South-east Asia can lead the energy transition with its partners

A FRESH oil-price shock, the second in five years, reveals an uncomfortable truth: Economies built on imported fossil fuels are exposed to forces beyond their control. 

For households, that means higher bills and uncertainty. For governments, it squeezes fiscal space and threatens to slow growth. 

In an increasingly fragmented geopolitical landscape, the dependence on imported fossil fuels is a strategic liability, and it would be irresponsible not to address it. 

This is particularly true in Asia.

Across the region, energy demand is rising rapidly, as countries face mounting climate impacts and tighter public finances amid growing geopolitical tensions. 

At the same time, the economics of clean energy have shifted decisively.

Solar with storage is now among the cheapest and fastest forms of new power generation. Wind, too. Nuclear provides baseload options. 

These generation options all demand better energy infrastructure.

While digitalisation can reshape the way energy systems operate, agile grids and connections offer a chance to not only wean Asia off fossil fuels, but also build resilience into growing clean economies.

We have always operated in an energy trilemma, balancing the needs of sustainability, security and affordability.

For now, security is the top priority in policymakers’ minds.

Still, having the type of energy infrastructure that supports renewable energy offers the chance to touch all three corners of the trilemma at the same time. 

Resilience in networks

Asean sits at the centre of this global challenge – and opportunity.

The region’s growth trajectory means its energy choices will have global consequences, and Singapore is emerging as a key player in the coming years. 

Ahead of its Asean chairmanship in 2027, the country has a new focus on building out carbon markets, climate adaptation and resilience, and investing in nature.

Achieving this requires greater partnership among governments, finance and industry within and across countries, as well as consistent signals to ensure that the scale of long-term investments is sufficient. 

The first priority is to focus on systems, not just energy sources.

Resilience is built across networks: in modern grids that can absorb renewable power, interconnections that balance supply across borders, and markets that reward flexibility and storage.

That is why the Asean Power Grid – a regional initiative to connect the electricity networks of Asean members – matters so much.

A more connected South-east Asia can share resources, lower costs and strengthen collective resilience. 

Hydropower in one country, solar in another and wind in a third can create a more reliable and secure regional system than one country can build alone. 

In a more volatile world, this kind of collaboration becomes strategically valuable.

Energy becomes a platform for cooperation and growth, rather than a source of vulnerability.

Financial collaboration between countries

The second priority is finance.

The transition is capital-intensive, but global capital is not scarce.

What is scarce is the adequate flow of capital into risk pools needed for emerging markets and sufficient projects supported by clear policy signals, credible pipelines and stable regulatory frameworks.

Again, this is the area in which partnerships are becoming increasingly important.

The UK and Singapore are working together through initiatives, such as Financing Asia’s Transition Partnership, to mobilise and blend finance, support project development, and crowd in private investment across South-east Asia.

At the same time, the UK, Singapore and Kenya lead a Coalition to Grow Carbon Markets, an initiative which other governments have joined, to scale demand for high-integrity carbon credits and strengthen market confidence.

Run with integrity, carbon markets can help channel finance to emerging economies desperately in need of new revenue to invest in their resilience.

They can also assist the private sector, especially in industries such as aviation and steel, in achieving their decarbonisation targets. 

Carbon markets must complement – not replace – domestic decarbonisation goals.

For many governments in the region, the challenge is to consider a compliance market with an emissions trading scheme, enter carbon trading as agreed under the Paris Agreement, and consider using voluntary markets. 

Leading governments are progressing along all three paths. 

Beyond carbon markets, Singapore’s growing ecosystem for blended finance and sustainable investment demonstrates the ways public, private and philanthropic capital can work together to unlock projects that will otherwise struggle to attract financing. 

Combined with the UK’s experience in offshore wind, carbon markets and private capital mobilisation, these partnerships offer a model for practical cooperation.

The “just transition”

A third priority is ensuring that the transition delivers tangible benefits for citizens.

Let us return to the energy trilemma.

The world over, people are demanding affordable energy. Electrifying everything, from industry to power generation and transportation, is changing our relationship with energy.

People, however, still need it to be affordable. 

As economies decarbonise, affordability and fairness must remain central.

We call it the “just transition”. Investments in grids, efficiency and clean power can reduce exposure to volatile fossil fuel imports and lower costs over time, but the transition must be managed carefully. 

Citizens need to see concrete gains: more stable prices, cleaner air, better jobs and stronger energy security.

A multi-party task

To achieve these goals, practical partnerships matter more than ever.

They help share risk, build trust and accelerate delivery. The scale of investment needed demands cooperation, as do multilateral trade rules.

Collaborations also reflect a simple reality, which is that no country can navigate the energy transition alone.

The current global instability carries real risks. But it also presents an opportunity. Current volatility can be a catalyst for building a more resilient, connected and secure energy future.

South-east Asia – working with partners such as the UK – has the chance to not only manage the transition, but also lead it. 

The clean energy destination has been clear for some time. Now, the task is to move further, faster and together.

The writer is the UK special representative for climate.

This essay is part of New Global Order, a series which explores how the changing world landscape is reshaping business, politics and beyond.