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The 2026 Middle East crisis, triggered by conflict in Iran, caused a spike in oil and gas prices and led some Southeast Asian nations to switch from gas to coal for electricity. However, the report argues that coal is not insulated from geopolitical shocks and carries high hidden health and climate costs. Analysis shows that replacing planned gas expansion with solar and storage would save ASEAN USD 4 billion by 2030, whereas replacing it with coal would increase costs. Despite this, ASEAN coal demand is projected to rise by 25% by 2030, driven largely by Indonesia and Vietnam, though Indonesia has committed to phasing out fossil fuels within 10 to 15 years.

The document examines the role of artificial intelligence (AI) in overcoming the technical challenges of integrating variable renewable energy (VRE) in Southeast Asia. It highlights five commercially proven AI applications: improving forecast accuracy to reduce reserve needs, enabling predictive maintenance to extend asset life, optimising dispatch to lower balancing costs, providing real-time control for grid security, and supporting dynamic line rating (DLR) to increase transmission capacity. The report provides global case studies—including examples from Google DeepMind, Siemens, and various utilities in the US, UK, and Belgium—to demonstrate how AI can reduce operational costs, curtailment, and carbon footprints while enhancing the reliability of power grids facing high VRE penetration.

The report argues that AI can significantly accelerate the energy transition in ASEAN by managing the complexity of rising variable renewable energy (VRE) shares. It identifies five key AI applications—forecasting, predictive maintenance, dispatch optimisation, real-time control, and dynamic line rating—that can reduce operational costs and emissions. While ASEAN shows strong digital readiness, current AI adoption is fragmented and pilot-based. The report estimates that widespread AI adoption could save up to $67 billion and reduce nearly 400 million tonnes of CO2 by 2035, provided that regulatory, data, and cybersecurity challenges are addressed.

Ember argues that Indonesia's energy transition requires more ambitious emissions targets and a stronger regulatory framework, particularly for the underregulated captive coal sector. The organization recommends integrating JETP investments with long-term economic diversification in coal-dependent provinces to ensure a just transition. Ember also highlights a significant gap in solar deployment, noting that Indonesia reached only 416 MW of on-grid solar capacity last year against a 2025 target of 4.1 GW, and calls for more transparent procurement processes by PLN.

Ember argues that Indonesia's JETP 2025 scenario is insufficiently ambitious, particularly regarding the captive power sector, where it suggests that integrating solar PV could significantly reduce emissions. The brief calls for the inclusion of captive power in peaking emission targets, the removal of solar quotas, and the redirection of JETP investments toward coal-producing provinces to mitigate fiscal vulnerabilities and job losses.

ASEAN requires between $4 billion and $10.7 billion in smart grid investments to support its energy transition, depending on the chosen ambition level. The report outlines three investment pathways based on international benchmarks: a low-level distribution-focused approach ($4 billion), a medium-level renewable growth approach ($6.7 billion), and a high-level regional integration approach ($10.7 billion). While Singapore serves as a governance and technical model with its Grid 2.0 strategy and Digital Twin, most ASEAN nations will require a mix of blended finance, green bonds, and regulatory reforms to fund these upgrades, with the largest investment needs concentrated in Indonesia, the Philippines, and Vietnam.

The report highlights the critical role of grid reliability and 'smart grids' in sustaining ASEAN's economic growth and clean energy transition. While the region has seen improvements in outage duration and frequency, challenges remain regarding transmission capacity and the integration of solar and wind power. The document warns that failure to invest in digital intelligence and infrastructure could lead to nearly $2.3 billion in annual economic losses by 2040.

The report argues that smart grids are essential for ASEAN to integrate rapidly growing solar and wind capacity while supporting industrial growth. It estimates that an investment of $4 billion to $10.7 billion is needed to modernize power systems, which could potentially unlock $2.3 billion in annual economic value by 2040 and create between 243,000 and 649,000 jobs. The document highlights the need for regional cooperation to harmonize grid codes and mobilize green finance to overcome current fragmented standards and financing gaps.

The document analyzes the competitive landscape of green investment in Southeast Asia, highlighting China as the leading public investor in clean energy between 2013 and 2023. It details the specific technological strengths of investor nations—such as Japan's lead in geothermal and solar and China's dominance in wind and hydropower—while examining the strategic frameworks used, including China's Belt and Road Initiative and Japan's Asia Zero Emissions Community. The report also notes significant financing gaps in the region, where annual renewable investments of USD 8 billion fell far short of the USD 27 billion required to meet 2025 targets.

The report argues that the ASEAN Power Grid (APG) can unlock significant renewable energy potential and enhance energy security by connecting resource-rich countries with high-demand markets. It highlights specific planned solar and wind projects, the role of the ASEAN Interconnection Master Plan Study (AIMS), and the potential for 30 GW of additional renewable capacity to generate 109 TWh of electricity and create 182,000 jobs.

