[Japan’s Voices No.8] Japan’s Bold Moves for Energy Resilience in Asia: POWERR Asia and AZEC 2.0 Japan’s New Flagship Regional Initiatives

As the Hormuz crisis rattles Asia, Japan is moving to lead the region’s push for energy resilience.

On April 15, at the initiative of Prime Minister Sanae Takaichi, the AZEC Plus Summit on Energy Resilience was convened online with the participation of leaders and representatives from 16 Asian countries, together with the heads of three international organizations.

At the meeting, Prime Minister Takaichi announced the launch of POWERR Asia (Partnership on Wide Energy and Resources Resilience Asia) and declared that the Asia Zero Emission Community (AZEC) would evolve into AZEC 2.0 by incorporating the perspectives of economic and energy resilience.

As tensions in the Middle East dramatically heighten the importance of energy resilience in the Indo-Pacific, POWERR Asia and AZEC 2.0 appear poised to become Japan’s new flagship regional initiatives.

The disruption of shipping through the Strait of Hormuz has dealt a severe blow to global energy supply, with Asia bearing the brunt of the impact. Approximately 90 percent (around 13 million barrels per day) of the crude oil passing through the Strait of Hormuz is destined for Asia, and the disruption is directly affecting Asian countries with limited oil reserves.

The Philippines has been particularly affected, as it depends on the Strait of Hormuz for 94 percent of its crude oil imports and has only 45 days’ worth of oil and petroleum product reserves. As a result, President Ferdinand Marcos Jr. declared a state of energy emergency on March 24. Vietnam is also highly reliant on the Strait of Hormuz, with 81 percent of its crude oil imports passing through it, and has only 30 days’ worth of reserves. Consequently, gasoline prices in Vietnam have risen sharply and become highly volatile.

* The data on crude oil dependence on the Strait of Hormuz and stockpile volumes are based on estimates by Japan’s Agency for Natural Resources and Energy.

With many Asian countries grappling with these disruptions, the Japanese government, under Prime Minister Takaichi’s leadership, convened the online AZEC Plus Summit on Energy Resilience on April 15 with the participation of leaders and representatives from 16 Asian countries and the heads of three international organizations.

At the summit, Prime Minister Takaichi announced the launch of POWERR Asia, a framework consisting of two categories of measures: emergency responses to address immediate fuel shortages and maintain supply chains across Asia, and structural responses aimed at strengthening the region’s long-term energy resilience. The launch of POWERR Asia, backed by an envisioned $10 billion (¥1.5 trillion) support package, was broadly welcomed by participating leaders and representatives.

Emergency Responses

Measures under the emergency response category include:

•  Financial support for procuring alternative crude oil and petroleum products
• Financing to maintain production at companies in Asia essential to Japan’s supply chains
• Fiscal support for relevant Asian governments
• Closer coordination with the Asian Development Bank (ADB) and the International Energy Agency (IEA)

Implementation tools are expected to include JBIC loans, ODA finance by JICA, insurance by NEXI, and cooperation with ADB and IEA.

Structural Responses

Measures under the structural response category include:

• Support for building oil stockpiling and release systems
• Support for relevant infrastructure such as storage tanks
• Support for restoring oil production capacity in Middle Eastern oil-producing countries
• Steps to secure the safety of sea lanes
• Diversification of energy sources away from crude oil dependence and toward LNG, biofuels, next-generation solar power, and nuclear energy (SMRs)
• Industrial upgrading through energy-efficiency investment and the introduction of new technologies

Implementation methods are expected to include support by JOGMEC, JBIC loans, ODA, NEXI insurance, METI’s Global South subsidy program, and cooperation with ADB, IEA, and ERIA.

Japan’s decision to announce such a bold package—despite scrambling itself to secure necessary crude oil and petroleum supplies amid disruptions in the Strait of Hormuz—reflects a clear recognition that Asian economies are now deeply interconnected through supply chains, and that joint efforts to strengthen energy resilience have become indispensable.

Japanese companies maintain extensive production networks throughout Asia. If any part of the supply chain breaks down, it becomes difficult to sustain production. The healthcare sector faces similar vulnerabilities. Japan sources many medical supplies from other parts of Asia, including dialysis equipment, waste disposal containers, and surgical gloves. As a result, supply chain disruptions caused by fuel shortages anywhere in Asia could seriously affect Japan’s economy and society, as well as the broader Asian economy.

Many AZEC Plus Summit participants underscored the need for coordinated regional action to enhance Asia’s energy resilience, suggesting broad regional alignment on this issue.

Particularly notable is that the announcement of POWERR Asia came amid speculation that Prime Minister Takaichi would be visiting Vietnam and Australia in early May to unveil a new initiative updating the Free and Open Indo-Pacific (FOIP) concept—marking its 10th anniversary this year—to reflect current circumstances.

As uncertainty over the Hormuz crisis grows, bolstering energy supply systems has become one of the most pressing challenges for Indo-Pacific countries. POWERR Asia is therefore likely to become one of the key pillars of a renewed FOIP strategy. Prime Minister Takaichi stated in her post-summit press conference that “POWERR Asia is a concrete embodiment of the FOIP vision that the Takaichi administration is advancing.”

Japan further intends to evolve AZEC so that it can respond more effectively to the growing importance of energy resilience in Asia. Among AZEC’s three core objectives—reducing greenhouse gas emissions, promoting economic growth, and ensuring energy security—the significance of energy security is likely to be emphasized more than ever under current circumstances. Prime Minister Takaichi also stated after the summit that AZEC partners had agreed to develop the initiative into AZEC 2.0 by incorporating the perspectives of economic and energy resilience.

Recent years have seen Japan lead many regional initiatives and policies, among them FOIP and the CPTPP. In the face of rising tensions over the Strait of Hormuz, the need for energy resilience in the Indo-Pacific has grown sharply. Through the launch of POWERR Asia and AZEC 2.0, which appear likely to become Japan’s new flagship initiatives, Japan is emerging as a key anchor of Asia’s energy resilience.

*The author concurrently serves as Japan’s Ambassador for AZEC.