The importance of Asia’s role in the energy transition to limit global warming to 1.5 degrees Celsius by 2050 cannot be overstated. While the continent accounted for 64% of new installed renewable capacity in 2020, according to figures from the International Renewable Energy Agency, development is uneven across Asia.
As the power sector is decarbonised, coal power and oil for transport and feedstock are being phased out, with old technology being replaced with more efficient, low-emission, combined-cycle gas-fired power. However, reliance on coal is still increasing in Indonesia, the Philippines and Vietnam. Meanwhile, China is still by far the world’s largest coal consumer, followed by India, according to data from the International Energy Agency.
Despite this, the technological improvements and reduced electricity-generation costs from renewables give hope. From 2010 and 2019, photovoltaic costs reduced by 82%, onshore wind by 40% and offshore wind by 29%, according to Irena figures.
Currently, most energy project financing is from the private sector, venture capital and industrial capital. Renewable end uses are mostly on providing biofuel supply and district heating. Meanwhile, energy conservation focuses much more on buildings and industrial processes in heating and cooling, as well as the transport sector.
Electrification end uses are increasingly on heating, cooling and transport, and charging infrastructure for electric vehicles. Green hydrogen development is being supported across Asia too, with a focus on carbon capture and storage, and bioenergy with carbon capture and storage.
Sustainable bioenergy efforts focus on greenhouse gas emissions, and their impacts on air quality, water quality and biodiversity will play an important role too. The next decade in Asia will see a rapid upgrade and expansion of energy infrastructure, together with regional market integration.
Significant public capital is being spent on deployment policies to support market creation and facilitate scale-up, cost reduction and increasing private sector investment levels. Project financing is moving towards low-cost, long-term debt.
While Asia’s energy transition differs between markets and the future of coal is likely to be decided in the region, the renewables growth dynamics are promising.
Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asian market research and investment/trade promotion services. E-mail: email@example.com
This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.