Asia is required to invest as much as $1 tn annually in energy over the next 15 years to strengthen energy security, as countries reassess their reliance on imported fuels following disruptions caused by the Iran war, Reuters reported on October 22, citing a report by US-based consultancy McKinsey.

McKinsey raised its forecast for Asia’s energy demand in 2040 to 370 million terajoules, 15% above its estimate a year earlier.

The region is expected to account for about 70% of global net energy demand growth through 2040, driven by expanding data centers, rising cooling needs, and industrial activity, according to the consultancy.

McKinsey expects coal to remain a significant part of Asia’s energy mix for longer than previously anticipated, with demand broadly flat over the next decade.

Declining consumption in China is expected to be offset by growth in India and Southeast Asia. Natural gas demand, meanwhile, is projected to slow over the next five to 10 years as countries prioritize coal and renewables for power generation, although industrial demand could support a longer-term recovery, according to the company.

McKinsey also forecast that renewable energy investment would increase, particularly in India and Southeast Asia, with annual investment in solar and wind projected to reach about $300 bn through 2040.

The company predicted that biofuels would displace $90 bn to $100 bn in fuel imports by 2040, potentially reducing the region’s dependence on overseas suppliers.

In September, a McKinsey report on energy security said the disruption to the Strait of Hormuz exposed vulnerabilities in global energy supply chains and reinforced the need to diversify supplies and strengthen resilience.