Transition finance will be one of the most important opportunities in the emerging markets especially as more countries commit to achieving net zero carbon emission in the coming decades. At the centre of the transition will be the push for renewable energy capacity, which is already underway.
These were the takeaways from the second part of The Asset Events+ 6th Asia Infrastructure Finance Leadership Series: Infrastructure Reimagined on the topic of Transition Finance and the Future of Renewables. The discussion forum attracted the participation of project sponsors, investors, bankers, and regulators from 21 countries in the Asia-Pacific, Europe, Middle East, and North America.
Among the speakers include Satoshi Ikeda, chief sustainable finance officer, Financial Services Agency, Japan; Rajit Nanda, chief portfolio management officer and acting chief investment officer ACWA Power; Jared Chng, chief financial officer, ENGIE South East Asia; Scott Reinhart, founder and managing director, Brawn Capital; Vivek Pathak, global head and director of climate business, International Finance Corporation; and Luca Tonello, managing director, structured finance department, Asia Pacific, Sumitomo Mitsui Banking Corp.
The speakers agree that prices of renewable inputs such as solar panels have been declining over time enabling renewables to become a viable energy alternative in the emerging markets. Governments, such as Japan, is pushing ahead with clean energy initiatives, including examining new technologies, and energy inputs such as hydrogen that should become more widely used in the coming decades.
Another speaker pointed out the need to look beyond the availability of solar or wind inputs, and also to address the challenges of storage technology and look to energy generation as a part of an integrated solution. For example, cost of storage is also going down but a lot more investments are needed to improve integration and technology is going to play a role.
Meanwhile, financial institutions are set to play a bigger part in facilitating the emerging market’s energy transition. Governments’ role is to ensure a stable framework supporting the various initiatives. Likewise, the continued development of domestic capital markets will be an important pillar for energy transition in the coming years.