Conquering the Energy Problem in Asia
As the world moves towards meeting its 2030 climate commitments, the focus on policy and finance aspects of energy, particularly in Asia, has become increasingly important. The press release discusses the need for urgent policy support to forge an accelerated decarbonization pathway, with energy transition technologies playing a significant role.
The challenges in developing viable pathways for energy transition technologies' value chains are complex and require urgent attention. These technologies, such as Carbon Capture and Storage (CCS), low-carbon hydrogen, and biofuels, can help reduce emissions from hard-to-abate industries, ensuring energy access, affordability, and economic growth.
The current policy support needs in Asia to drive clean energy investment and accelerate decarbonization focus on several key areas. These include targeted de-risking instruments, favorable regulatory frameworks, strengthened national and regional project preparation platforms, scaled-up infrastructure development, regional coordination and integrated planning, and a shift in public and private finance towards renewables.
A greater infrastructure readiness and enhanced electricity market design are required in Southeast Asia and East Asia to manage the projected 2.6x growth in energy demand by 2025 relative to 2022, to integrate renewables effectively. Capacity building and coordinated regional approaches are essential to harmonize investment and climate objectives across member states, facilitating clean energy planning and execution.
Multilateral and bilateral finance actors, such as Japan’s public financial institutions, have historically favored fossil fuels. Therefore, policy realignment is needed to incentivize renewable energy investments, reduce supply chain risks linked to fossil fuel dependency, and bolster clean energy manufacturing capacities in Asia.
The World Bank’s recent blended finance examples highlight the importance of catalytic financing mechanisms, combining public and private capital, accompanied by policy certainty to activate large-scale clean energy infrastructure investments. East Asia’s decarbonization requires an integrated policy package addressing energy efficiency, electrification, renewables expansion, and deployment of advanced low-carbon technologies like green hydrogen and carbon capture, especially in power and industrial sectors.
In summary, Asia’s clean energy transition needs policy frameworks that reduce investment risk, improve infrastructure and market readiness, facilitate regional collaboration, enhance project development capacity, and realign financial flows towards sustainable technologies to effectively accelerate decarbonization and attract impactful clean energy investment. The energy challenge in Asia is crucial for meeting global climate targets under the Paris Agreement.
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