By Lina Irawan 
Ten years ago, the world was aligning around consistent climate policies, fostering a sense of shared responsibility and collective action under frameworks like the Paris Agreement. However, a noticeable divergence is now emerging, as nations, particularly in Asia, increasingly prioritize what Ghosh terms a “pragmatic transition.” This approach seeks to delicately balance the imperative of sustainability with the immediate demands of energy security and economic affordability, a balance that frequently necessitates the continued, albeit perhaps temporary, role of traditional fossil fuels. This shift is not a complete abandonment of climate goals but rather a recalibration of priorities, acknowledging the complex realities and inherent trade-offs faced by rapidly developing economies.
The primary catalyst for this reassessment of the green transition has been a series of profound geopolitical conflicts and economic disruptions. The most impactful of these was Russia’s full-scale invasion of Ukraine in February 2022, which sent shockwaves through global energy markets. The ensuing Western sanctions on Russian energy exports, coupled with Russia’s own reductions in gas supplies to Europe, triggered an unprecedented surge in fuel prices worldwide. This directly led to an acute energy crisis across much of the developing world, hitting Asian economies particularly hard. Countries that relied heavily on imported oil and gas faced soaring electricity costs, inflationary pressures, and severe economic strain, forcing governments to re-evaluate their energy procurement strategies and domestic generation mixes.
Adding another layer of volatility, February’s U.S. strikes on Iran and the subsequent, albeit temporary, closure of the Strait of Hormuz served as a stark, immediate reminder to Asian governments of their profound reliance on energy supplies from the politically unstable Middle East. The Strait of Hormuz is one of the world’s most critical maritime chokepoints, through which approximately 20% of the world’s total petroleum liquids consumption and a significant portion of global liquefied natural gas (LNG) transits. For energy-hungry Asian economies, any disruption in this vital waterway can have catastrophic consequences, reiterating the urgent need for diversification and enhanced energy resilience. This incident, following closely on the heels of the Ukraine crisis, underscored the fragility of global energy supply chains and intensified the drive among Asian nations to reduce their exposure to external shocks.
In response to these persistent threats, Asian governments are now pursuing a multifaceted range of energy options, primarily aimed at weaning themselves off an over-reliance on Middle Eastern energy. This involves significant investments in renewable energy sources such as solar, wind, and hydropower, alongside a renewed, and sometimes controversial, commitment to nuclear power. Simultaneously, nations are actively seeking alternate sources of oil and gas, with the United States emerging as a significant supplier of LNG, for instance. Perhaps most concerningly for global climate targets, several countries are also reconsidering or even actively returning to coal power generation, a decision driven by immediate needs for affordability and energy security.
Japan, a nation historically dependent on energy imports and deeply affected by past energy crises, exemplifies this pragmatic shift. On August 25, the Japanese government unveiled detailed plans to accelerate its "Green Transformation" (GX) strategy, a comprehensive roadmap designed to bolster energy security while progressing towards decarbonization. Central to these plans is a significant commitment to nuclear power, which had largely been scaled back after the 2011 Fukushima disaster. Japan now intends to build up to five new nuclear reactors in the 2040s, with an additional 14 planned for the 2050s, a remarkable reversal of its post-Fukushima stance. This ambitious nuclear expansion underscores a strategic re-evaluation of energy priorities, recognizing nuclear’s capacity for stable, baseload, carbon-free power.
During a press conference in April, Japanese Prime Minister Sanae Takaichi underscored the urgency behind these measures, stating, "The Government of Japan is now undertaking various measures as it makes all efforts to ensure a stable supply of energy and critical goods to safeguard the lives and livelihoods of the Japanese people." She further emphasized the vulnerability of the region, noting, "Fuel supply shortages and supply-chain disruptions in Asia… result in major negative societal and economic impacts for Japan." Beyond nuclear, Japan’s GX strategy also encompasses substantial investments in hydrogen and ammonia fuel technologies, offshore wind, and carbon capture, utilization, and storage (CCUS) projects, aiming to create a robust and diversified energy portfolio less susceptible to global volatility.
Singapore, a small island nation with virtually no domestic energy resources, also faces acute energy security challenges and has responded with a strategic focus on innovation and diversification. The city-state recently committed 800 million Singapore dollars ($631 million) to supporting research and innovation in low-carbon energy generation and decarbonisation technologies. This substantial investment is part of Singapore’s broader ambition to slash national greenhouse gas emissions to between 45 million and 50 million tonnes of CO2 by 2035, an aggressive target for a highly urbanized and industrialized economy.
Tan See Leng, Singapore’s Minister-in-charge of Energy, Science and Technology, articulated this dual objective during a parliamentary session on March 2. "We are significantly increasing investments in promising solutions to reduce power sector and industry emissions, and at the same time, to ensure a reliable and resilient power system," he stated. Singapore’s strategy includes exploring emerging technologies such as geothermal energy, hydrogen imports from regional partners, carbon capture, and advanced waste-to-energy solutions, alongside enhancing regional grid interconnections to import renewable energy. The nation also plays a pivotal role as a green finance hub, channeling capital towards sustainable projects across Southeast Asia.
