Southeast Asia Energy Outlook by the IEA – Hedgepoint Global Markets

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Southeast Asia Energy Outlook by the IEA

View the main energy outlook for Southeast Asia according to the International Energy Agency’s (IEA) annual report.

November 29, 2024

Hedgepoint Global Markets

Southeast Asia is emerging as a major player in the global energy landscape. According to the Southeast Asia Energy Outlook 2024 report published by the International Energy Agency (IEA), the region will play a central role in the growth of energy demand in the coming decades.

In this context, we explore the key trends highlighted by the IEA, including Southeast Asia’s fuel consumption, outlook to 2050, energy demand growth, and more. Countries in this region include: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

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Energy Consumption in Southeast Asia

The IEA report deals with data on energy consumption in Southeast Asia in recent decades. According to the organization, the region has accounted for 11% of global energy demand growth since 2010. In addition, local countries are expected to contribute more than 25% of the growth by 2035 in the Stated Policies Scenario (STEPS), which is based on currently declared energy policies.

As the region’s economy has grown over the past decade, energy demand has more than doubled since 2000. Most of this growth has been met by fossil fuels, primarily coal. See below for data collected by the IEA:

As for oil, the region’s demand grew by 60% over the same period. However, the growth in consumption has been fueled by imports, as production in Southeast Asia has fallen by more than a third since the last century.

This increase in oil demand is driven by industry and transportation. As shown in the chart above, transportation consumption more than doubles, rising from 1.3 mb/d (million barrels per day) in 2000 to 2.8 mb/d in 2024.

Coal’s share of the local energy mix increases from 9% in 2000 to 28% in 2024. Coal has an even larger share in electricity generation, reaching 45%. However, the region’s electricity sources have diversified over the past five years. See the charts:

Due to geopolitical tensions, energy security remains a priority for Southeast Asia. The IEA points out that the recent global crisis has highlighted the region’s vulnerability to rising prices, as it depends on the Middle East for 60% of its imported oil.

In terms of energy consumption, oil and coal each account for more than a quarter of the region’s energy needs. Natural gas comes in third, accounting for about one-fifth. The organization also noted that coal will generate half of the electricity consumed in Southeast Asia in 2023, in addition to 30% of industrial demand.

Energy outlook for Southeast Asia to 2050

According to the data presented in the IEA report, energy demand in Southeast Asia is expected to continue growing until 2050. The local energy mix is expected to change completely by mid-century if countries meet their climate change targets. See the STEPS and APS (Announced Promises Scenario) expectations in the graphs below:

Despite the change in the energy mix, all scenarios show higher demand by 2050. As a result, the matrix is expected to continue to diversify energy sources, with all types of fuels guaranteeing an important position in the production chain.

Currently, oil and coal are the main sources in the region and are still expected to account for almost 30% of the energy mix in 2035. The report also points out that the composition of this mix is still unclear, but that industry should continue to be the most energy-intensive sector. However, the transport sector is expected to reduce fuel demand due to the increase in electric cars. Follow the data:

In the transportation sector, declining demand for fossil fuels is accompanied by increasing demand for biofuels and electricity. The report notes that this growth will be significant, but that oil will continue to dominate the sector. Follow the story:

Currently, road transport and freight account for almost half of the energy demand in Southeast Asia (48%), followed by passenger cars (34%), two/three-wheeled vehicles (16%), and buses (2%). In this scenario, oil meets 90% of demand and biofuels only 8%. By 2050, the share of biofuels is expected to rise to 20%.

Growing energy demand in Southeast Asia

According to the data, Southeast Asia’s energy demand is expected to exceed that of the European Union by 2050. This growth in energy demand will be led by the electricity sector.

The institution points out that demand is expected to grow at an annual rate of 4%, driven by the use of air conditioning. See the data below:

Finally, the institution also reports that clean energy sources, such as wind and bioenergy, are expected to meet more than one-third of the region’s growth in energy demand by 2035. Check out the chart:

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