Latest Asean energy outlook ditches carbon neutrality pathway, projects higher emissions by 2050

Southeast Asia’s energy-related emissions are projected to be around 22 per cent above 2024 levels by 2050 under the lowest-emissions scenario, according to the region’s official energy outlook. 

The ninth Asean Energy Outlook (AEO), produced by the Asean Centre for Energy (ACE), projects regional energy demand, supply and emissions to 2060. ACE is an intergovernmental organisation that supports energy cooperation among Asean member states.

Its latest and ninth edition of the outlook, AEO9, launched on 8 October and endorsed by Asean energy ministers at their annual meeting in Manila, examines three scenarios based on current trends, national energy policies and coordinated regional measures.

Unlike the previous edition, published in 2024, the report does not include a scenario built around member states’ net-zero pledges. Seven of the 10 countries covered by the outlook have pledged to reach net zero or carbon neutrality by 2050.

ACE told Eco-Business that member states agreed by consensus to replace the pledge-based scenario, and that the latest scenarios do not use national net-zero dates as targets.

The lowest-emissions pathway, the Asean Coordinated Transition Scenario (ACTS), builds on national energy policies with faster electrification, tighter energy efficiency standards and more cross-border power trade. The other two scenarios extend current trends or reflect member states’ energy policies.

Even under the ACTS, the region’s energy consumption more than doubles, from 485 million tonnes of oil equivalent in 2025 to 1,073 million tonnes in 2060. Energy-related emissions rise in all three scenarios. If current trends continue, they more than triple by 2050, from 2,465 million tonnes of carbon dioxide equivalent in 2024; under member states’ current policies, they more than double, to 5,185 million tonnes.

These projections diverge from the members’ existing pledges. Brunei, Cambodia, Laos, Malaysia, Singapore, Thailand and Vietnam have pledged to reach net zero or carbon neutrality by 2050. Indonesia’s formal net zero target remains 2060, but President Prabowo Subianto said at the 2024 G20 summit that he was optimistic the country could get there by 2050. Myanmar and the Philippines have no economy-wide target.

Plans and pledges diverge

The outlook serves as a set of projections while Asean’s energy targets are set in a separate document, the Asean Plan of Action for Energy Cooperation, a five-year plan whose current edition runs from 2026 to 2030. The bloc’s Strategy for Carbon Neutrality, endorsed by Asean economic ministers in 2023, does not set a target year.

The ACTS is built around measures member states can coordinate on, such as cross-border power trade and shared efficiency standards.

“The key point is that the ACTS is a coordinated energy-transition scenario, not a net-zero compliance pathway,” said ACE, acknowledging that the scenario falls short of net zero.

“Reaching net zero endpoints would require additional measures beyond those imposed in the ACTS, particularly faster decarbonisation and retirement of fossil generation and deeper mitigation of residual emissions in harder-to-abate sectors.”

National pledges “may have broader economy-wide scopes and different treatment of land use, carbon sinks and offsets”, allowing countries to count the carbon absorbed by forests against what their energy sectors emit, it noted.

The International Energy Agency (IEA) has found that meeting the region’s net zero pledges would still require energy emissions to fall by 5.9 per cent a year, and described the emissions implied by members’ latest national climate plans as “misaligned” with those goals. Under the ACTS, energy emissions rise by about 0.8 per cent a year to 2050, according to Eco-Business calculations based on the ACE report’s data.

Eco-Business has reached out to the energy ministries of Brunei, Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam for comments on the gap between the outlook’s projections and their pledges.

Putra Adhiguna, Managing Director of the nonprofit energy finance think tank Energy Shift Institute, believes it shows that climate pledges and energy plans are not yet aligned.

“Individual countries’ energy plans will need to be better reconciled with the pledges,” he said.

“To be fair, AEO is treading the delicate balance of creating a consensus from the member states, but it will also need to highlight clearly where the gaps are, and how they are best addressed.” 

Renewables grow, but coal remains in the picture

Under the ACTS, renewables make up about 64 per cent of the region’s power capacity by 2060, according to ACE. Over the same period, the regional economy is projected to grow more than fourfold. Cleaner energy and more efficient energy use prevent about 79 per cent of the extra emissions that this growth would otherwise bring.

The International Renewable Energy Agency (IRENA), one of the outlook’s external reviewers, takes a different approach. Its 1.5°C scenario works backwards from how much carbon the world can still emit while keeping warming to 1.5°C, and sets out what the region’s power system would need to look like.

By 2050, IRENA’s scenario has projected about 2,800 gigawatts (GW) of renewable capacity in the region, around 90 per cent of the total. The ACTS has about 1,800 GW, or just under 68 per cent. Coal, gas and oil plants without carbon capture shrink to about 190 GW under IRENA’s scenario, compared with some 730 GW under the ACTS.

