Scenarios

Most likely: Sporadic energy inroads hampered by geoeconomic challenges

The most likely scenario is contestation. This scenario may be marked by occasional energy gains driven by technological advances. However, their traction would be limited by factors such as slower global economic growth and rising competition among major powers. As a result, this could hinder support for more ambitious pathways toward decarbonization.

ASEAN’s recently adopted Plan of Action for Energy Cooperation 2026-2030 serves as a strategic blueprint designed to guide regional energy cooperation into its next phase. This plan directly acknowledges the challenges ahead from geopolitical and economic headwinds. It notes that while climate change and technological advancement can potentially drive climate action, larger trends like escalating geopolitical tensions, political instability, recurring health crises and demographic shifts are fundamentally “challenging traditional planning models and governing structures.”

The plan warns that while progress may be made in the coming years, these challenging circumstances could still lead to a contested energy future in Southeast Asia. Increased energy market volatility, disrupted supply chains, delayed cross-border infrastructure projects, trade tensions and price fluctuations could disproportionately affect import-dependent countries and even spur conflicts in energy-producing regions.

The inaugural ASEAN Geoeconomics Report referenced earlier goes further, warning that actions in individual sectors like energy will take place in a context of “unprecedented challenges to the global economic order.” This situation will lead to economic fragmentation across various channels unless regional strategies focused on resilience and collective action are implemented.

Less likely: Supercharged green targets and cross-border power initiatives

The second scenario – while less likely – is acceleration. In this case, Southeast Asian nations would find ways to supercharge their greening ambitions despite the numerous challenges they face. If this scenario unfolds, more ambitious national climate targets and energy transition plans can be expected from the region’s largest economies such as Indonesia, the Philippines, Thailand and Vietnam.

More regional monitoring mechanisms are likely to be established to bridge the gap between intentions and actions across initiatives in areas such as carbon neutrality, circular economy, the blue economy and sustainable finance. Efforts could also increase toward the cross-border and minilateral frameworks previously discussed. These may fall short of broader goals, such as a regional electric vehicle ecosystem or emergency petroleum security stockpiles, due to competition among Southeast Asian states.

One key example to watch on this front is the aspiration for an ASEAN Power Grid, which stems from a long-discussed vision of enhanced regional energy connectivity. Future developments are likely to focus less on a single integrated regional power grid and more on the growth of smaller initiatives for cross-border power trading within the region. This effort would be supported by investments from development banks and key powers such as Europe, Japan and the United States.

A notable case is the Laos-Thailand-Malaysia-Singapore Power Integration Project, which uses landlocked Laos’ hydropower potential to connect both mainland and maritime Southeast Asia. Research on regional power grid interconnections found that participating countries could see GDP growth increase by up to 4.6 percent, potentially creating up to 9,000 new jobs a year.

Least likely: No progress on energy and climate targets

The third and least likely scenario is stagnation. Here, Southeast Asian countries would fail to make significant progress on their previous energy targets and goals, let alone achieve new advancements. While this is the least likely given the tailwinds driving both the energy transition and climate imperatives, it cannot be ruled out entirely.

If this scenario were to occur, lasting shifts in the shares of individual energy types within the mixes of key countries and the region as a whole are likely, whether in declines in renewables or increases in coal or natural gas.

There could also be a pause in trends that had previously expanded policymakers’ options for shaping energy strategies. A clear example is the renewed momentum behind nuclear energy – particularly small and modular reactors – following years of stagnation triggered by the 2011 Fukushima disaster in Japan. The earthquake, tsunami and meltdowns at the Fukushima Daiichi nuclear plant resulted in one of the costliest natural disasters in modern history.

Concerns have already emerged regarding this issue. For instance, one projection indicates that Southeast Asia could see the world’s fastest growth in coal consumption globally by 2030. This trend would exacerbate a reality in which the energy transition fails to keep pace with the region’s energy-related carbon dioxide emissions, projected to increase by around 35 percent through 2050.

Meanwhile, trade deals with the U.S. tend to shift focus toward natural gas purchases even as regional states continue investing in greener energy alternatives offered by partners including China. The internal hunger for data center construction within the digital economy is supercharging energy demand and tilting the balance toward meeting domestic needs rather than prioritizing cross-border and regional cooperation.  

Southeast Asian governments are keenly navigating an increasingly complex landscape amid ongoing uncertainty. This focus appears in the theme of the latest five-year ASEAN energy plan, set to guide actions through 2030: “Advancing Regional Cooperation in Ensuring Energy Security and Accelerating Decarbonization for a Just and Inclusive Energy Transition.” The plan emphasizes the three objectives of energy connectivity, energy resilience and sustainability, and inclusivity. This reinforces the reality that, despite occasional advancements in Southeast Asia’s energy sector, longer-term uncertainties and risks are likely to persist.