Southeast Asia’s climate goals require financial commitment, CEO says

“I do think it’s feasible, but I think it will require sacrificing cost to achieve the objective,” Lucci stated. He expressed concern about the region’s ability to balance economic growth with decarbonization efforts, noting that many governments face a difficult choice between increased costs and revised targets.

The Philippines, where Prime Infrastructure Capital is based, heavily relies on oil imports, sourcing 98% from the Middle East. A nationwide energy emergency was declared in March following the Iran war in February, which significantly increased fuel prices. The country’s existing grid infrastructure also presents a challenge for the energy transition. Prime Infrastructure Capital is currently constructing 2,000 megawatts of pumped hydro storage to help stabilize the Philippines’ grid.

Kim-See Lim, chief investment officer of the Asian Infrastructure Investment Bank (AIIB), offered a more optimistic perspective, highlighting the region’s young population and robust growth. She emphasized the necessity of transitioning to sustainable energy sources due to the severe impacts of climate change already being felt in Southeast Asia.

The disruption to energy flows, particularly through the Strait of Hormuz, where approximately 25% of global seaborne oil trade passed in 2025, has significantly impacted prices. According to the International Energy Agency (IEA), about 80% of the oil and oil products traversing the strait were destined for Asia. Lim noted that LNG prices remain double pre-conflict levels, and oil prices are nearing that mark.

While capital for energy projects isn’t the primary issue, Lim identified a lack of investor confidence as a key obstacle. She explained that companies require a minimum return on investment in emerging markets, and perceived risk remains too high. The IEA projects a further 5.4% annual increase in Southeast Asia’s electricity demand from 2026 to 2030.

The rising demand for energy is being exacerbated by the growth of data centers, which consumed an estimated 415 terawatt hours globally in 2024, representing 1.5% of global electricity consumption. The increasing deployment of high-performance servers driven by artificial intelligence is further intensifying power demands, according to the IEA. Xingjian Pang, president of Schneider Electric’s East Asia, noted that data centers are increasingly being located away from populated areas to avoid community backlash over resource consumption.