Gulf Energy Crisis Exposes Southeast Asia’s Renewable Energy Dilemma |
Features | Environment | Southeast Asia
Gulf Energy Crisis Exposes Southeast Asia’s Renewable Energy Dilemma
Will the current oil supply shock hold back the region’s green transition, or accelerate it?
A wind farm in Vietnam.
A surge in global fuel prices following disruptions around the Strait of Hormuz has exposed the extent to which Southeast Asia still depends heavily on imported fossil fuels for its security energy.
Across the region, governments have scrambled to stabilize supply. Coal plants are operating at higher capacity, with emergency measures announced to shield economies from price shocks.
Beyond the immediate term, perhaps the most pressing question is whether the crisis will slow or accelerate the region’s transition to renewable energy.
Short-term Fix, Long-term Risks
In the Philippines, the government’s response has underlined the tension between short- and long-term imperatives.
In late March, President Ferdinand Marcos Jr.’s administration declared a “national energy emergency” amid rising geopolitical tensions, introducing a range of measures to secure and conserve fossil fuel supplies. Coal-fired plants in the country have increased production, while lower-grade petroleum products have been allowed to ease shortages.
At the same time, policymakers are reconsidering earlier commitments to phase out fossil fuels.
“I know how sensitive we are to the renewable energy transition,” said Economy Secretary Arsenio Balisacan during an April Senate hearing. “But even countries like Japan and Germany are revisiting their timelines.”
Balisacan suggested suspending the Philippines’ coal moratorium, arguing that delaying his country’s transition to renewables may be necessary to preserve industrial competitiveness. In place since 2020, the moratorium was enacted to allow the nation to focus on its transition to renewable energy.
The Philippines is not alone in its actions to stabilize prices and ensure system reliability.
Across Southeast Asia, governments are leaning on fossil fuels to manage immediate risks. Thailand has restarted decommissioned coal plants. Vietnam is securing additional coal supplies. Indonesia has increased its coal production.
Even beyond the region, major economies are taking similar steps. South Korea has delayed the shutdown of ageing coal plants, while Japan has expanded the role of coal in its capacity markets.
In all these places, the response has followed the same pattern: energy security first.
But analysts say this shift is temporary.
“We see this shift as largely a short-term response rather than a long-term direction,” said Alnie Demoral, Southeast Asia analyst at the global energy policy institute Ember. “These measures address immediate shocks, but they also increase exposure to future volatility.” Companies and governments are increasingly treating energy security and sustainability as aligned rather than competing goals, she added.
For some in the renewable energy sector, the current turmoil is not a setback, but a turning point.
“This is an opportunity,” said Gerry Magbanua, president of Philippine renewable energy firm Alternergy. “I believe this will accelerate the transition.”
Magbanua points to investment trends as evidence. His company is pursuing an ambitious goal of one gigawatt of renewable capacity by 2030, with multiple projects set for completion this year. Although a smaller energy player, Altenergy has invested nearly 25 billion pesos ($404 million) in its projects over the past two years.
Across the Philippines, clean energy investment has grown steadily over the past decade, supported by policies such as the Green Energy Auction Program. According to industry figures, investment rose from $2.6 billion in 2015 to $3.4 billion in 2024.
“I have yet to see significant new capital flowing into non-renewables,” Magbanua said. “The shift has already been made.” Before the geopolitical shocks, the Philippines had already set targets of a 35 percent renewable energy share in its power generation mix by 2030 and 50 percent by 2040.
Demoral agrees that while some short-term investment may still flow into fossil fuels, the country’s broader trajectory remains unchanged.
“Renewables are becoming the more attractive and resilient investment pathway,” she said.
On the ground, at the consumer level, Magbanua said there remains an unserved demand for EVs. Solar installers have also reported seeing more inquiries from homes and small businesses.
While government policy guides industry-level decisions, the general public is also considering how they can ease the pressure of the crisis on their own lives – pressure that could influence the policy decisions of those they choose to elect.
A Region Moving at Different Speeds
ASEAN’S long-term energy security and decarbonization strategy prioritizes renewable energy, as guided through its recent ASEAN Plan of Action for Energy Cooperation (APAEC). But across the diverse region, the transition is far from uniform.
Vietnam has emerged as a regional leader, with solar capacity reaching around........