The report argues that ASEAN's transmission grid expansion must roughly double to align with IEA pathways, as current national plans for Indonesia, Viet Nam, the Philippines, and Thailand cover only about 45% of the required expansion. It highlights that 30 GW of solar and wind potential is located along planned interconnection routes in countries like Indonesia, Malaysia, Cambodia, and Brunei. To support this transition, the report proposes a six-pillar framework for future-ready grid planning—including smart modernisation, strategic expansion, and market reforms—and suggests learning from the integrated power systems of Europe and Southern Africa to move from bilateral to multilateral power trade.

Southeast Asia is facing a potential surge in gas production, with 14 projects potentially reaching final investment decisions (FIDs) in 2025. If approved, these would add over 20 bcm/y of capacity, an 18% increase over current output. However, many projects have a history of delays, and the expansion threatens ecologically sensitive areas like the Coral Triangle and Mekong Delta. The report highlights contradictions between these extraction plans and the net-zero commitments of Malaysia, Indonesia, Vietnam, and Brunei.

The report finds that human-caused climate change significantly increased extreme heat and health risks globally from December 2024 to February 2025. At least 1.8 billion people experienced temperatures at least twice as likely due to climate change every day of the period, with exposure peaking at 3 billion people on February 28, 2025. Africa was particularly affected, with 293 million people experiencing 30 or more 'risky heat days' added by climate change. The analysis also highlights that 110 out of 220 analyzed countries and 287 out of 940 cities saw the average person experience strong climate influence for at least one-third of the season.

The report identifies opportunities to reduce direct emissions from the food, agriculture, and land use (FALU) sector in Southeast Asia by 1.9 billion tons of CO2-eq per year. It highlights that FALU is responsible for 54% of the region's total greenhouse gas emissions, with deforestation and peatland degradation acting as the primary drivers. The analysis emphasizes 'hotspots' where targeted interventions—such as protecting 20% of carbon-dense forests or improving rice cultivation on 20% of farms—can yield disproportionately high emissions savings. Key solutions include legal forest protection, non-continuous flooding in rice paddies, and improved nitrogen fertilizer management. The report also discusses indirect solutions like shifting diets toward the EAT-Lancet planetary health diet and reducing food loss and waste, while detailing co-benefits such as improved air quality, water security, and enhanced farmer incomes.

ASEAN's electricity demand grew by 3.6% in 2023, a rise entirely met by fossil fuels, leading to a 6.6% increase in power sector emissions. While solar and wind costs are falling, the region remains heavily dependent on coal and gas, and hydropower has become less reliable due to climate-induced droughts. The report argues that scaling renewable capacity by 3-5x by 2035, implementing direct power purchase agreements, and expanding the ASEAN Power Grid are essential to meet rising demand and climate goals. It also highlights the potential for a regional compliance carbon market and the importance of a just transition to secure social acceptance.

Global Energy Monitor identifies 74 new oil and gas projects that could emit 2.4 million metric tonnes of methane annually by 2030, potentially undermining the Global Methane Pledge. The analysis reveals significant discrepancies between these potential emissions and the company-wide figures reported by operators to the OGMP 2.0, suggesting widespread underreporting of assets or methane intensity. A small number of fields in Saudi Arabia and Guyana account for a disproportionate share of these emissions, while new EU regulations on imported oil and gas are expected to impact many of these developments.

The report finds that while Southeast Asia has increased its operating utility-scale solar and wind capacity by 20% since January 2023 to 28 GW, the transition is hindered by low construction rates for prospective projects and continued reliance on fossil fuels. Vietnam, the Philippines, and Thailand are regional leaders, but only 3% of the region's 220 GW prospective capacity is currently under construction. Despite these hurdles, the report suggests the ASEAN collective target of 35% renewable energy capacity by 2025 is attainable given existing capacity and pipelines.

ASEAN's solar and wind generation grew by 43% annually between 2015 and 2022, largely driven by Viet Nam's Feed-in Tariff policies. However, growth slowed in 2022, and the region currently utilizes less than 1% of its theoretical solar and wind potential. To meet the IEA's 2050 net zero scenario, ASEAN must reach a 23% share of solar and wind in total electricity generation by 2030, requiring the addition of 164 GW of solar and 65 GW of wind capacity. The report argues that achieving this requires removing regulatory barriers like local content requirements, investing in grid modernization and storage, and implementing attractive pricing mechanisms.

The document highlights a critical lack of tracked financing for oil and gas methane abatement in Southeast Asia, despite the sector being the region's second-largest methane contributor. It identifies key barriers such as limited technical capacity, data gaps, and underdeveloped regulations. The brief argues that methane abatement offers a low-cost, quick-win opportunity for near-term climate mitigation and suggests that state-owned enterprises and international financial institutions play pivotal roles in scaling these efforts.

The ASEAN sustainable finance market contracted by 32% in 2022 to USD 36bn due to rising inflation and interest rates, though volumes remained double those of 2020. Singapore continues to lead the region, accounting for 60% of 2022 issuance. While green bonds and loans showed the most resilience, sustainability-linked bonds (SLBs) saw a nearly 90% plunge. Sovereign issuance remained robust, with Singapore and the Philippines entering as new sovereign issuers. The report highlights a shift toward local currency denomination in green debt and a critical need for mandatory, science-based corporate transition plans to avoid greenwashing and support hard-to-abate sectors.