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| The largest integrated photovoltaic and energy storage projec in Indonesia designed and constructed by China Yongfu Electric Power. |
Southeast Asia sits at the heart of the world's energy transition dilemma. The region is growing faster than much of the world, with its collective GDP projected to rise by 4.1% in 2025 versus 3.0% globally. Governments in the region are racing to modernize and to create jobs for youthful populations. With a burgeoning middle class, rapid urbanization, and considerable infrastructural developments in the pipeline, its electricity use is climbing at one of the fastest rates anywhere. Indeed, ASEAN is set to account for more than a quarter of global energy demand growth through 2035.
Yet nearly 80% of that demand is still met by fossil fuels, mainly coal. The fault line between growth and climate pledges is widening – even though Southeast Asia's renewable potential is immense. Indonesia, the region's largest economy, is the world's biggest producer of palm oil, which could well be converted into biofuel. Laos and Cambodia are rich in hydropower resources, while the Philippines and Vietnam have vast wind potential. Across the archipelagos of Indonesia, geothermal energy also offers a promising alternative. Coal still generates half of ASEAN's electricity because it delivers cheap, dispatchable power at scale.
At the same time, eight of ten ASEAN members have adopted net-zero targets. Brunei, Cambodia, Laos, Malaysia, Singapore and Vietnam aim for 2050, Indonesia for 2060, and Thailand for 2065. Aligning with the global climate agenda sits uneasily alongside the developmental reality. The tension is simple and unavoidable: ASEAN must keep the lights on today while cutting emissions for tomorrow.
That contradiction defines ASEAN's development path. No government can accept factories idling or homes going dark. In practice, security still means firm baseload at the lowest cost. Transition requires unprecedented investment in renewables, grids and storage. Reconciling these aims is no longer an abstract policy exercise. It is a credibility test for ASEAN's development model.
China's Role to Play?
No external partner looms larger in this balancing act than China. Beijing has long underwritten regional energy security. Indonesia and Vietnam rank among the top global recipients of Chinese coal finance, and Chinese investors back more than 70% of Indonesia's captive coal capacity, much of it linked to minerals and industrial parks. At the same time, China has become the indispensable supplier of clean tech, channeling more than US$2.7 billion into renewables in Southeast Asia between 2013 and 2023 and helping anchor localized manufacturing hubs for solar panels, batteries, and electric vehicles. China supports both sides of the equation. It can entrench coal dependency or enable a leap toward cleaner power. The role it plays next will shape whether ASEAN's growth and climate agendas converge.
There are already glimpses of how to square security with transition. At Indonesia's Morowali Industrial Park, partners have launched a 200 MW solar project with 80 MWh of storage to serve nickel smelters. This is a proof of concept: clean power configured for heavy industry, with reliability built in. Likewise, the MoU between State Grid Corporation of China and PLN, Indonesia's state utility, on grid upgrades signals the kind of transmission and distribution investment that improves system stability while creating space for more renewables.
These projects remain the exception. In ASEAN, the Chinese state appears to prefer long-standing, long-established mining projects or steadfast infrastructure construction undertakings, to more experimental, renewable energy-centric initiatives – even despite China's strengths in innovation and diffusion in the latter. For every Morowali-style project, there are still dozens of conventional coal and gas plants under construction or discussion. Chinese credit and engineering pipelines in coal remain deep, and Southeast Asian governments are still tempted by them. In the absence of large-scale concessional finance delivered at speed by Western partners, the real measure will be whether Chinese firms pivot their capacity and financing toward dual-purpose projects that guarantee reliability and reduce emissions.
Many Southeast Asian governments, scarred by price spikes and blackouts, are cautious about moving too fast. The region could drift into a split landscape: coal to power factories and renewables to showcase at summits, with the gap between rhetoric and reality growing wider. The countercurrent is strong.
Yet these forays into renewable energy show what is possible when the needs and interests of both Chinese state-owned enterprises and capital, and domestic players in ASEAN, are firmly reconciled through careful negotiations. Indeed, China's role is not fixed.
The Path Ahead
In September 2021, President Xi Jinping pledged to end support for new coal projects abroad – with ASEAN featuring prominently at the top of foreign policy agenda for technocrats in charge of determining projects for and methods of capital deployment and financing.
For ASEAN leaders meeting at this year's summit, and for negotiators heading into COP30, the test is clear. The measure of progress is not another pledge or another capacity headline. It is whether partners, especially China, are ready to back projects that make security and transition inseparable: solar-plus-storage that runs factories at night, grids that absorb variable generation without outages, and green industrial parks that demonstrate clean power can be reliable power.
There is a second imperative. Adaptation and resilience must be built in alongside emissions cuts. Southeast Asia is among the world's most climate-vulnerable regions, facing flooding, heat, and storm risk that threaten livelihoods and supply chains. Energy planning that strengthens resilience – through hardened grids, diversified generation and demand-side flexibility – will matter as much as new capacity. China can contribute by expanding South–South climate cooperation, sharing expertise on resilient agriculture, water and disaster monitoring, and embedding adaptation criteria in its green finance and infrastructure projects overseas. Such efforts, paired with continued engagement in multilateral climate forums, would allow Beijing to support not just decarbonization efforts, but the region's survival.
The pragmatism of ASEAN states and their private sectors deserve recognition. The region will not abandon growth, nor should it be asked to. What it can do, and what partners should support, is to pursue pathways where energy security, climate ambition and adaptation reinforce each other. If ASEAN keeps the lights on while peaking emissions and building resilience, it will be because China chose to act as a bridge and ASEAN chose to steer a constructive course. That is the real measure of whether the silent conflict confronting the region today can be resolved.
