{"id":175635,"date":"2026-06-24T14:31:19","date_gmt":"2026-06-24T14:31:19","guid":{"rendered":"https:\/\/www.europesays.com\/iran\/175635\/"},"modified":"2026-06-24T14:31:19","modified_gmt":"2026-06-24T14:31:19","slug":"how-the-iran-war-disrupted-aseans-energy-transition-the-diplomat","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/iran\/175635\/","title":{"rendered":"How the Iran War Disrupted ASEAN\u2019s Energy Transition \u2013 The Diplomat"},"content":{"rendered":"

When the Strait of Hormuz closed in March, ASEAN economies \u2013 like many in Asia \u2013 faced their biggest energy shock in a decade. Prices across oil products jumped and by late April, the region\u2019s import bill had risen by an estimated<\/a> $3.36 billion per month.<\/p>\n

After another fragile ceasefire agreement has been reached, it is a good time to assess what the shock has revealed about ASEAN\u2019s energy transition. The conflict did not derail the transition but exposed how vulnerable it remains to external disruption and how quickly governments can fall back on fossil fuels when energy security is threatened.<\/p>\n

ASEAN is highly dependent on oil and gas imports. Transport draws on oil and gas for close<\/a> to 90 percent of its energy supply, and oil and gas account for about<\/a> 31 percent of electricity generation. Roughly<\/a> 55 percent of ASEAN\u2019s crude oil imports originate in the Middle East. When shipments halted, up to 28 percent of final oil consumption was at direct risk.<\/p>\n

Across the bloc, the immediate response relied heavily on fiscal tools to help<\/a> consumers. Indonesia controlled fuel prices through the state-owned Pertamina, and Malaysia subsidized petrol and diesel at set quantities per person. The Philippines combined subsidies for transport workers and tax cuts. Thailand used its Oil Fuel Fund and refineries to manage prices. Vietnam allowed flexible fuel pricing, imposed export restrictions and trimmed fuel taxes. Cambodia also cut fuel taxes and diversified imports toward Singapore and Malaysia. Laos managed shortages with emergency imports and rationing.<\/p>\n

The clearest indication that ASEAN\u2019s energy transition had come under pressure was a renewed reliance on coal. In Vietnam, coal-fired generation rose<\/a> 44 percent month-on-month in March. Indonesia approved<\/a> higher coal production quotas and restricted<\/a> coal exports. Thailand brought<\/a> two decommissioned units at Mae Moh back online and pushed existing coal stations to full output. In the Philippines, where coal already supplies about 60 percent of electricity, the government declared a state of national energy emergency and ramped up<\/a> coal generation.<\/p>\n

Even so, the crisis did not halt ASEAN\u2019s transition agenda altogether. Thailand has overhauled its rooftop solar<\/a> policy and extended EV<\/a> incentives for consumers. Cambodia slashed<\/a> import taxes on EVs, electric stoves and solar-powered devices. In Vietnam, Vingroup<\/a> plans to scrap the country\u2019s largest LNG power plant project in favor of a renewables and battery storage project. The Philippines doubled down on rooftop solar, becoming the second-largest<\/a> destination for Chinese solar exports in the first quarter of 2026. Indonesia has opened<\/a> a tender for a 1.2 GW of utility scale solar capacity spanning several regions.<\/p>\n

Progress on diversified supply, stronger grids, and more credible institutions are necessary for Southeast Asia\u2019s energy security. Yet the same shock also made these goals harder to execute, as the return to coal and the energy security pressures shifted policy attention toward securing supply rather than advancing reform. Whether the shock ultimately delays reform or strengthens the case for it will depend on how governments balance immediate energy security needs with long-term transition goals.<\/p>\n

The ASEAN Power Grid is the region\u2019s most ambitious long-term response to energy insecurity. A unified electricity market could reduce<\/a> decarbonization costs by up to $800 billion, but the investment required<\/a> is substantial, at $27 billion in interconnectors and $300 billion in broader grid infrastructure by 2040.<\/p>\n

Despite growing support, including new financing from the Asian Development Bank and World Bank, funding remains well below what is required. Progress has also been limited: ASEAN has invested only about $2 billion in cross-border interconnectors over the past five decades.<\/p>\n

The recent crisis has reinforced the value of regional power integration but also made clear the scale of the challenge. A fully integrated network given stretched government budgets is unlikely. In the near term, subregional power trade and domestic market reforms, including improved grid management and more flexible power procurement, offer more practical pathways to strengthen energy security while supporting the transition.<\/p>\n

The line between energy security and energy transition is less visible than ever before. Today\u2019s decisions on subsidies, strategic reserves, fuel procurement and grid management will shape ASEAN\u2019s long-term energy pathway. That creates a dilemma for governments over how to use finite resources. Expanding fuel subsidies may ease pressure on households and help governments contain political fallout, but it also risks delaying investment in cleaner alternatives. It will be harder to turn consumers away from fossil fuels without the right price signals. And shifting the policy agenda toward market reform is politically harder, because the benefits are slower to materialize and less visible to consumers.\u00a0<\/p>\n

If short-term support for fossil fuels turns permanent, it will weaken both fiscal space and reform momentum. But if crisis management is paired with more targeted relief and continued investment in energy reform, ASEAN can emerge more resilient and less exposed to future shocks. The war did not derail the transition, but it showed how crucial it is for ASEAN to have a sustainable and reliable energy supply.<\/p>\n","protected":false},"excerpt":{"rendered":"When the Strait of Hormuz closed in March, ASEAN economies \u2013 like many in Asia \u2013 faced their…\n","protected":false},"author":2,"featured_media":175636,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3],"tags":[12814,53753,53754,53755,703,11938,53756,34,14676,53757],"class_list":["post-175635","post","type-post","status-publish","format-standard","has-post-thumbnail","category-iran","tag-2026-iran-war","tag-asean-energy","tag-asean-energy-transition","tag-asean-renewables","tag-environment","tag-hormuz-closure","tag-indonesia-energy-policy","tag-iran","tag-southeast-asia","tag-vietnam-energy-sector"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116805572082035700","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/175635","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=175635"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/175635\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/175636"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=175635"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=175635"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=175635"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}