Powering Asia's Green Energy Progress

The adoption of more ambitious and progressive climate policies is needed to keep the net zero agenda on track. However, the haste on net zero should not harm local communities and the environment.

Asia’s greenhouse gas emissions now take up more than half of the global share. Much of the region’s growth in the past decade has been heavily dependent on fossil fuel production. This reliance on coal to power its fast-growing economies is eating up the region’s carbon budget that could be used to develop other high-value industries.

Speaking at Ecosperity Week 2024, key decision makers across the public and private sectors called for the adoption of more ambitious and progressive policies to keep the net zero agenda on track.

On the whole, the pace of deployment of renewables in Southeast Asia is lagging and favourable economics for these renewables, on their own, will not be enough to secure rapid energy transitions. According to the International Energy Agency (IEA)’s analysis, there is currently over US$1.8 trillion of capital yet to be recovered from today’s coal plants, including Asia’s young coal plants, which creates a powerful constituency for their continued operation.

Unlocking Asia's renewables potential with policy

“The public sector can play an important role in driving decarbonisation, but it must not distort the market,” said Grace Fu, Minister for Sustainability and the Environment and Minister-in-charge of Trade Relations, Singapore. “In some cases, we have seen how hard it has been to accelerate the push for renewables because government subsidies for fossil fuels are still in place and it goes against economics to use renewables as substitutes for fossil fuels.” 

Governments can play a more proactive role by setting progressive climate policies to price carbon right, remove fossil fuel subsidies and wisely deploy capital to incentivise the adoption of clean technologies. 

In doing so, Southeast Asia stands to unlock US$300 billion in new revenue streams this decade from climate initiatives – if investors step up today to the tune of US$1.5 trillion and governments work together to clear red tape. Among 10 ASEAN countries, only Indonesia, Malaysia, Singapore and Vietnam have made progress on this front.

Benchmarking Asia against the world

On a more positive note, there have been legal and regulatory developments around the renewable push in their countries. 

In the United States, the landmark Inflation Reduction Act (IRA) is driving investment in clean energy with broad tax incentives, since being signed into law in August 2022. Mindy Lubber, President of climate non-profit Ceres, shared that the IRA is also about jobs, justice and equity. Over 500 new climate and energy projects have been developed, with 270,000 new jobs created.

China has achieved stunning growth in its installed renewable capacity over the last two decades, outpacing the rest of the world. Prof Zou Ji, CEO and President of Energy Foundation China, however, says that China will now need to decouple carbon emissions from its economic growth. Digitalisation and artificial intelligence are two pathways that could help.

The Philippines aims to increase its renewable energy share in supply mix to 35% by 2030 and 50% by 2050. Its renewable energy sector is now open to full foreign ownership. Secretary Maria Antonia Yulo Loyzaga of the Department of Environment and Natural Resources also announced that the country is working with Singapore on an agreement for bilateral trading of carbon credits. 

Enabling a just and people-centred green transition

Ensuring a just transition was also top of mind as speakers zeroed-in on the need for policy-makers and businesses to ensure that the haste on net zero does not harm local communities and the environment.

Critical minerals are the cornerstone of the green transition, but the industry’s social and environmental policies have come under sharp scrutiny, and its credibility impacted by ongoing tensions and conflict with local communities living near mining sites.

“Mining firms need to be more stringent and transparent about operational processes, while finding ways to better communicate the importance of their work to the green transition,” said Dominic Barton, chair of mining major Rio Tinto’s board of directors.

Many renewable energy projects in developing countries are still not easily bankable and come with a sovereign risk premium.

“We say climate change is a global problem, but when it comes to solutions, we leave it to the countries at the bottom of the pyramid to pay,” said Piyush Gupta, CEO, DBS Group. 

Watch the session playbacks: