SE Asia’s Green Economy Faces US$80 Billion Execution Gap: Bain, StanChart Report

SINGAPORE, May 18, 2026 – Southeast Asia’s green economy has expanded to an estimated US$290 billion and remains on track to reach US$430 billion by 2030, but the region is increasingly confronting what researchers describe as a “conversion problem” rather than a shortage of climate capital.

According to the latest Southeast Asia Green Economy Report 2026: The New Calculus, published by Bain & Company and Standard Chartered, more than 35 per cent of announced green capital expenditure across Southeast Asia’s power and electric vehicle ecosystems is failing to translate into actual deployment.

The report argues that the region’s climate transition is entering a more commercially disciplined phase where climate ambition alone is no longer sufficient to unlock investment. Instead, energy security, infrastructure readiness and economic competitiveness are increasingly determining where green capital flows.

“The transition is sorting leaders and laggards in ways that climate ambition alone can no longer bridge,” said Dale Hardcastle.

“Capital is flowing where commercial demand, energy security and policy that delivers infrastructure come together, and stalling where any of the three is missing, even where targets remain ambitious. That is the new calculus,” Hardcastle said.

The report estimates that of roughly US$540 billion in announced green capex across Southeast Asia’s power and EV sectors through 2030, only about US$315 billion is currently on a credible path toward deployment under existing conditions.

Grid Infrastructure Emerges as Critical Bottleneck

One of the strongest themes emerging from the report is the widening mismatch between rapidly growing electricity demand and inadequate grid investment across the region.

While energy demand across Southeast Asia has grown by roughly 5 per cent annually over the past decade, investment in transmission and distribution infrastructure fell by 3 per cent between 2015 and 2025.

The challenge is becoming more urgent as artificial intelligence infrastructure, hyperscale data centres, EV adoption and green industrial clusters rapidly increase electricity consumption.

The report projects that Southeast Asia could absorb more than 100 terawatt-hours of new electricity demand over the next three to four years from data centres, EVs and industrial decarbonisation projects alone, representing more than US$200 billion in committed capex.

However, delays in power grid connectivity are increasingly becoming a barrier to investment.

According to a Bain survey referenced in the report, 90 per cent of regional data centre operators and hyperscalers identified grid connection delays as one of their biggest constraints, with many willing to pay premiums for guaranteed access timelines.

The report warns that as delays continue, many operators are turning to interim gas and thermal power solutions instead of waiting for renewable energy infrastructure to catch up, potentially locking in fossil fuel dependence well into the 2030s.

Southeast Asia Risks Becoming an EV Assembly Hub Rather Than Value Creator

The report also raises concerns that Southeast Asia could emerge as a large-scale EV consumption market without capturing sufficient long-term industrial value.

While four Southeast Asian countries now rank among the world’s top 15 EV markets by new vehicle sales, the region still captures less than 2 per cent of global EV and battery production value. Around 70 per cent of four-wheel EV value currently flows outside the region.

Although EV adoption across Southeast Asia has exceeded earlier projections by 1.5 to 2 times, major challenges remain around supply-chain ownership, battery ecosystems and long-term manufacturing competitiveness.

The report notes that platform and supplier decisions made between 2026 and 2028 could determine whether Southeast Asia becomes a genuine manufacturing and innovation centre or remains a lower-margin assembly and consumption market.

Cancellation rates across renewable energy and EV supply-chain projects further illustrate the structural challenges.

Between 2021 and 2025, approximately 50 to 60 per cent of renewable energy projects across Vietnam, Thailand and Indonesia were cancelled due to permitting challenges, unclear power purchase agreements and grid connection issues. Nickel and battery investment projects recorded cancellation rates of 40 to 50 per cent.

Singapore Advances, But Investment and Corporate Execution Remain Uneven

The report’s SEA Green Economy Index 2026 suggests that while national ambitions across Southeast Asia remain broadly stable, progress around corporate roadmaps and investment execution is becoming increasingly uneven.

Singapore continued to advance in areas including mandatory emissions reporting, sustainable aviation fuel initiatives and EV adoption, with EVs accounting for approximately 46 per cent of new four-wheel vehicle sales in 2025, among the highest in Southeast Asia.

However, the report also notes that Singapore’s renewable energy share remains relatively low at around 5 per cent and that green capex deployed currently represents only 23 to 27 per cent of the investment required to meet long-term decarbonisation goals.

Recommendations for Singapore include accelerating carbon tax implementation, expanding cross-border renewable energy imports through the Indonesia-Singapore power corridor and strengthening mandatory sustainability taxonomy adoption among SGX-listed companies.

The report also highlights diverging trends across Southeast Asia. Thailand advanced its net-zero target to 2050 under its latest NDC 3.0 framework, while Malaysia strengthened implementation of its energy transition roadmap through initiatives including LT-LEDS and CRESS.

At the same time, corporate transition roadmaps weakened in some markets including Indonesia and Thailand, reflecting growing pressure on companies to move beyond climate commitments toward actual deployment and measurable execution.

Chow Wan Thonh, Head of Coverage for Singapore and ASEAN at Standard Chartered, said synchronisation between policy, infrastructure and finance will be essential if Southeast Asia hopes to unlock the next phase of green growth.

“The opportunity for Southeast Asia’s green economy is substantial, but capturing it requires synchronising policy, infrastructure and finance at speed,” he said.

The report concludes that Southeast Asia’s long-term success may ultimately depend on whether the region can align energy infrastructure, policy frameworks and commercial demand quickly enough to capture an additional US$80 billion in green investment opportunity before capital is redirected elsewhere.