BANGKOK: The war in Iran has exposed major risks for Southeast Asia that could cost the region many billions of dollars if it does not diversify sources of energy more quickly, according to an International Energy Agency report released on Tuesday (Jun 16).
An overreliance on oil and gas transported through the Strait of Hormuz left the region particularly vulnerable to shocks from the Iran war, a “stark wake-up call” for its energy security, the report says.
It notes that rising sales of electric vehicles, a renewed interest in nuclear power and a boom in rooftop solar and other renewable energy installations show the war is spurring change.
But more sweeping reforms are needed. Otherwise, Southeast Asia’s energy import bill could rise to US$245 billion by 2035, tripling from US$80 billion in 2024, the report warns.
“Diversification of energy sources and supply routes is now a central priority,” said Fatih Birol, the IEA executive director.
Iran war exposes Southeast Asia’s energy risks
The energy shock sent Southeast Asia into a state of energy triage, leading to higher energy bills and rising inflation.
In a likely setback for efforts to phase out dependence on fossil fuels, the conflict has reinforced the need to rely on coal during times of energy crisis, the IEA said.
The war is also furthering plans for nuclear power in Southeast Asia, but years-long construction and regulatory processes remain. Indonesia, Vietnam and the Philippines may be the furthest along with nuclear power plans, but their timelines are uncertain.
“The IEA report clearly highlights that Southeast Asia is at a crossroads,” said Sam Reynolds of the US-based Institute for Energy Economics and Financial Analysis.
