3 June 2026
The 2026 energy shock has tested Asia harder than any other region. At RESET’s inaugural regional seminar, our experts—Joyashree Roy, Duan Maosheng, Ashwini K Swain, and Qin Hu—noted that the crisis is also an accelerant in the clean energy transition for security, economic productivity, and equity reasons.
The 2026 crisis should not be managed through emergency measures alone. Chronic under-utilization of energy efficiency and demand-side solutions also exacerbate energy shocks. Historical evidence across more than a century shows that energy efficiency improvements in industry, transport, and buildings consistently reduce import dependence, lower costs, and create jobs, with welfare gains particularly strong in developing economies. Countries need to mainstream demand-side solutions into long-term energy planning, using high-resolution spatial models to integrate supply and demand in ways that enhance affordability for end consumers.
Countries that invested in decarbonization are the most insulated from fossil fuel shocks. China, despite being a major oil importer, has been among the large economies least affected by the energy shock. Two decades of sustained government support for electric vehicles has produced a fleet of over 40 million EVs that is now displacing roughly 50 million tonnes of crude oil imports annually. That is approximately 20% of what China would otherwise source from the Middle East.
India has suffered more acute disruption. Around 85–90% of its oil and a significant share of LPG and LNG imports transit through the Strait of Hormuz. However, years of renewable energy investment and a growing base of electric three-wheelers have provided partial buffers, particularly in peri-urban areas where fossil fuel exposure might otherwise have been severe.
The transition cannot be just if it widens the affordability gap — and the current crisis is doing exactly that. The researchers were clear that carbon pricing instruments have an important role to play here. Revenue from carbon markets and carbon taxes can be recycled to fund social protection, cushion vulnerable households from price shocks, and finance the clean energy infrastructure that will reduce exposure to future crises. India’s National Clean Energy Fund offers a model worth examining more closely.
Just transition cannot be imposed from the top down in highly diverse federal systems. In India, meaningful transition will need to be negotiated state by state, with pathways tailored to each region’s economic base, energy mix, and political economy. The same principle applies across the Global South more broadly: solutions must be locally grounded, even when they draw on shared research, tools, and international finance.
RESET’s regional webinar series continues quarterly, rotating across the Global South. Keep an eye out for our next webinar in August.