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South Asia is at a crossroads with growing population, rising per capita income, expanding economies, and increasing energy demand. With growing industrial, commercial, and transport sectors along with rising urban and middle-income consumers, the energy use is increasing at unprecedented rates to meet the ambitious poverty-reduction targets. All countries of the region are facing critical scenarios ranging from depleting indigenous energy resources for developing long-term energy cooperation plans to ensuring energy security. South Asian countries are highly dependent on imported fuels, especially liquid hydrocarbon, for transport. For instance, India, Pakistan, and Bangladesh meet less of their energy demand with indigenous sources and thus face mounting energy import bills. Maldives depends on oil products to meet its energy needs. Nepal and Bhutan have huge hydroelectric potential. At the same time, there is a very wide variation in the energy consumption levels in South Asian countries. The high potential of hydropower in South Asia can reduce the reliance of the region on importing fossil fuel, increase the demand from indigenous resources, raise the energy security level, and reduce the emission levels. Therefore, energy security is vital for improved economic growth and to attain poverty reduction in the region, and thus calling for development and utilization of locally available renewable energy along with intraregional energy cooperation to help mitigate individual country energy security risks in the context of climate change is required.

The Association of Southeast Asian Nations (ASEAN) countries share the common challenge of energy security, which consists of meeting rising demand for energy in a secure, affordable, and sustainable manner. This chapter extends the gravity model to estimate the effects of economic integration, renewable energy supply, and energy efficiency on energy security. By extending the gravity model, our model specifications introduce a series of key variables to capture deployment of renewable energy, energy efficiency, and level of regional economic integration. Four measures are crucial to this task — reinforcing regional energy trade, ensuring renewable energy supply, energy efficiency improvements, and stronger economic integration. Using bilateral trade data for most economies in the world over the period 1995–2016, we demonstrate the role of renewable energy supply, energy efficiency improvements, and economic integration in bilateral energy trade. Based on the findings, policy recommendations are provided to help ASEAN decision-makers prescribe future energy security policy.