Fossil Fuel Imports Threaten Southeast Asia's Economic Stability

Southeast Asia faces significant macroeconomic risks due to its reliance on imported fossil fuels. Between 2015 and 2024, fossil fuels met over 70% of the region's incremental energy demand, with an energy import bill reaching USD82 billion in 2024.

Under current policies, this figure is projected to increase to USD245 billion by 2035, largely due to the Middle East supplying 60% of the region's crude oil imports and one-third of its gas imports. Power generation accounts for approximately 30% of Southeast Asia's fossil-fuel import bill, or around USD48 billion annually.

Renewable energy offers a way to reduce this exposure, with Southeast Asian countries setting significant renewable energy targets to support decarbonization. Indonesia, Vietnam, the Philippines, Thailand, and Malaysia aim to add 450 gigawatts (GW) of solar and wind capacity by 2035, requiring an estimated USD288 billion in capital expenditure.

Achieving this would displace about 17% of power-sector fuel imports and save USD8.2 billion in incremental foreign exchange annually, with cumulative forex savings exceeding to-date equipment import costs by the end of year five.