Asian Angle | For Asia, low-carbon energy is both a priority and one of the greatest regional challenges

Asia will make up two-thirds of global energy demand growth by 2025, meaning private capital needs to flow into low-carbon projects

A survey by The Economic Research Institute for Asean and East Asia (ERIA) revealed a lack of information on finance and gaps in de-risking investment opportunities in this sector

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A low-carbon energy transition requires the mobilisation and establishment of capital flows to energy generation and energy efficiency improvements. Photo: Reuters

Published: 7:05am, 24 Feb 2020Updated: 2:53pm, 24 Feb 2020

With Asia’s rapid population and economic growth, energy demand is also expected to rise, making up two-thirds of all global energy demand growth by 2025.

Coal is still likely to account for more than half of Asia’s primary energy production, bringing with it pollution problems and carbon emissions.

To avoid these environmental and health hazards across Asia in the coming decades, meeting energy needs through low-carbon means is a priority, but it is also one of the greatest regional challenges.

Demand for low carbon projects and awareness of low carbon financing opportunities. Credit: The Economic Research Institute for Asean and East Asia (ERIA)

A low-carbon energy transition, involving low-carbon energy generation and energy efficiency improvements, will require the mobilisation and establishment of capital flows to the respective technologies. In order to encourage such investment, private sector involvement is necessary but currently faces extensive barriers and risks to entering the market due to regulations, licensing processes, taxation, and fuel subsidisation programmes.

Having a clear understanding of both government and private sector roles in the low-carbon energy transition is important to stimulating necessary investments.