The future of global oil has become more uncertain: The downshift in Chinese consumption is changing the demand outlook, while the growth of U.S. and Western Hemisphere oil supply is rebalancing the global market. The war in Ukraine has turned a global oil market into a divided market. Even with energy transition, oil will continue to play a significant role in the energy mix for decades to come.

Asia's energy markets are on the cusp of a transformative evolution, set to redefine the region's energy landscape in the years to come. Driven by rapid economic and population growth, alongside surging energy demand, Asian economies are grappling with the intricate complexities of balancing energy security and affordability to sustain economic development while advancing their climate ambitions – and there are implications on every vertical of the Asian energy value chain from upstream to midstream to downstream end use segments.

Energy companies are pursuing a diverse range of strategies and new business models as they support the needs of today’s energy system while positioning themselves for the energy transition. Experience over the last two years is leading to a reevaluation of priorities as companies analyse costs and opportunities and adjust to volatile government policies and the requirements of investors. Some are moving quickly into new technologies; others are more focused on consolidating for greater scale, efficiency and future flexibility and many are pursuing innovative new partnerships. Whatever the strategies, there remain constants – meeting customer needs, ensuring reliable supply, and seeking to reduce emissions.

The electric power sector is at the forefront of the global energy transition, with wind and solar technologies commercially viable and now deploying at scale. The electrification of the energy system and the recent emergence of power-thirsty artificial intelligence systems point to substantial demand growth for the sector, which can pose challenges for what have been seen as set targets for the future generation mix. New technologies, partnerships and policies are emerging to help the sector meet the world’s need for reliable, affordable and low emissions electricity. But standing in the way are roadblocks in the form of permitting, capital deployment, and sourcing and supply chains, all slowing grid transformation and deployment of new generation capacity.

Asia’s power demand is set to grow at an unprecedented pace, driven at its roots by population growth, rapid economic expansion and urbanisation, and widespread electrification across various sectors. Particularly in developing Asia, a critical balancing act must be struck in advancing power system decarbonisation while ensuring inclusive growth. Many countries in the region continue to grapple with challenged energy accessibility, especially among rural populations. Addressing these dual imperatives calls for sustained yet sustainable development of the region’s power supply, balancing the fulfilment of immediate energy needs with the commitment to long-term climate goals.

The pathway to a decarbonised power sector varies across countries, reflecting the region’s diverse resource endowments and development priorities. Each nation must therefore leverage a range of technologies to tailor its power mix based on its own unique circumstances and agendas. Regional initiatives like the ASEAN Power Grid are essential for bridging such resource disparities, while fostering cross-border collaboration and advancing a unified strategy for power sector decarbonisation across Asia.

Harnessing technological innovation is critical to the energy transition. AI and other digital technologies stand out as the most broadly disruptive forces, but technological advancement is occurring across the entire energy landscape. A vibrant innovation ecosystem presents significant strategic opportunities for stakeholders to integrate new approaches into their operations. Understanding successful models of innovation will be essential for advancing technology deployment, scaling innovations, and fostering collaboration across private and public institutions. Company programs, research initiatives and start-ups all have important roles in technological advances.

In addition, innovative solutions centered on circularity and sustainability, such as carbon removal and waste management technologies, face substantial obstacles in securing funding, achieving project deployment, and scaling for commercial viability. Similarly, emerging clean energy technologies such as low-carbon hydrogen and carbon capture and storage (CCS) remain in their infancy and have yet to gain meaningful traction in the region. To fully unlock the potential of next-generation technologies in advancing Asia’s energy transition, fostering collaborative innovation and establishing strategic partnerships across both the public and private sectors will be crucial.

Finance, the fuel of energy investment, is at the center of the energy transition. Managing the current energy system while fostering new low-carbon technologies and markets will require the mobilisation of significant public and private capital, in the face of policy risks, trade tensions and geopolitical disruptions. Meanwhile investors’ choices are sending mixed signals to companies about how to move to a lower emissions energy system while delivering the returns stakeholders need. The financing of the energy transition in emerging markets remains challenged as availability of capital, regulation and risk levels slow investments and capital flows.

Projects in emerging Asia continue to be challenged by high capital costs, driven largely by suboptimal risk-return dynamics. Clearer policies and regulatory frameworks are necessary to mobilise finance to deploy capital in projects that bend the emission curve, irrespective of underlying fuel type. Closing, or tightening the capital gates to projects at the source of fuel stage could risk sidelining investments that deliver near-term emission reductions, while longer-term breakthrough clean technologies continue to develop and mature.

COP28 marked a significant moment with major industry players committing to reducing emissions and enhancing measurement and monitoring practices. While compliance carbon markets are expanding, questions about their applicability in emerging economies and the potential convergence of voluntary and compliance carbon markets remain. The climate and sustainability agendas are facing challenges in promoting collaboration between governments and industries, as well as in establishing effective funding strategies. Points of contention include how to secure financing for energy transitions in emerging markets, providing capital for both climate adaptation and mitigation efforts, and ensuring the effective operation of carbon markets. Achieving global consensus is increasingly challenging within a polarized political and economic landscape.

With its densely populated coastal cities and heavy reliance on agriculture for livelihoods and food security, Asia remains one of the most climate-vulnerable regions in the world. Yet, the region is also home to some of the world's fastest-growing economies. The challenge, therefore, lies in harmonising rapid economic growth with the urgent imperative to mitigate environmental risks. Balancing sustained economic growth while strengthening the region’s climate resilience necessitates the development of robust policy frameworks, forging of strategic regional partnerships and mobilisation of critical investments into climate mitigation and adaptation solutions.

Asia’s progress toward a sustainable energy future hinges on the successful development of a skilled workforce capable of driving the region's energy transition. At the same time, as traditional energy systems evolve in line with low-carbon agendas, ensuring a just and equitable transition for the region’s incumbent workforce becomes increasingly paramount. The rise of AI technologies is reshaping every facet of organisations, from talent management and skills development to operational strategies and customer engagement.

Central to this is the need for comprehensive reskilling and upskilling initiatives, which are essential for managing the economic disruptions of the transition while fostering equitable opportunities within the workforce. Such efforts require close collaboration between governments, the private sector, educational institutions, and trade unions to design accessible and targeted training programs aligned with the needs of evolving energy markets, while ensuring that workers are empowered with the necessary resources to adapt and thrive as the region transitions.