KUALA LUMPUR: Southeast Asia’s green economy has scaled to US$290 billion (US$1 = RM3.96) this year, but a realisation gap exceeding 35 per cent has opened between announced and deployed green capital expenditure (Capex) across the region’s power and electric vehicles (EV) value chains, according to a recent report by Bain & Company and Standard Chartered.
The report, "Southeast Asia’s Green Economy Report 2026: The New Calculus”, stated that capital deployment is no longer guided by climate ambition alone, with energy security, economic growth, and delivery now weighing equally in the calculus that determines investment flows.
"The transition is sorting leaders and laggards in ways that climate ambition alone can no longer bridge. 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. Southeast Asia has 24 to 36 months to get the answer right, with an additional US$80 billion in green capex in the balance,” said Dale Hardcastle, a partner at Bain & Company, in the report.
The report said as a result, capital flows decisively to sectors where commercial demand, policy, and infrastructure readiness tightly align, and stalls where they do not.
Of about US$540 billion in green capex announced across Southeast Asia’s power and EV value chains between now and 2030, the report said that only around US$315 billion is on a credible path to deployment under current conditions.
Realising the full potential of green capital deployment in Southeast Asia hinges on developing a robust power grid, yet grid investment has lagged demand growth.
"Investment in transmission and distribution fell three per cent between 2015 and 2025, even as energy demand grew about five per cent per year.
"New electricity demand from data centres, EVs and green industrial clusters could be an important catalyst for progress,” said the report.
Over the next three to four years, the region is projected to absorb over 100 terawatt-hour of new energy demand from these sources, amounting to more than US$200 billion in committed capex.
Reducing time-to-power for strategic demand will be key to capturing this new investment, the report said.
To date, four Southeast Asian countries now rank among the top 15 global EV markets by new car sales, yet 70 per cent of four-wheel EV value flows outside the region.
Additionally, Southeast Asia accounts for less than two per cent of global EV and battery production.
"Platform and supplier decisions being finalised between 2026 and 2028 will determine whether the region holds the profit pool. Southeast Asia could risk becoming a high-volume consumer and a low-margin assembler in a value chain it does not own.
"Closing the power, grid, and EV green capex deployment gap could unlock an additional US$80 billion by 2030, a 25 per cent uplift on the baseline,” said the report.
Meanwhile, Standard Chartered Malaysia interim chief executive officer, head of coverage and chief financial officer, Mushahid Syed, said the opportunity for Southeast Asia’s green economy is substantial, but capturing it requires synchronising policy, infrastructure and finance at speed.
"As an international bank with a strong presence across most ASEAN markets, we are committed to mobilising US$300 billion in sustainable finance globally by 2030.
"Our priority is to support clients through this transition by mobilising capital, structuring bankable solutions, and enabling cross-border opportunities that drive delivery,” he added. - Bernama
