South-east Asia’s green economy risks passing over US$80 billion due to 35% execution gap: report

[SINGAPORE] While South-east Asia’s green economy stands at US$290 billion today and is projected to reach US$430 billion by 2030, a gap of more than 35 per cent remains between announced and deployed green capital expenditure, according to The New Calculus report by Bain & Company and Standard Chartered.

The gap spans the region’s power and electric vehicle value chains, with only about US$315 billion of roughly US$540 billion in announced green capex currently on a credible path to deployment. 

The report describes this as a “structural signal that the green economy has a conversion problem, not a capital shortage”.

Dale Hardcastle, partner at Bain & Company, said: “Capital is flowing where commercial demand, energy security and policy that delivers infrastructure come together, and stalling where any of the three is missing – even where targets remain ambitious.”

Against this backdrop, the report found that closing the gap could unlock an additional US$80 billion by 2030, representing a 25 per cent uplift on the baseline. 

Capital development in power and EVs

The report found that of about US$40 billion in annual green capex deployed across the region between 2021 and 2025, roughly 80 per cent went into power and grid and the electric vehicle value chain. This was driven by segments where demand is already commercially viable, such as mobility and green industrial zones.

EV adoption is also running between 1.5 and two times ahead of earlier forecasts, with four countries in the region now ranking among the top 15 global EV markets by new car sales. 

However, about 70 per cent of four-wheel EV value flows outside the region, while the region still captures less than 2 per cent of global EV and battery production.

At the same time, cancellation rates remain elevated, with about 50 to 60 per cent of renewable energy projects in Vietnam, Thailand and Indonesia cancelled between 2021 and 2025. This was due to system constraints, including unclear power purchase agreements, permitting delays and grid connection rules. 

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Nickel and battery investment cancellation rates have also reached 40 to 50 per cent.

These cancellations underscore a systemic conversion problem in segments where commercial demand, infrastructure readiness and policy clarity have yet to converge, the report said.

Grid infrastructure and demand outlook

On the infrastructure front, grid maturity remains a key constraint on green capex deployment, even as investments in transmission and distribution lagged demand growth. 

Spending on grid and storage infrastructure fell 3 per cent between 2015 and 2025, despite energy demand rising about 5 per cent annually.

Meanwhile, new demand from data centres, EVs and green industrial clusters is expected to drive a turnaround. With South-east Asia expected to add more than 100 terawatt-hours of electricity demand from these sources over the next four years, this represents over US$200 billion in committed capex. 

To this end, Chow Wan Thonh, head of coverage for Singapore and Asean at StanChart, said the bank has committed US$300 billion in sustainable finance globally by 2030.

This is aimed at “supporting clients through the transition via capital mobilisation, structuring bankable solutions and enabling cross-border opportunities that drive delivery”.