ASEAN’s Unique Position in the Global Energy Landscape
ASEAN stands among the world’s fastest-growing economic regions with rapid urbanisation and industrial expansion driving sustained growth in energy demand. This momentum places mounting pressure on energy infrastructure, as governments work to advance decarbonisation and energy security in parallel.
Yet ASEAN’s energy transition is shaped as much by diversity as by scale. ASEAN Member States differ significantly in system size, resource endowment, income level, infrastructure maturity, market structure, and institutional capacity. These differences influence national energy priorities, investment capacity, and the pace at which renewable technologies can be deployed. As a result, ASEAN’s transition is not defined by a single pathway and instead requires alignment across varied realities to move in a coherent regional direction.
Within this landscape, Dr Nuki Agya Utama plays a central role. As the Director for Energy Policy and Head of the Asia Zero Emission Center at the Economic Research Institute for ASEAN and East Asia (ERIA), Dr Nuki sits at the intersection of policy research, regional coordination, and implementation. His work has contributed to research, regional dialogue, and practical initiatives supporting ASEAN’s energy cooperation agenda.
In an exclusive interview, Energy Watch speaks with Dr Nuki to unpack ASEAN’s energy transition, exploring how the region can balance economic growth with environmental responsibility, while ensuring a sustainable energy future.
Energy Watch (EW): ASEAN countries are at varying stages of development, creating distinct challenges for regional energy policies. What practical steps is ERIA taking to support greater policy alignment and interoperability across Members States, and how do you balance this with each country’s unique needs and ambitions?
Dr Nuki Agya Utama (DNAU): The energy transition in ASEAN cannot follow a single template. Alignment is not about uniformity, since each Member State faces its own realities. Viewing the transition through the lens of national resources, system structures, and development priorities provides a more practical way to accommodate the region’s diverse energy landscape.
ERIA approaches this by conducting policy research and technical analysis to provide recommendations that support progressive policy alignment and coordination across the region, including frameworks for multilateral power trade under the ASEAN Power Grid (APG), oil stockpilling initiatives for enhanced energy security and the development of regional bioenergy and Sustainable Aviation Fuel (SAF) value chains, while supporting the goal stated in the ASEAN Plan of Action for Energy Cooperation (APAEC).
Through the Asia Zero Emission Center, ERIA supports Member States in pursuing decarbonisation at their own pace while ensuring national strategies contribute to APAEC objectives while respecting national priorities and circumstances. In 2026, the Center strengthened its support for regional energy security, particularly amid growing concerns over oil supply disruptions, as exemplified by developments in the Strait of Hormuz. This includes an ASEAN-wide study on joint oil stockpiling strategies and the exploration of potential voluntary pilot arrangements for joint stockpiling and oil ticketing, aimed at enhancing regional oil supply resilience through public–private cooperation. Other key initiatives included supporting the Philippines-led development of the ASEAN Critical Minerals Strategy for Regional Resilience and Sustainable Growth, as well as the development of the ASEAN Carbon Neutrality Work Plan in collaboration with the ASEAN Secretariat.
ASEAN’s Progress and Commitment to Renewable Energy while Balancing its Challenges
ASEAN has made steady progress in expanding renewable energy capacity, particularly in solar and wind, as governments move to diversify energy sources, reduce exposure to fossil fuel volatility, and ultimately ensure long-term energy security for its people. Viet Nam’s rapid rise as one of Southeast Asia’s most dynamic solar markets reflects how policy clarity and investor confidence can accelerate deployment at scale. Malaysia, Thailand, Indonesia, and other ASEAN Member States have expanded investment in renewable energy, although the technology mix and pace of deployment differ considerably, signalling a broader regional recalibration toward cleaner and more resilient generation portfolios.
Even so, the transition remains structurally complex. Coal continues to anchor energy security, industrial competitiveness, and employment across much of the region, which makes the shift away from it both an economic and social consideration. At the same time, integrating variable renewables places new demands on grid infrastructure, requiring stronger interconnections, storage, smart systems and real-time data management. More interoperable and scalable arrangements for cross-border electricity trade, together with closer alignment between emerging demand centres and infrastructure investment, could further unlock the benefits of regional initiatives such as the ASEAN Power Grid (APG). Financing adds further complexity, particularly for developing Member States facing fiscal constraints, as large-scale infrastructure upgrades and the managed transition from high-carbon assets demand sustained and innovative capital mobilisation beyond traditional public funding.
EW: At this juncture, what do you see as ASEAN’s greatest strength in balancing the need for rapid economic growth with the imperative for sustainable energy?
DNAU: The ASEAN economy is projected to continue growing year on year, and this growth is driving a rise in energy demand. Simultaneously, global momentum for decarbonisation is accelerating, requiring ASEAN to carefully balance economic aspirations with sustainability imperatives.
