Regional spotlight: Hydrogen & e-fuels in Southeast Asia — what's different and why it matters

Southeast Asia's hydrogen economy reached $2.3 billion in announced project investment by end of 2025, yet only 11% of that capital has moved past the feasibility study stage, according to the ASEAN Centre for Energy's 2025 Hydrogen Progress Tracker. This gap between ambition and execution defines the region's hydrogen and e-fuels landscape: enormous renewable energy potential, rapidly growing industrial demand, and a patchwork of national strategies that range from Singapore's detailed hydrogen import roadmap to Myanmar's near-complete absence of policy frameworks. For investors, project developers, and policymakers working across the ten ASEAN member states, understanding these regional dynamics is essential because approaches proven in Europe, Japan, or Australia often fail when transplanted directly into Southeast Asian operating environments.

Why It Matters

Southeast Asia is one of the world's fastest-growing energy demand regions. The International Energy Agency projects that primary energy demand across the ASEAN bloc will increase 30% by 2035, driven by industrialization in Vietnam, Indonesia, and the Philippines (IEA, 2025). The region's current energy mix is heavily fossil-dependent: natural gas supplies roughly 23% and coal 27% of total primary energy, with renewables (excluding large hydro) contributing just 14%. Decarbonizing heavy industry, maritime shipping, and long-haul transport in this context requires low-carbon fuels at scale, and hydrogen and e-fuels are the primary candidates for sectors where direct electrification is technically or economically impractical.

The maritime dimension is particularly significant. Southeast Asia contains four of the world's twenty busiest shipping lanes, including the Strait of Malacca, through which roughly 25% of global seaborne trade passes. The International Maritime Organization's 2023 revised greenhouse gas strategy targets net-zero emissions by or around 2050, creating demand for green ammonia and green methanol as shipping fuels at Southeast Asian bunkering hubs. Singapore, already the world's largest conventional bunkering port by volume, is positioning itself as the region's green bunkering hub, with the Maritime and Port Authority of Singapore committing S$300 million (approximately $220 million) to develop ammonia and methanol bunkering infrastructure by 2030 (MPA Singapore, 2025).

Domestically, Indonesia's ammonia demand for fertilizer production exceeds 6 million tonnes per year, almost entirely produced from natural gas via the Haber-Bosch process. Converting even a fraction of this production to green ammonia represents a multi-billion-dollar market opportunity and a significant emissions reduction pathway. Vietnam's steel industry, projected to reach 30 million tonnes per year of crude steel production by 2030, faces increasing pressure from the EU's Carbon Border Adjustment Mechanism to reduce production emissions, making green hydrogen for direct reduced iron a commercially relevant consideration (World Steel Association, 2025).

Key Concepts

Green hydrogen economics in tropical climates: Southeast Asia's solar irradiance ranges from 1,400 to 1,900 kWh per square meter per year across most of the region, comparable to Southern Europe but with higher humidity and temperature profiles that affect electrolyzer efficiency. Alkaline and PEM electrolyzers operating at ambient temperatures above 35 degrees Celsius experience efficiency losses of 3 to 8% compared to temperate climate installations. However, several locations in Indonesia, Vietnam, and the Philippines offer combined solar and onshore wind capacity factors that can support electrolyzer utilization rates above 4,500 full-load hours per year, a threshold at which green hydrogen production costs drop below $3.50 per kilogram using current PEM technology.

Ammonia as both product and carrier: Unlike Europe and Japan, where ammonia is primarily discussed as a hydrogen carrier for long-distance transport, Southeast Asia has a massive existing ammonia market. Indonesia's Pupuk Indonesia, the state-owned fertilizer holding company, operates five ammonia production facilities with combined capacity exceeding 4.5 million tonnes per year. Replacing gray ammonia with green ammonia offers a pathway that avoids the "chicken and egg" infrastructure problem because the demand, storage, and distribution infrastructure already exists.

E-fuels for aviation and shipping: Sustainable aviation fuel (SAF) mandates are emerging across the region. Singapore's Civil Aviation Authority announced a 1% SAF blending mandate effective 2026, with a pathway to 5% by 2030. Malaysia's Petronas has partnered with Neste to develop e-kerosene production using captured CO2 and green hydrogen, targeting 50,000 tonnes per year of SAF capacity by 2028 (Petronas, 2025). For shipping, the ASEAN Green Shipping Initiative, launched in 2024, established voluntary bunkering standards for ammonia and methanol at ports across Singapore, Malaysia, and Thailand.

Regulatory fragmentation: There is no unified ASEAN hydrogen standard. Each nation defines hydrogen purity grades, safety codes, and permitting pathways independently. Indonesia uses SNI (Standar Nasional Indonesia) standards adapted from ISO frameworks. Singapore has developed bespoke hydrogen import and handling regulations through its Energy Market Authority. Vietnam's hydrogen strategy, issued in draft form in December 2024, proposes a national hydrogen authority but has not yet established implementing regulations. This fragmentation increases compliance costs for multinational developers operating across multiple ASEAN markets.

