The Middle East conflict is having a corrosive impact on Asia and the Pacific’s developing economies, particularly in the energy sector. Fuel costs are soaring, and economic growth is slowing as countries grapple with higher commodity prices and the prospect of widening unemployment.
The Asian Development Bank (ADB) is helping its member countries to stabilize their economies and maintain essential services, while taking steps to protect the region against future shocks.
A core part of ADB’s efforts to strengthen the region’s long-term energy resilience is its plan to mobilize $50 billion in support for the Pan-Asia Power Grid Initiative (PAGI). This will enable cross-border power trade and integrate renewable energy at scale, making electricity in the region more reliable, affordable, and sustainable.
Priyantha Wijayatunga, ADB Senior Director for Energy, explains how the Middle East conflict is affecting Asia and the Pacific’s energy landscape and ADB’s role in mitigating its impacts.
The Asia Clean Energy Forum (ACEF) takes place amid acute global uncertainty and economic volatility. How is this affecting Asia’s energy outlook?
Around 60 percent of Asia and the Pacific’s crude oil comes from the Middle East, so supply disruptions are causing significant price hikes for diesel and gasoline in many countries. It’s a reminder that governments need to diversify energy sources and invest more in renewable energy. The situation has also highlighted the need for policies and concerted efforts—from industries to households—that encourage energy efficiency and conservation.
Some countries are already taking steps in the right direction. Cambodia and the Philippines, for example, are implementing policies to ease the importation, purchase, and use of electric vehicles as well as renewable energy sources like solar technologies. India has embarked on a program to distribute induction (electric) cookers to low-income households to move them away from liquid petroleum gas (LPG) based cooking. Other countries in the region have implemented work-from-home or reduced work week arrangements to help reduce fuel and energy needs.
How is this reshaping the region’s energy future?
We’ve seen in recent months how tighter energy supply can slow down economic activity and derail growth prospects. We need to move quickly to enhance energy efficiency, expand renewable energy such as solar and wind, and enable regional energy trade. ACEF is an ideal platform to share and discuss innovative ways to make these changes happen.
More importantly, the current situation is pushing a mindset change. Embracing clean energy and energy efficiency is no longer an option. It’s a crucial step that must be taken to ensure a sustainable and prosperous future.
Without affordable energy economic growth is constrained, and without clean energy economic growth can significantly damage the environment. There’s an obvious dollars and cents argument as well. Energy diversification and connectivity within Asia and the Pacific will reduce the region’s reliance on imported fossil fuels and exposure to price fluctuations in the world market.
Why is it important that countries in the region cooperate on energy security and connect their energy systems?
The time has come for countries to work together more closely to safeguard their economies and communities against shocks. There is a degree of cooperation now, but we need to think bigger so even the most remote communities’ benefit. An example of this bigger thinking is the Association of Southeast Asian Nations (ASEAN) Power Grid, which ADB is supporting.
The ASEAN Power Grid aims to connect power networks across ASEAN countries by 2045 to enable energy trading. By enabling the integration of diverse energy resources including renewable energy, it can minimize Southeast Asian countries’ reliance on imported fossil fuels and their vulnerability to global energy shocks. When realised, the ASEAN Power Grid will help provide reliable and affordable energy for the region’s 700 million people and power sustainable economic development.
How will the Pan-Asia Power Grid Initiative support regional energy connectivity efforts?
The Pan-Asia Power Grid Initiative will build on subregional energy connectivity efforts like the ASEAN Power Grid to accelerate cross-border power trade and provide more reliable and affordable electricity across Asia and the Pacific. ADB will work with governments, utilities, the private sector, and development partners to mobilise US$50 billion by 2035 for cross-border power infrastructure that can unlock renewable energy at scale.
The initiative will focus on transmission and grid integration, including cross-border lines, substations, storage, and grid digitalisation. It will also support power generation linked to electricity trade, including renewable energy export projects, regional renewable hubs, and hybrid generation-storage facilities.
It’s a complex undertaking, but it can be done with strong political will, sustained coordination, and greater investments from governments, the private sector, and development partners such as ADB.
By 2035, PAGI aims to integrate about 20 gigawatts of renewable energy across borders, connect 22,000 circuit-kilometers of transmission lines, improve energy access for 200 million people, create 840,000 jobs, and cut regional power sector emissions by 15 percent.
How is ADB helping Asia and the Pacific expand access to reliable and affordable energy?
As a multilateral development bank rooted in Asia, ADB is best placed to provide the financing, policy, and technical support needed to upgrade the region’s energy security. Regional cooperation is essential to achieve this, and ADB can be the honest broker that convenes policymakers to help countries find common ground and ensure they all benefit from regional energy connectivity. ADB can also be the bridge connecting the public and the private sector, forging crucial linkages required for smart investments.
From 2015 to 2025, our loans and grants to increase energy supply and expand energy access in Asia and the Pacific amounted to over US$37.3 billion. We’ve significantly ramped up our support for clean energy, investing US$3 billion in clean energy in 2025 alone.
ADB has been working for more than 40 years to increase access to electricity given its critical role in poverty reduction and economic growth. Still, there’s work to be done. Our focus is on improving energy access for the region’s poorest, promoting clean energy, fostering regional cooperation to meet energy demand, and helping governments to improve policies, laws, capacity, and institutions to efficiently manage and regulate the energy sector.
What policies guide ADB’s work in the energy sector?
Making sure that our commitments remain relevant and responsive to Asia and the Pacific’s evolving needs is a key priority. This is why we updated our energy policy in 2025. ADB’s updated energy policy provides a clear operational framework to prioritise investments in clean energy, strengthen electricity transmission and distribution, making energy systems smarter and foster regional cooperation and integration, among others.
The updated energy policy paves the way for the bank to support nuclear power investments for the first time, subject to rigorous assessments and the highest standards of safety, security, and environmental and social safeguards. It also recognises ADB’s role in enabling the development of diversified and responsible critical minerals-to-manufacturing value chains which are crucial to scale clean energy technologies for the region and the rest of the world.
