Reed Smith In-depth

Key takeaways

  • Key impediments to ASEAN’s clean energy transition include existing priority for fossil fuels, fluid regulations, financial constraints, and reliability of supply.
  • Potential investors should conduct thorough due diligence and properly allocate risks.
  • Energy producers should exploit transition subsidies, cautiously retire existing infrastructure, and embrace new technology and challenges.
  • Energy consumers/purchasers should leverage ESG shifts and safeguard security of energy supply.
green globe grass meadow

In a previous article, we explored the dispute resolution landscape for energy-related issues in the Asia Pacific (APAC) region. This article focuses on the key issues affecting the transition to clean energy, particularly in the Association of Southeast Asian (ASEAN)1 region, and specific considerations which various market players should bear in mind as they seek to navigate the transition.

Introduction

There is little consensus on the speed and extent to which the transition to clean energy will occur. This is starkly apparent in the contrasting outlooks of the International Energy Agency (IEA) and the oil majors. The IEA report “World Energy Outlook 2023” predicts demand for fossil fuels (oil, coal and gas) will peak before 2030 if governments meet their pledges to clean up energy supply. In contrast, some key oil players see no imminent peak in oil demand and are clearly betting on the longevity of fossil fuel demand and prices, as evidenced by recently announced mega mergers.