What's Working

Singapore's hydrogen import strategy is the most advanced national framework in the region. The city-state's National Hydrogen Strategy, updated in October 2024, identifies ammonia cracking and liquid organic hydrogen carrier (LOHC) import pathways as primary supply mechanisms. Singapore has signed bilateral hydrogen cooperation agreements with Australia, Chile, and New Zealand, and completed Southeast Asia's first commercial-scale ammonia-to-hydrogen demonstration at Jurong Island in 2025, converting 500 tonnes of imported Australian green ammonia into hydrogen for refinery use. The Energy Market Authority has established a hydrogen certification framework aligned with the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE) methodology, enabling cross-border hydrogen tracking and trade (EMA Singapore, 2025).

Indonesia's green ammonia pilot projects are leveraging existing industrial infrastructure. PT Pupuk Kaltim, the country's largest single-site ammonia producer, commissioned a 20 MW electrolyzer in East Kalimantan in early 2025, powered by a dedicated solar PV installation with battery storage. The pilot produces approximately 10 tonnes per day of green ammonia blended into the existing production stream, reducing the facility's overall carbon intensity by 4%. Japanese trading house Mitsubishi Corporation has invested $150 million in a larger 200 MW green ammonia project at the adjacent Bontang Industrial Estate, targeting 200,000 tonnes per year of export-grade green ammonia by 2028 (Pupuk Indonesia, 2025).

Vietnam's offshore wind-to-hydrogen pipeline represents a longer-term opportunity gaining concrete traction. The revised Power Development Plan VIII allocates 6 GW of offshore wind capacity by 2030, with an additional 30 GW targeted by 2045. Copenhagen Infrastructure Partners and Enterprize Energy have both proposed integrated offshore wind and hydrogen production facilities off the southern coast. The Thang Long Wind project, a 3.4 GW offshore wind farm with a 500 MW electrolyzer component, received its investment registration certificate from Ba Ria-Vung Tau Province in mid-2025, making it one of the first offshore wind-to-hydrogen projects in Southeast Asia to secure formal government approval (Enterprize Energy, 2025).

What's Not Working

Grid connection and renewable energy certificate challenges undermine green hydrogen credibility in several markets. In Thailand and the Philippines, electrolyzers connected to the national grid cannot guarantee that consumed electricity is renewable, even when backed by renewable energy certificates (RECs), because grid emission factors remain high (0.45 to 0.55 kg CO2/kWh). The EU's delegated acts on renewable hydrogen require either direct connection to new renewable generation, temporal matching within the same hour, or location within the same bidding zone. Most Southeast Asian grids lack the hourly tracking infrastructure to satisfy these requirements, potentially disqualifying regionally produced hydrogen from EU market access.

Land acquisition and permitting complexity slow project timelines significantly. Indonesia's land tenure system involves overlapping claims from national forestry maps, provincial spatial plans, and customary (adat) land rights. A 2025 study by the Institute for Essential Services Reform found that green hydrogen projects in Indonesia face average permitting timelines of 24 to 36 months, compared to 12 to 18 months for comparable projects in Australia or the Middle East (IESR, 2025). In Vietnam, foreign developers face a 50-year land lease cap and must navigate approvals from commune, district, and provincial authorities for each project component.

Financing gaps for first-of-a-kind projects persist across the region. Development finance institutions including the Asian Development Bank and the World Bank have issued hydrogen-specific technical assistance grants, but commercial lenders remain reluctant to provide project finance for green hydrogen at Southeast Asian risk premiums. Typical project finance terms in Indonesia and Vietnam carry interest rates of 7 to 10%, compared to 3 to 5% for equivalent projects in OECD markets, adding $0.80 to $1.50 per kilogram to the levelized cost of hydrogen production. Blended finance mechanisms, such as the ADB's Energy Transition Mechanism, have not yet been applied to hydrogen projects in the region.

Workforce and supply chain limitations constrain execution capacity. Southeast Asia has fewer than 2,000 engineers with electrolyzer design and commissioning experience across the entire ASEAN bloc, according to a 2025 survey by the ASEAN Hydrogen Association. Critical equipment including electrolyzer stacks, high-pressure hydrogen compressors, and ammonia cracker units must be imported from Europe, China, or Japan, with lead times of 12 to 24 months and import duties of 5 to 15% depending on the destination country.

Key Players

Established Companies:

• Pupuk Indonesia: state-owned fertilizer group operating 4.5 million tonnes per year ammonia capacity, piloting green ammonia blending at multiple sites
• Petronas (Malaysia): integrating hydrogen and e-fuels into downstream operations, partnering with Neste on SAF production
• PTT Group (Thailand): developing hydrogen refueling station network and co-investing in electrolyzer manufacturing through PTT Global Chemical
• Singapore LNG Corporation: adapting LNG terminal infrastructure for ammonia import, storage, and regasification capabilities

Startups and Developers:

• Enterprize Energy (UK/Vietnam): developing the 3.4 GW Thang Long offshore wind-to-hydrogen project
• H2 Industries (Germany/Southeast Asia): deploying LOHC-based hydrogen transport systems targeting Singapore and Indonesia markets
• GenH2 (Vietnam): local electrolyzer integrator focused on industrial hydrogen replacement projects under 10 MW