Getting there would mean adding about 100 GW of renewables a year to 2050. The region added about 11 GW in 2025, according to IRENA. Even that pathway leaves Southeast Asia emitting about 0.6 billion tonnes of energy-related carbon dioxide in 2050.

“The distance between them is therefore best read as the remaining policy and investment gap,” experts at IRENA told Eco-Business.

The ACTS requires about US$405 billion of energy investment a year to 2060, in a region where renewable projects cost at least twice as much to finance as in advanced economies. The Just Energy Transition Partnerships with Indonesia and Vietnam fall short of their 2030 funding needs by 70 and 89 per cent respectively.

“While clean energy investment is growing, it is still far below what is needed to meet the Member States’ carbon neutrality goals and regional energy targets,” ACE said in the report, adding that between 2015 and 2024, the region added more fossil fuel capacity than renewables, at about 85 GW against 67 GW.

Renewables can make up a large share of capacity without a similar share of generation, because solar and wind produce less electricity per unit of capacity than fossil fuel plants.

“Adding renewables does not automatically reduce emissions if fossil fuel generation is not displaced,” said Dinita Setyawati, External Affairs and Strategic Impact Lead, Asia, at energy think tank Ember.

Coal generates about a tenth of the region’s electricity in 2060 under the ACTS. The model also allows new, more efficient coal plants to be built where they are the cheapest option, up to 20 GW in each member state, according to ACE. In 2024, ACE urged the region to drop fixed coal phase-out dates from its green finance taxonomy.

“Banking on coal for a tenth of electricity supply in 2060 needs to be considered with caution,” Setyawati said.

She noted that coal reserves in Indonesian provinces would last only until about six years beyond 2060, and that more aggressive mining would bring further deforestation, environmental damage and the loss of rural villages.

Coal and gas plants are the region’s largest source of emissions in 2060, at about 1,500 million tonnes of the 3,355 million tonnes projected for that year.

According to AEO9, the largest single component of the remaining gap is therefore continued operation of fossil generation, which is a question of deployment speed and asset retirement rather than of technological limits.

Setyawati believes a power sector aligned with limiting warming to 1.5°C would need to reach net zero emissions before 2050.

“Coal and gas generation must decline rapidly, with unabated coal phased out and investment in new fossil fuel plants avoided,” she said.

What falling short would cost

The Asian Development Bank (ADB) estimated in 2024 that under a high-emissions scenario, climate change could cut economic output across developing Asia and the Pacific by 16.9 per cent by 2070, including by 30.2 per cent in Vietnam and 26.8 per cent in Indonesia.

Those losses depend on emissions worldwide, to which Southeast Asia is a growing contributor; the region accounts for nearly a fifth of global energy demand growth to 2035, according to the IEA.

A study published on 13 October found that reaching net zero later also locks in more extreme weather: if global emissions stopped in 2060 rather than 2030, extreme El Niño events, which bring drought, fires and haze to Southeast Asia, would make up about 26 per cent of all El Niño events, compared with 16 per cent, and remain at that level for centuries. Before industrialisation, the share was under 2 per cent. 

A solar and wind farm in Ninh Thuan province, Vietnam. Renewables make up about 64 per cent of the region’s power capacity by 2060 under the outlook’s lowest-emissions scenario. Image: Quang Nguyen Vinh/Pexels

What comes next

The AEO9 suggests that a future edition could model a pathway to zero emissions.

“Chapter 7 identifies this as an important option for future modelling, but it is not yet a confirmed AEO10 scenario,” told Eco-Business, referring to the tenth edition of AEO, which is yet to be scheduled to publish.

Whether a net zero scenario returns will depend on member states. ACE said the next edition’s scenarios will be settled through a consultation process with them, the same consensus-based process through which the previous edition’s carbon neutrality scenario was replaced.

“To be fair, AEO is treading the delicate balance of creating a consensus from the member states, but it will also need to highlight clearly where the gaps are, and how they are best addressed,” Energy Shift Institute’s Adhiguna said.

Asean’s consensus-based decision-making meant it would not adopt binding targets of the kind set by the European Union, according to Adhiguna.

What the region needs are clear near-term emission reduction milestones that countries can commit to within two to three years, said Adhiguna, adding that relying on the five-year cycle of the energy cooperation plan “may prove too long – politically – to drive meaningful change”. 

Seven member states have promised to reach net zero or carbon neutrality by 2050. The outlook’s lowest-emissions scenario has the region’s coal and gas plants running through to 2060, and lets each member state build up to 20 GW of new coal capacity. Setyawati said the region’s thinking on those fuels has to change.

“We need to redefine coal and gas’s role in [the] Asean energy future as alternative energy supply,” she said.