Investments for the development of clean energy technology in Southeast Asia have dipped by over 50 percent, slowing down the region’s efforts to meet its 2030 net-zero carbon emissions ambition, according to a report.
International research and investment firms Bain & Co., Temasek, GenZero and Amazon Web Services found in their “Southeast Asia’s Green Economy 2023 Report: Cracking the Code” that while investors favored renewable energy projects, the majority of the green investments in the region went only to Indonesia and Singapore.
The report noted that green investment in the region went down to $5.2 billion in 2022, far from the needed $1.5-trillion cumulative investment to achieve its global climate action commitments by 2030.
Of this total, $1.1 trillion in investments are required for clean and efficient energy transition.
“Southeast Asian governments need to focus first on proven solutions to balance rising energy demand while reducing carbon emissions. The everything, everywhere all at once mantra is not going to get the job done nor build the clarity needed to scale investment and impact,” said Dale Hardcastle, global head of carbon markets at the Singapore-based Bain & Co.
According to the report, the region remained highly dependent on fossil fuels and international funding, making it a challenge to effectively implement clean energy transition initiatives.
Such is the case for the Philippines, which still sources more than 50 percent of its electricity requirements from coal-fired power plants. Renewable energy accounts for only 21 percent of the country’s energy mix—far from the government’s goal of increasing this to 35 percent by 2030.
“Adapting economies to change in the face of an emerging middle class that is driving energy demand, while simultaneously reducing carbon emissions, is an enormous task for governments and leaders in the region,” the report said.
While 40 percent of Southeast Asian countries have published long-term policy strategy documents, the report pointed out that most still lacked actionable implementation details.
This is mostly due to the slow approval and launch of infrastructure, lack of financial attractiveness and regulatory uncertainty, according to the report.
Addressing this and accelerating energy transition would require the region’s energy sector to streamline its permit process, accelerate grid modernization efforts to reduce congestion and curtailment risks and increase financial incentives for renewables.
“Regional cooperation is key to unlocking the full potential of an effective green economy by crowding in necessary capital and expertise to fully develop opportunities in nature, technology and carbon markets. This will help advance the regional transition to a net-zero economy,” stressed Frederick Teo, GenZero chief executive officer. INQ