The key challenge ahead is how to achieve both decarbonisation and economic growth concurrently. At the same time, energy security remains a fundamental priority. The disruption in the Strait of Hormuz served as a timely reminder of the region’s vulnerabilities, including its high dependence on fossil fuel imports, concentrated supply sources, and fragmented national responses to supply risks. ASEAN’s greatest strength lies in its enduring spirit of cooperation. For nearly six decades, decisions have generally been reached through consultation and consensus, ensuring each Member State’s perspective is respected while upholding regional energy transition aspirations under APAEC. This commitment has enabled Member States to pursue multiple pathways to strengthen their energy security through the combination of renewable energy expansion, cross-border interconnectivity, and emerging decarbonisation technologies.
EW: How is ERIA addressing financing challenges, and which models or partnerships are most promising for ASEAN’s energy transition?
DNAU: While ASEAN’s renewable energy potential is vast, mobilising capital remains a hurdle, particularly as many Member States face budgetary constraints and competing development priorities. ERIA helps address the enabling conditions for investment through research, policy design, capacity building, stakeholder coordination, and project preparation. Through the Asia Zero Emission Center, ERIA is advancing transition finance solutions suited to the realities of emerging economies.
The report, “Decarbonising ASEAN’s Hard-to-Abate and High-Emitting Sectors: Transition Finance, Technologies, and Policy Approaches”, a joint study between ERIA, the Asian Development Bank (ADB), and the Ministry of Economy, Trade and Industry (METI) Japan, outlines how transition finance can support credible emissions reductions in power and industrial sectors, including the upgrading, repurposing, and managed transition of existing assets, while expanding lower-emission technologies and avoiding unnecessary stranded costs.
Beyond financing, creating viable market opportunities is also essential for attracting investment. ERIA’s Layered Market study on the ASEAN Power Grid (APG) highlights the importance of a phased approach to regional electricity market integration, starting with bilateral arrangements and gradually expanding towards sub-regional and multilateral frameworks. Building on these findings, fostering concrete demand for cross-border electricity trade through bilateral cooperation could be an effective way to advance APG development and attract investment in regional grid connectivity.
International partnerships, including Japan’s Asia Zero Emission Community (AZEC) initiative, the EU cooperation on carbon markets, and financing from multilateral banks such as ADB and the World Bank, are helping to de-risk investments in renewables, cross-border grids, and emerging technologies like Carbon Capture, Utilisation, and Storage (CCUS) and hydrogen. Innovative instruments such as blended finance, public-private partnerships, and green sukuk, which are already being piloted in several ASEAN countries, are equally important in funding the region’s transition.
EW: Having worked across academia and implementation, where do you see the biggest gap between theory and execution in energy transition, and how do you bridge it while ensuring that policies are both visionary and actionable?
DNAU: The biggest gap lies in the difference between what looks optimal in theory and what is feasible in practice. Academic and modelling studies often present least-cost pathways to net zero, assuming smooth deployment of renewables, rapid cost reductions, and seamless financing. In reality, ASEAN countries face persistent challenges: institutional capacity constraints, affordability concerns, grid limitations, land-use competition, and the political economy of subsidies and vested interests. A plan that is technically sound may falter if it does not reflect these on-the-ground realities.
Our Sustainable Energy for Islands and Distributed Off-Grid Systems (SEIDO), which is exploring potential pilot activities in Indonesia and the Philippines, is one example that demonstrates how integrating local input into system design and linking projects to local livelihoods makes renewable energy adoption more durable.
In my role, bridging this divide requires continuous dialogue between academics, policymakers, utilities, financiers, and communities to test ideas against real-world constraints. By combining theoretical modelling with pilot projects, pairing long-term targets with practical financing mechanisms, and embedding social considerations into technical solutions, we can narrow the gap between ambition and execution and make ASEAN’s energy transition deliverable.
Taken together, ASEAN’s progress reflects both ambition and pragmatism in advancing the decarbonisation of its energy sector.
Taken together, ASEAN’s progress reflects both ambition and pragmatism in advancing the decarbonisation of its energy sector. Yet the region’s transition remains shaped by the continuing role of coal in several national systems, uneven grid readiness, relatively young thermal assets, and the practical limits on capital mobilisation. Managing these trade-offs will define ASEAN’s energy trajectory in the coming decade. What gives the region an advantage, as Dr Nuki notes, is its tradition of consensus and cooperation. The next phase of ASEAN’s transition will depend not only on technology and investment, but also on whether this cooperative model can translate ambition into implementation across very different national realities.
While ASEAN has made progress in aligning policy, mobilising finance and expanding renewables, the transition raises deeper questions beyond infrastructure and investment. In Part 2, Dr Nuki Agya Utama reflects on how ASEAN can ensure the transition remains inclusive while preparing for technological, geopolitical and climate disruptions that will shape the region’s energy future.