OVER the last two years, we have seen the global energy markets swing from one extreme to another, starting from significant oversupply in pandemic-stricken 2020 to critical undersupply due to recovering production and skyrocketing demand. This situation has been exacerbated by an evolving geopolitical landscape – most notably the ongoing Russia-Ukraine war and the potential re-entry of Iranian crude back into the marketplace. The complicated global energy landscape is further impacted by the growing worldwide imperative to address climate change, which has seen countries pledge to cut fossil fuel production.

Solving the energy crisis is paramount for countries to preserve stability and remain on track to achieve political and economic outcomes, especially in energy-hungry Asia. According to the Foresight Economics Energy Sector FDI Attractiveness Index, the ongoing disruption of crude oil and natural gas supplies to Asia is expected to result in an inherent shift to locally sourced, dirtier but cheaper substitution fuels, which would have various ramifications for progress – especially where the environment is concerned.

However, a silver lining is that this shortage has also generated greater momentum for a stronger push for investments into disruptive sustainable energy sources – particularly in Southeast Asia – to resolve energy volatility. What was originally thought of as the region’s “transition” from fossil fuels to greener alternatives may have accelerated into a straight “jump” out of pure necessity, and foreign direct investment (FDI) will play a critical role in this evolution.