Asia is Running on Fumes

By Sneha Sinha

The current U.S.-Iran-Israel conflict plaguing Middle Eastern infrastructure has had severe downstream effects around the world. Asia, home to the world’s fastest growing economies, is cut off from its bloodline: energy.

Roughly 80 percent of Asia’s energy supply comes from oil and gas flowing through the Strait of Hormuz. The war strangles this critical artery of global commerce. For Southeast Asians and South Asians alike, this geopolitical shock ripples through daily life. With rising fuel costs, stressed power grids, and strained food supply, an overseas conflict has become a kitchen-table crisis.

South Asia adopted a clear strategy: save energy. India imposed taxes on aviation fuel and diesel exports. Pakistan prohibited wedding events after 5 p.m., required offices to operate with only 50 percent of staff present, and provided free public transport between major cities. Bangladesh banned decorative lighting at events.

The story is similar in Southeast Asian countries. On March 25, Philippines’ President Ferdinand Marcos Jr. declared a national energy emergency less than a month after the conflict started, authorizing the government to procure, subsidize, and allocate fuel. In Thailand, news broadcasters removed their suit jackets on live television to promote the government’s energy conservation measures. Across the region, the message was the same: sacrifice now, or suffer worse later. But for how long?

Residents of Asian countries have little choice but to bend their lives around this conflict they had no part in starting, especially in this dire summer season. On April 20, the high in Kolkata had already reached 38°C, with a feels-like temperature of 47 degrees Celsius (over 115 F). Record-breaking heatwaves have correspondingly driven record-breaking energy consumption, with the surge in cooling demand reaching 7 terawatt-hours—enough to power 700,000 homes for one year. Much of this energy demand was supplied by coal, but this volatility underscores the risks of fossil fuel dependence: Any disruption to supply, whether geopolitical or logistical, leaves countries scrambling.

The impacts also reach Asian businesses. Export industries, like Indonesia’s nickel sector and Bangladesh’s production of polyester-dependent clothes, are choked. And there is an imminent food security crisis: the halting of fertilizers through the Strait of Hormuz threatens crops like Vietnamese rice paddies.

The damage goes beyond individual industries—energy undergirds entire economies. The IMF now expects inflation in Asia to rise from 1.4 percent in 2025 to 2.6 percent this year, impacting growth well into 2027. Short-term measures like fuel subsidies and price caps give the appearance that policymakers are taking steps, but ultimately disincentivize addressing the root causes of Asia’s energy insecurity.

So, what now? Asian countries must prioritize energy security amid global conflict, now more than ever. The Iran conflict exposes how dependence on oil and gas holds entire economies hostage to narrow chokepoints. These countries have two options: coal or renewable energy.

Returning to coal is the dominant short-term strategy for Asian economies with low fuel reserves. South Korea delayed the shutdown of coal-fired power plants. Thailand started increasing coal generation. India ordered its coal plants to run at maximum capacity and avoid planned outages. These are understandable responses—but not sufficient ones.

In the long-term, Asian countries should approach energy security with the same urgency as Europe after Russia’s invasion of Ukraine over four years ago.

Asian countries ought to adopt policy frameworks inspired by RePowerEU, the EU’s landmark energy independence initiative that mobilized capital toward renewable infrastructure and diversified supply chains. Europe’s precedent is instructive; since 2022, the EU has been generating more electricity from wind and solar than from gas. Political urgency compressed years of the energy transition into just months. In an unpredictable world, the investment case for renewables only grows stronger; the next energy disruption is not a matter of if but when.

Accelerating renewable deployment in Asia will increase dependence on China, which dominates the manufacturing of solar panels, batteries, wind turbines, and electric vehicles (EVs). But the risk of renewables dependence is not the same as the risk of fossil fuel dependence. While fossil fuel imports require a constant source of supply, renewables require one-time infrastructure development. The dependency is front-loaded, not permanent.

Of course, embarking on this path is easier said than done. Accelerating renewables demands regional coordination at a scale Asia has never attempted, sustained grid investment, and political will to resist relapsing to fossil fuels. Asia did not start this war; it should not let this war define its energy future. The countries that treat this moment as an inflection point, not just a one-time emergency, will be the ones to emerge with true resilience.