Southeast Asia’s green economy has grown to US$290 billion (US$1 = RM3.96) in 2026, but a widening investment gap of more than 35 per cent remains between announced and deployed green capital expenditure (Capex), particularly across the region’s power and electric vehicle (EV) value chains, according to a new report by Bain & Company and Standard Chartered.
Titled “Southeast Asia’s Green Economy Report 2026: The New Calculus,” the report highlighted that investment decisions are no longer driven solely by climate ambitions. Instead, energy security, economic growth, and execution capabilities are now equally important in determining where capital flows.
According to the report, sectors with strong alignment between commercial demand, supportive policy, and infrastructure readiness are attracting investments, while others continue to lag despite ambitious sustainability targets.
“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,” said Dale Hardcastle, Partner at Bain & Company.
He noted that Southeast Asia has a 24 to 36-month window to close the gap, with an estimated US$80 billion in green Capex at stake.
The report found that of approximately US$540 billion in green Capex announced across Southeast Asia’s power and EV sectors through 2030, only around US$315 billion is currently considered on a credible path to deployment.
A key challenge remains the region’s power grid infrastructure, which has failed to keep pace with rising energy demand. Investment in transmission and distribution declined by three per cent between 2015 and 2025, even as energy demand increased by roughly five per cent annually.
The report noted that rising electricity demand from data centres, EV adoption, and green industrial clusters could serve as a major catalyst for infrastructure expansion. Over the next three to four years, Southeast Asia is expected to absorb more than 100 terawatt-hours of additional energy demand, supported by over US$200 billion in committed Capex.
In the EV sector, four Southeast Asian countries now rank among the world’s top 15 EV markets by new vehicle sales, yet approximately 70 per cent of four-wheel EV value creation still occurs outside the region. Southeast Asia currently contributes less than two per cent of global EV and battery production.
The report warned that decisions made between 2026 and 2028 on EV platforms and supplier ecosystems will determine whether the region can capture more value within the supply chain.
“Closing the power, grid, and EV green Capex deployment gap could unlock an additional US$80 billion by 2030, representing a 25 per cent increase from the baseline,” the report said.
Meanwhile, Standard Chartered Malaysia interim chief executive officer, head of coverage, and chief financial officer Mushahid Syed said the region’s green economy presents significant opportunities, but success depends on the ability to align policy, infrastructure, and financing effectively.
“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 said.
