Asia races to stockpile oil, speed up renewables in response to Iran war

Asian nations are rushing to increase their oil stockpiling capacity, establish a regional power grid, and accelerate the adoption of renewable energy sources, triggered by the energy challenges posed by the Iran war. Southeast Asia has suffered the most from the energy impact as 80% of the oil transported through the Strait of Hormuz to the Gulf historically reached this region before the Iran war commenced.

Nine Southeast Asian nations, along with Japan and Australia, issued a joint statement advocating for the development of oil stockpiling systems and a voluntary regional stockpile model. Japanese State Minister of Economy, Trade and Industry Takagi Kei confirmed that Japan and its Asian partners had agreed on action plans to boost crude oil reserves across the region following a meeting of the Japan-led Asia Zero Emission Community (AZEC).

The Philippines, which relies on nearly all imports for its oil and fuel, plans to create a national reserve by the end of 2027, which could potentially evolve into a regional stockpile. The chair of the Association of Southeast Asian Nations (Asean) this year, the Philippines' Energy Secretary Sharon Garin, stated that countries will decide on hosting a regional oil stockpile and set their own terms of sale.

The Asean member countries have also pledged to enhance the share of clean energy in power generation, targeting 30% of renewables in total primary energy supply and 45% in installed power capacity. Despite being among the greatest laggards in green energy, renewables currently account for just 14.1% of primary energy, below the 2025 target of 25%, while green power constitutes 33.7% of total capacity since 2020, compared to the 2025 goal of 35%.

The Asean countries also concluded an enhanced preliminary agreement on developing a long-overdue regional power grid, a significant achievement. The notion of a regional electricity network was initially proposed in December 1997, and the countries are now working to expedite its implementation.