Southeast Asia Energy Outlook 2026

FOR IMMEDIATE RELEASE

IEA Launches Southeast Asia Energy Outlook 2026: Middle East Crisis Exposes Structural Vulnerabilities, Accelerates Call for Clean Energy Shift

SINGAPORE / PARIS – August 19, 2026 – The International Energy Agency (IEA) today published the Southeast Asia Energy Outlook 2026, the seventh edition of its regional study, warning that the ongoing Middle East conflict has laid bare the deep structural vulnerabilities of Southeast Asia’s energy system while underscoring the urgent need for diversification, electrification, and regional cooperation.

According to the report, Southeast Asia – home to 9% of the world’s population and 4% of global GDP – accounts for nearly 20% of global energy demand growth to 2035 under today’s policy settings. Prior to the crisis, around 60% of the region’s crude oil imports and one-third of its gas imports originated from the Middle East, with 45% of refined oil products indirectly dependent on Middle Eastern crude. The resulting price shock has pushed benchmark crude and LNG prices up by about 60%, inflating energy bills and straining household budgets, particularly for lower-income groups.

“The Middle East conflict is both a stress test of Southeast Asia’s current energy system and a catalyst to accelerate structural change,” said Dr. Fatih Birol, IEA Executive Director, in the foreword. He noted that the IEA’s first regional office outside Paris, opened in Singapore in 2025, reflects deepening ties with ASEAN member states.

The Outlook models three scenarios – Current Policies (CPS), Stated Policies (STEPS), and Announced Pledges (APS). In the STEPS, total energy demand rises by nearly a third to 2035, with clean energy meeting over 40% of incremental growth but fossil fuels still supplying 60%. Coal and gas-fired power generation continue to grow, and energy-related CO₂ emissions reach 2.5 Gt by 2050. In the APS, where all climate pledges are met, emissions peak around 2030 and fall to 1 Gt by 2050, with low-emissions sources providing 90% of electricity by mid-century.

Key findings include:

• Electricity demand is growing twice as fast as total energy use; cooling, data centers, and EV charging are major drivers. Regional grid length must more than double by 2050.
• Transport oil demand keeps rising, but EV sales more than doubled in 2025 to nearly 500,000 units (20% of sales). Biofuels and electrification could avoid 3 million barrels of oil equivalent per day by 2050 in the APS.
• Investment in energy reached over USD 100 billion in 2025, yet remains at only 3% of global total. Clean energy investment must nearly double to meet pledges; the ASEAN Power Grid alone requires USD 27 billion by 2040.
• Critical minerals: The region holds 51% of global nickel reserves and is expanding battery/EV manufacturing, though trade barriers (e.g., U.S. anti-dumping duties on solar PV) are reshaping supply chains.

Governments have responded with short-term subsidies and demand restraint, but the IEA stresses that only structural reforms – such as competitive renewables auctions, efficiency standards, and cross-border power trade – can durably reduce import exposure. The report highlights the ASEAN Power Grid, POWERR Asia (Japan’s USD 10 billion framework), and Article 6 carbon cooperation as vital platforms.

“How Southeast Asia responds will be pivotal for its resilience and for the global energy system,” the report concludes.

The Southeast Asia Energy Outlook 2026 was prepared by the IEA’s Office of the Chief Energy Economist, led by Tim Gould, with funding support from the Ministry of Economy, Trade and Industry of Japan. The full report is available at www.iea.org.

Press Contact: IEA Communications Office – www.iea.org/contact

The IEA is an autonomous international organization established in 1974 to promote energy security, economic growth, and environmental protection.