HANOI, Vietnam — The ongoing conflict between Israel and Iran underscores Asia’s vulnerability to disruptions in oil and gas shipments through the Strait of Hormuz, emphasizing its heavy reliance on Middle Eastern energy sources and the region’s slow transition towards cleaner energy alternatives.
The Strait of Hormuz, a crucial passageway for around 20% of the world’s oil and liquefied natural gas exports, is situated adjacent to Iran. Major Asian economies such as China, India, Japan, and South Korea are significant importers, collectively making up 75% of these energy imports.
Research conducted by Zero Carbon Analytics indicates that Japan and South Korea are particularly susceptible to potential risks should there be a disruption in this supply route, with India and China also at risk. Both Japan and South Korea have lagged in the adoption of renewable energy sources compared to other developed nations.
In 2023, for example, less than 10% of South Korea’s power was produced from renewable resources, far below the average of 33% seen among OECD member countries. Japan relies more on fossil fuels than any other nation within the G7. Despite a temporary truce in the Middle East conflict, energy experts advocate for reducing dependency on fossil fuels and encouraging a rapid shift to indigenous and sustainable energy production across Asia.
“These are immediate and significant risks that need addressing to ensure long-term energy and economic security,” said Murray Worthy, a Zero Carbon Analytics research analyst. Japan and South Korea find themselves particularly exposed due to historical reliance on energy imports.
Passing through the Strait of Hormuz are substantial oil imports, comprising 75% of Japan’s and over 70% of South Korea’s oil needs, with notable quantities of LNG also affected. While efforts to diversify fossil fuel import sources continue, transitioning to renewable energy remains crucial if these nations wish to uphold energy security.
Forecasts suggest Japan aims for 30-40% of its energy to rely on non-renewable resources by 2040, indicating investments in new LNG infrastructure. South Korea intends to decrease its LNG dependency to 10.6% by 2038 from a current rate of about 28%. Meeting 2050 net-zero carbon goals requires these nations to substantially boost renewable energy capacity, with analysts urging substantial investments in solar and wind energy projects.
Japan’s inconsistency in energy policy remains a hurdle, as indicated by its continued subsidies for gasoline and diesel alongside an agenda to ramp up LNG imports. Contradictions are apparent in its climate action plans, lacking definitive targets within the power sector. South Korea’s low electricity pricing presents a barrier to profitable renewable ventures, deterring much-needed investment. Strategic reforms in this area could potentially catalyze the needed transition.
Meanwhile, China and India have made notable progress in increasing their renewable energy capabilities to lessen their risks. China led global advances in wind and solar energy infrastructure growth in 2024, additionally expanding its domestic gas production. By reducing reliance on external supplies to some extent, these nations strive for greater energy resilience.
India persists with coal as a predominant energy source but is scaling renewable implementations rapidly, evident from the addition of 30 gigawatts in the past year. Efforts to diversify energy imports from various global suppliers have reduced vulnerabilities, but significantly more investment in renewable technologies is necessary to achieve robust energy security.
The risk of disruptions extends across Asia with potential blockades of the Strait of Hormuz. Energy experts emphasize the critical role of enhancing renewable energy capabilities to mitigate these risks. Southeast Asian countries, transitioning to net oil importers, are critical to developing stronger clean energy policies to handle rising demand that threatens to outpace supply.
The International Energy Agency points to looming economic pressures, predicting that ASEAN’s oil import costs might soar from $130 billion in 2024 to over $200 billion by 2050 unless clean energy initiatives are aggressively implemented.
“Beyond environmental concerns, clean energy represents a cornerstone of national energy security,” remarked an expert at the Institute for Energy Economics and Financial Analysis.