Investors and Development Finance:

• Asian Development Bank: providing technical assistance and concessional finance for hydrogen feasibility studies across ASEAN
• Mitsubishi Corporation: committing $150 million to green ammonia production in Indonesia
• Temasek Holdings (Singapore): investing in hydrogen infrastructure and e-fuel startups through its decarbonization portfolio

Action Checklist

• Assess project eligibility under both local regulations and EU delegated acts for renewable hydrogen, particularly temporal and geographic correlation requirements
• Engage with national hydrogen certification bodies early, as frameworks are evolving rapidly in Singapore, Indonesia, and Vietnam
• Structure projects to leverage existing ammonia infrastructure where possible, reducing the capital intensity of storage and distribution
• Build permitting timelines of 24 to 36 months into project schedules for Indonesia and Vietnam, with dedicated local land and regulatory counsel
• Explore blended finance structures through ADB, World Bank, and bilateral development agencies to reduce financing costs below commercial market rates
• Develop workforce training partnerships with regional technical institutions and equipment OEMs to build local electrolyzer commissioning and maintenance capacity
• Monitor ASEAN-level harmonization initiatives for hydrogen safety standards and trade protocols, as regional alignment will reduce cross-border compliance costs

FAQ

Q: How does Southeast Asia's green hydrogen cost compare to other producing regions? A: At current technology costs and regional renewable energy prices, green hydrogen production in favorable Southeast Asian locations (southern Vietnam, eastern Indonesia, central Philippines) ranges from $3.20 to $4.80 per kilogram, compared to $2.00 to $3.00 per kilogram in the Middle East and $2.50 to $3.50 per kilogram in Australia. The cost gap is driven primarily by higher financing costs (7 to 10% weighted average cost of capital vs. 4 to 6% in OECD markets), longer permitting timelines, and equipment import duties. As local supply chains develop and financing mechanisms mature, the cost differential is expected to narrow to $0.50 to $1.00 per kilogram by 2030.

Q: Which Southeast Asian country is best positioned for hydrogen export? A: Indonesia has the strongest long-term export potential due to its vast land area, high renewable energy resource quality, existing ammonia port infrastructure, and proximity to key import markets in Japan, South Korea, and Singapore. However, permitting and land acquisition challenges remain significant barriers. Singapore is better positioned for near-term hydrogen trade as a re-export and processing hub, leveraging its established bunkering and trading infrastructure. Vietnam offers a compelling offshore wind-to-hydrogen value chain but is earlier in its regulatory development cycle.

Q: What role will e-fuels play in Southeast Asian decarbonization compared to direct electrification? A: Direct electrification is the preferred and lower-cost pathway for road transport, buildings, and light industry across the region. E-fuels (green methanol, e-kerosene, green ammonia) are primarily relevant for three applications where batteries cannot serve: international maritime shipping through Southeast Asian sea lanes, long-haul aviation connecting ASEAN hubs to global destinations, and high-temperature industrial processes such as steel, cement, and fertilizer production. The ASEAN Centre for Energy estimates that e-fuels will constitute 8 to 12% of the region's final energy consumption by 2050, concentrated in these hard-to-abate sectors (ACE, 2025).

Q: How are ASEAN governments addressing the regulatory fragmentation problem for hydrogen? A: The ASEAN Ministers on Energy Meeting in 2024 endorsed a Regional Hydrogen Roadmap that establishes voluntary alignment targets for safety standards, certification methodologies, and cross-border trade protocols by 2028. Singapore and Indonesia have signed a bilateral mutual recognition agreement for hydrogen certification. The ASEAN Centre for Energy is developing a regional guarantee-of-origin scheme modeled on the EU's CertifHy framework but adapted for ASEAN grid and market structures. Progress is incremental, and full harmonization across all ten member states is unlikely before 2030.

Sources

• International Energy Agency. (2025). Southeast Asia Energy Outlook 2025. Paris: IEA.
• Maritime and Port Authority of Singapore. (2025). Singapore Green Bunkering Strategy: Ammonia and Methanol Infrastructure Development Plan. Singapore: MPA.
• World Steel Association. (2025). Steel Statistical Yearbook 2025: Southeast Asia Chapter. Brussels: worldsteel.
• Petronas. (2025). Sustainability Report 2024: Hydrogen and E-Fuels Development Progress. Kuala Lumpur: Petroliam Nasional Berhad.
• Energy Market Authority Singapore. (2025). National Hydrogen Strategy: 2024 Update and Implementation Progress. Singapore: EMA.
• Pupuk Indonesia. (2025). Green Ammonia Integration Program: East Kalimantan Pilot Results. Jakarta: PT Pupuk Indonesia (Persero).
• Enterprize Energy. (2025). Thang Long Offshore Wind and Hydrogen Project: Investment Registration and Development Update. Ho Chi Minh City: Enterprize Energy.
• Institute for Essential Services Reform. (2025). Indonesia's Green Hydrogen Permitting Landscape: Barriers and Recommendations. Jakarta: IESR.
• ASEAN Centre for Energy. (2025). ASEAN Hydrogen Progress Tracker and Regional Roadmap Update. Jakarta: ACE.