Paris 1.5°C Goal Is 'Feasible' for Southeast Asia—If Bills Get Paid

Southeast Asia can still hit the Paris Agreement's 1.5°C target, but only if governments accept deliberately higher energy costs, according to Guillaume Lucci, president and CEO of Philippines-based Prime Infrastructure Capital.

"I do think it's feasible, but I think it will require sacrificing cost to achieve the objective," Lucci said Tuesday onstage at Fortune's Southeast Asia 500 Summit in Ho Chi Minh City, Vietnam.

The trade-off is stark, he argued. "That will be a very difficult decision for a lot of the governments in our region to decide if we drive cost up and decarbonize, or maybe not so, and rethink some of these targets," Lucci added. He called himself "a bit of a pessimist" on whether the region can power an AI-era growth spurt without breaking its climate targets.

Why the Philippines Is the Cautionary Tale

Lucci's skepticism comes from hard recent experience. The Philippines imports 98% of its oil from the Middle East. The country declared a nationwide energy emergency in March after the Iran war broke out in February, sending local fuel prices soaring.

The grid compounds the problem. "We have fairly poor grids [and] certainly not grids that are capable of receiving an abundance of variable energy," Lucci said. "We're building 2,000 megawatts of pumped hydro right now that will help stabilize the grid in the Philippines."

What Does the Energy Shock Mean for Asia?

The supply disruption matters far beyond Manila. About 25% of the world's seaborne oil trade went through the Strait of Hormuz in 2025, according to the International Energy Agency, and options to bypass the strait are limited. An estimated 80% of the oil and oil products passing through it were destined for Asia.

Kim-See Lim, chief investment officer of the Asian Infrastructure Investment Bank (AIIB), quantified the aftermath. "The LNG prices are still double of where it used to be before the Middle East issue, and oil prices are still double as well," she said.

Lim was more optimistic than Lucci, pointing to Southeast Asia's young, tech-savvy population. "It's been the fastest-growing region in the last two decades, projected to continue on that trajectory," she said. She added that the region will have to transition regardless, because climate change effects are "felt quite severely" there.

Capital Isn't the Problem—Confidence Is

Asked about the region's energy investment gap, Lim rejected the idea that money is scarce. "Clearly, capital is not lacking," she said. "What's lacking really is the confidence, right? And that's bankable projects."

Companies still expect a minimum return in emerging markets, she said, while perceived risk remains "too high." For developers and lenders, that means the bottleneck sits at project preparation and de-risking, not in fundraising.

Data Centers Push Demand Higher

The demand side keeps tightening. The IEA projects Southeast Asia's electricity demand will rise 5.4% annually between 2026 and 2030. Data centers add a new layer: global electricity consumption from data centers reached an estimated 415 terawatt hours in 2024—roughly 1.5% of global electricity use—and the IEA says AI is accelerating deployment of high-performance servers, driving up power density.

That is already reshaping siting decisions. "Many of the data centers have to move far from the community to the energy park," said Xingjian Pang, East Asia president of Schneider Electric. Locating facilities near communities, he said, risks protests over their electricity and water use.

Under the Paris Agreement, countries committed to holding global average temperature rise well below 2°C above preindustrial levels and pursuing efforts to limit it to 1.5°C. Whether Southeast Asia can do both—decarbonize and fuel AI-era growth—now hinges on whether its governments will pass the higher costs on to consumers, or revisit the targets themselves.