Demand for energy in Southeast Asia is set to surge over the next decade, and the region is likely to face ripple effects from shifts in U.S. climate policy under a Trump presidency.

President-elect Donald Trump has pledged to roll back climate policies, signaling a more transactional approach to governance. This raises uncertainty about U.S. support for the global cleantech sector and how Trump will address its competitiveness, particularly in relation to China.

The incoming U.S. president could influence Southeast Asia’s energy transition by altering his country’s international climate presence, through business and trade relations and, perhaps unexpectedly, by dangling the prospects of more U.S. gas exports.

Trump could again rapidly yank the U.S. out of international climate deals such as the Paris Agreement, as he did in his first term (incumbent Joe Biden brought the U.S. back into the accord).

Without climate leadership from the world’s largest economy, emerging Southeast Asian nations may feel less pressure to curb emissions. Yet, a more pertinent question is whether recent progress in the region’s energy transition has relied heavily on U.S. involvement.

Between 2015 and 2022, solar and wind energy use grew over 40% annually across Southeast Asia, with Vietnam leading the way, according to think tank Ember. This trend highlights the diverse and varying pace of transition across the region.

U.S. withdrawal from global agreements could also impact financing for the green transition, as Washington has been integral in international initiatives like the Just Energy Transition Partnership (JETP) in Indonesia and Vietnam. If the U.S. steps back from JETP, the partnership might need players like the European Union to step in. China’s role would loom larger, with over 30% of its overseas power generation investment directed to Southeast Asia, mainly in coal and hydro. The Lowy Institute also reports China as being Southeast Asia’s largest renewable energy financier.

In the transport sector, Southeast Asia’s focus on electric vehicle adoption could reduce its dependence on imported fuel; the region has been a net importer of oil since 2005. EV adoption is likely to accelerate with China as the natural partner, given its dominance in affordable EV manufacturing.

Regarding business and trade relations, Trump’s “America first” approach is likely to increase trade barriers for Southeast Asia’s clean technology sector. China controls over 80% of the global solar panel supply chain and more than 80% of the battery market. Since the U.S. Inflation Reduction Act was enacted, domestic cleantech manufacturing investment has grown rapidly, especially in batteries, EVs, solar and critical minerals — sectors where Southeast Asia has interests.

The U.S. is a major solar equipment importer, sourcing over three-quarters of its imports from Vietnam, Thailand, Malaysia and Cambodia, largely made by Chinese companies. Tariffs on Chinese solar products, imposed under former President Barack Obama and extended by subsequent administrations, drove Chinese solar manufacturers to Southeast Asia. A Trump administration keen on reducing Chinese-linked imports will likely accelerate this trend.

But as Trump might be open to Chinese companies establishing U.S.-based jobs through production facilities, this could redirect some Chinese investments from Southeast Asia to the U.S.

Meanwhile, solar manufacturing in the region should technically benefit Southeast Asia’s energy transition, but the results have been mixed. Vietnam’s lead in solar growth was largely driven by feed-in-tariffs, whereas other Southeast Asian countries have progressed more slowly, underscoring the export-oriented nature of solar production in the region.

With U.S. solar imports totaling 30 gigawatts to 50 GW annually, Southeast Asia’s own installed solar capacity reached roughly 26 GW last year. Rising U.S. trade barriers could disincentivize solar manufacturing in the region, risking facility closures and efforts to localize clean technology manufacturing to date unless new demand arises to sustain the sector.

In the battery sector, barriers might be even higher, given that nearly 70% of U.S. cleantech investments target battery production, underscoring ambitions to compete with China across batteries, EVs and critical minerals. However, it is essential to distinguish between the U.S. government policies and private sector actions. Major companies, including Google and Tesla, maintain ambitious clean energy targets driven by public and investor pressure, charting independent paths in the energy transition.

U.S. companies expanding into Southeast Asian markets are likely to continue investing in clean energy, especially in high-demand sectors such as data centers and tech hubs, which carry strong climate goals and can help drive regional clean energy adoption.

As for U.S. gas exports, we must consider the role of U.S. liquefied natural gas (LNG) shipments in Southeast Asia’s transition fuel narrative.

Though the U.S. is less prominent in the cleantech arena, its gas exports are significant worldwide. The U.S., already the world’s largest LNG exporter, is set to double its export capacity over the next decade. Southeast Asia, a region projected to become a net gas importer by 2027, remains a prime target market.

Although the EU absorbs most U.S. LNG exports, complex dynamics in traditional Asian markets like Japan and South Korea, and strained U.S.-China relations have made market targeting more challenging. Despite the declining renewable costs, some Southeast Asian countries could remain hesitant to fully embrace various renewables due to grid limitations. Consequently, gas may continue to be favored as a transitional fuel, potentially increasing demand for LNG imports.

Globally, public and investor scrutiny around methane emissions from gas will continue to rise. Whether shifting from high-emission coal to a costlier, high-emission fuel like LNG will be accepted in the long-term remains uncertain. Strong ambitions in the U.S. will influence Southeast Asia’s energy transition, alongside traditional LNG players like Japan.

Ultimately, while competition between the U.S. and China could drive progress, China is likely to maintain significant influence over Southeast Asia’s energy transition.

Global energy dynamics have evolved. The transition is now about securing a competitive edge rather than solely about emissions reduction, with capital flowing into clean energy at a faster pace than fossil fuels.

The region would certainly welcome greater U.S. support in driving the energy transition. In the absence of government backing, however, U.S. businesses could fill the gap in advancing Southeast Asia’s energy goals, at least for now.