However, the "pragmatic transition" also entails a more controversial aspect: a deepening reliance on fossil fuels in some Asian countries. Data from the Institute for Energy Economics and Financial Analysis (IEEFA) reveals a concerning trend: China, Japan, South Korea, and Indonesia have all increased coal-fired capacity since 2020, despite earlier pledges to decarbonize. This surge in coal power generation is driven by several factors, including the relative abundance and affordability of coal compared to volatile international gas prices, the existence of established infrastructure, and the need to provide baseload power for rapidly growing economies.
The Philippines offers a stark illustration of this dilemma. In March, after declaring a national energy crisis due to surging electricity prices and supply shortfalls, its energy secretary, Sharon Garin, announced plans to boost the output of its existing coal-fired plants. This decision, while economically driven to keep energy costs down for consumers and businesses, highlights the immediate trade-offs many developing nations face when confronted with energy insecurity. Similarly, other emerging economies like Vietnam and India continue to rely heavily on coal to fuel their economic expansion, often arguing for "common but differentiated responsibilities" in climate action, asserting their right to develop using available resources, much like industrialized nations did historically.
Rahul Ghosh observes that this nuanced approach is distinct from that seen in Western economies. "Be it in Australia, Singapore or Hong Kong, we’ve seen more focus on safeguarding transition assets and activities than we’ve seen in Europe," Ghosh notes. This implies a greater willingness to maintain or even expand infrastructure related to natural gas, or to prolong the life of existing fossil fuel assets, viewing them as necessary bridges to a cleaner future rather than immediate liabilities. "That’s a reflection of the decarbonization challenges which Asia faces. It’s an area of strong income growth, which historically translates to higher emissions… so Asia has to figure out how to meet greater demand for vehicles and air-conditioning, while keeping energy efficiency standards in place." The sheer scale of population growth, urbanization, and rising living standards across Asia presents an unprecedented challenge: how to provide modern energy services to hundreds of millions without pushing global emissions past critical thresholds.
By contrast, wealthier societies, particularly in Europe, are pursuing a more aggressive path towards net-zero commitments. The European Union’s Carbon Border Adjustment Mechanism (CBAM), which became operational in January, is a prime example. This mechanism places a carbon cost on imported goods from countries with less stringent climate policies, aiming to prevent "carbon leakage" and incentivize global decarbonization. While intended to level the playing field, CBAM is viewed by some Asian economies as a potential trade barrier, complicating their export competitiveness and potentially forcing them to accelerate decarbonization efforts or face higher costs for their goods in European markets.
Beyond the immediate energy security imperative, yet another powerful global trend – climate change itself and the escalating frequency and intensity of extreme weather events – is fundamentally reshaping investment priorities in Asia. Public and private investors are increasingly channeling significant capital towards climate adaptation and resilience projects. This category encompasses a broad spectrum of initiatives, including critical infrastructure like floodgates, seawalls, and dams to protect against rising sea levels and storm surges; sophisticated smart sensing and early warning systems for climate disasters such such as typhoons, heatwaves, and droughts; and the development of drought-resistant crops and climate-resilient agricultural practices to safeguard food security.
Ghosh explains the urgency behind this shift: "A lot of the next ten years of extreme weather conditions are already locked in because of prior emissions." This stark reality underscores that even if global emissions were to halt tomorrow, the planet would still experience significant climate impacts due to accumulated greenhouse gases. On Wednesday, the United Nations delivered a sobering assessment, stating that the world has failed in limiting global warming to 1.5 degrees Celsius above pre-industrial times, despite notable advancements in wind and solar power technologies since the Paris Agreement was ratified in 2016. This failure intensifies the focus on adaptation, as communities worldwide must prepare for an increasingly volatile climate future.
Last year’s record-shattering monsoon season across vast swathes of Asia, impacting countries like India, China, Pakistan, and parts of Southeast Asia, has further heightened the urgency to invest in climate resilience. These extreme weather events led to widespread flooding, displacement, agricultural losses, and significant economic damage, exposing critical vulnerabilities. "Large swathes of Asia, including parts of India, China and Southeast Asia, are quite under-insured when it comes to natural disasters," Ghosh highlights. This low insurance penetration means that governments and communities often bear the brunt of recovery costs, diverting resources from development and exacerbating poverty. "That’s one of the reasons why there’s greater focus in this region on creating greater climate resiliency," he concludes, emphasizing the economic and social imperative to build protective infrastructure and adaptive capacities.
Despite the apparent contradictions – countries seemingly moving backwards on some elements of sustainability and increasingly operating independently rather than in unison – Ghosh still maintains a nuanced optimism, believing the region is ultimately headed in the right direction. "The process was always going to be non-linear," he says, acknowledging the immense complexity and scale of the energy transition for a region undergoing rapid development. Yet, he concludes, "we are still moving from a higher-carbon to a lower-carbon economic system over time." This perspective suggests that while the path may be circuitous, marked by detours and pragmatic compromises, the underlying trajectory towards a more sustainable and resilient future for Asia remains intact, driven by both climate imperatives and the inexorable march of technological innovation.
