in renewable energy supply. This ensures stability of electricity grids and secure power production when wind, solar and hydro are unavailable.
Solutions must balance growth, decarbonisation
The Paris Agreement recognised that the scope of countries’ nationally determined contributions should reflect their “common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.” Energy choices of individual countries in Asia will reflect their unique circumstances.
Coal currently accounts for the biggest share of power generation in India, China, Vietnam, the Philippines, Indonesia, Malaysia, Cambodia and South Korea. Coal is accessible and affordable but also produces 90% of Asia’s power sector emissions.
With a lack of sufficient regional gas resources, liquefied natural gas (LNG) will be a critical fuel to help Asian nations meet rising power demand, while reducing emissions and providing grid stability that supports ongoing investment in renewable energy.
This includes the Philippines, where renewable energy procurement is behind schedule and a target of 35 per cent share of generation is unlikely to be achieved by 2030. Without other solutions to support energy security and economic growth, planned retirement of coal-fired power stations will be slowed and emissions reduction goals will not be met.
Detailed analysis by S&P Global Energy identified LNG as a solution that balances reliability and decarbonisation for the Philippines. By using current and planned infrastructure, the Philippines could expand the role of LNG to ensure much-needed grid stability as investment in renewable energy continues.
Increased near-term use of LNG, alongside growth in renewables, would allow the Philippines to retire half its coal-fired power by 2035, reducing power sector emissions by 38 per cent. This would be the equivalent of taking more than 11 million cars off the road.
Scaling up LNG to support reduced coal use, represents a pragmatic and realistic approach that optimises energy options available to the Philippines.
