The Unfolding Heat Crisis in Thailand and Southeast Asia: Challenges and Emerging Solutions

This report examines the net-zero transition pathways of Sweden, Japan, Indonesia, Viet Nam and Thailand. It explores the diverse strategies each country has adopted to reduce greenhouse gas emissions and compares their decarbonisation pathways to identify common opportunities, key challenges, and lessons learned. The analysis shows that achieving net-zero requires strong policy frameworks, sustained investment, technological innovation and institutional capacity.

This review has been prepared in collaboration with the Department of Energy (DOE) of the Philippines, the Economic Research Institute for the Association of Southeast Asian Nations (ASEAN) and East Asia (ERIA), and Japan’s Ministry of Economy, Trade and Industry (METI). It examines trends, supply and demand dynamics and the evolving regulatory environment. It also highlights key risks and vulnerabilities for the power sector arising from factors such as rising demand, reliance on imported fuels, the need for grid modernisation, access and affordability constraints, financing challenges and growing exposure to extreme weather events.

In alignment with priorities set out by the DOE of the Philippines, the report provides a detailed analysis of three key areas: the potential for nuclear power, for energy resilience and for grid modernisation in the Philippines.

The Southeast Asia Energy Outlook 2026 is the seventh edition of this World Energy Outlook Special Report, making Southeast Asia by far the most regularly updated regional outlook compiled by the International Energy Agency (IEA). This reflects the dynamism of the region, as well as the importance of the IEA’s partnership with the eleven countries that make up the Association of Southeast Asian Nations (ASEAN) – Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic (Lao PDR), Malaysia, Myanmar, the Philippines, Singapore, Thailand, Timor-Leste (joined ASEAN in 2025) and Viet Nam.

As energy security concerns move ever higher on the policy agenda, this year’s report explores the trajectory that the region was on prior to the conflict in the Middle East, and discusses the potential implications of the energy crisis triggered by this conflict for policy priorities and investment strategies in the region.

The report finds that Indonesia has a strong regulatory foundation for energy efficiency, including provisions for PPPs and green finance. However, investment remains limited by weak project pipelines, financing gaps, perceived risks, limited ESCO capacity, and poor market coordination. It recommends translating existing policies into bankable, scalable industrial energy-efficiency projects.

This ERIA research report examines the strategic frameworks and practical challenges associated with decarbonising the transport sector in selected ASEAN countries. The study compiles and analyses relevant transport sector policies and assesses the progress of electric vehicle (EV) adoption and biofuel integration in Indonesia, Malaysia, Singapore, Thailand, and Viet Nam. Using well-to-wheel greenhouse gas emission assessments, the report compares the carbon emissions of different vehicle powertrains while taking into account each country’s power generation mix.