Balancing short-term energy affordability while maintaining support for long-term decarbonisation goals has become the “hardest political problem” facing governments today in a volatile energy market, according to Australia’s climate authority chair Matt Kean.
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Still, ensuring near-term energy security and affordability in the wake of ongoing energy market crisis will be critical to sustaining public support for climate action, said Kean at Singapore state investor Temasek’s Ecosperity summit this week.
“The hard part is making decisions today that get you there without the lights going out tomorrow.”
He said the key challenge for governments in making near-term energy decisions that support long-term decarbonisation goals is immense, as households and businesses could start feeling rising energy prices within the next three years.
The energy crisis has become more pressing following disruptions linked to conflict in the Middle East, war in Ukraine and intensifying geopolitical competition between major powers, which have prompted governments to reassess their energy security strategies.
The developments have sent shockwaves across Southeast Asia, with governments moving quickly to cushion households and secure fuel supplies. In Malaysia for instance, the government reduced subsidised petrol quota under the BUDI95 scheme from 300 litres per month to 200 litres per month in April.
In the Philippines, president Ferdinand Marcos Jr. declared a national energy emergency as the country imports most of its petroleum and is highly exposed to oil-price spikes and supply disruptions.
Thailand, too, which also relies heavily on imported oil from the Middle East, said it was monitoring the situation closely, reviewing energy reserves and contingency plans, and preparing to manage potential price shocks and supply risks.
In Australia, which is also grappling with a shortage of gas and diesel, the government announced earlier this month that it would commit 14.8 billion Australian dollars (US$10.7 billion) to securing fuel and fertiliser supplies.
At Ecosperity, Kean highlighted that energy security today extends beyond maintaining domestic fuel reserves and increasingly centres on exposure to global supply chains and geopolitical choke points.
“The question is not about whether you have enough fuel storage today,” he said. “The new definition of energy security is whether you are exposed to a shipping lane that you don’t control, a refinery that you don’t own, and a currency that you can’t hedge.”
He noted that governments are becoming increasingly concerned about dependence on shipping lanes, foreign-owned refineries and volatile currencies. In Australia’s case, heavy reliance on imported liquid fuels has exposed vulnerabilities in conventional fossil fuel systems.
Instead of abruptly cutting fossil fuel exports, Kean said countries should focus on simultaneously scaling clean energy alternatives for fuel security.
“What we need to do is get on with the fastest path to fuel security, and that is building renewables, storage, grids.”
He added that renewable energy technologies and storage systems can improve not only decarbonisation outcomes, but also national energy sovereignty and affordability.
Australia has seen rapid deployment of distributed energy systems, including rooftop solar and home battery installations. Around 455,000 Australian households installed home batteries over the past six months, adding roughly eight gigawatt hours (GWh) of storage capacity to the grid.
This, he said, could serve as a model for Asia-Pacific to accelerate the energy transition.
He also pointed to growing bilateral partnerships such as clean energy cooperation agreements between Australia and Singapore as examples of how governments are trying to secure “anchor demand”, investment certainty and aligned policy frameworks to support clean energy supply chains.
Supply chain risks and stranded assets
While countries increasingly seek to electrify their economies to strengthen energy security, concerns are also growing, particularly in the West, over the dependence on China-dominated clean energy supply chains.
Speaking at the same panel, Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University said governments are not sufficiently addressing the potential risks associated with concentrated clean energy supply chains, compared to the more familiar energy security risks tied to fossil fuels.
“We’re not yet having a very nuanced conversation about how to compare the energy security risks of oil and gas to the energy security risks that may exist in supply chains for clean energy products,” Bordoff said.
“If we’re not really thoughtful about that, it has the potential to throw a big wrench in the pace of the transition.”
He noted that concerns about overdependence on Chinese supply chains now sit at the centre of climate and energy discussions in the United States and parts of Europe.
China currently dominates the processing and refining of many critical minerals and clean energy technologies, including batteries, solar panels and electric vehicles (EVs). It controls about two‑thirds of global refining capacity for critical minerals and is also the world’s largest producer of solar panels.
Bordoff urged governments to take a more measured approach when assessing supply chain risks, noting that dependence on imported solar panels differs significantly from reliance on heavy rare earths used in sensitive military applications and advanced technologies.
“If you’re not really thoughtful about that, then you run the risk that traditional political impulses toward protectionism are just going to run rampant, and it’s going to make it impossible to have a faster transition,” he said.
Instead of attempting to completely eliminate dependence on China, countries should focus on “de-risking” supply chains through diversification and international cooperation, he added.
As governments accelerate efforts to transition away from fossil fuels, policymakers are also facing growing questions over how to avoid carbon lock-in while maintaining reliable and affordable energy systems in the near term.
Bordoff noted that fossil fuels still account for around 80 per cent of the global energy system, a figure that has remained largely unchanged for decades.
“If you want to keep energy affordable and reliable, that requires investment in the current oil and gas system,” he said.
Even under ambitious net-zero scenarios, hundreds of billions of dollars in investment would still be needed annually in existing fossil fuel infrastructure, he said, adding that some fossil fuel assets may ultimately become economically unviable as the transition accelerates.
“Some amount of stranded assets, if we think of it as part of the cost of a well-managed transition, is going to be inevitable.”
He urged governments and investors to focus on designing projects with shorter payback periods or time-limited permits to reduce long-term lock-in risks while ensuring energy systems remain stable during the transition.
If governments fail to maintain energy affordability and reliability during the transition, public support for climate action could quickly erode.
“In the end, meeting basic energy needs, heating homes in the winter, powering factories and keeping the lights on, is the predominant concern,” Bordoff said.
