Asia plays a central role in the global efforts to achieve net zero and the speed and trajectory of the global energy transition are now more urgent than ever.
Decarbonisation is already a prevalent focus across the region, but the associated opportunities, challenges, and risks are unevenly distributed. Different levels of wealth, hydrocarbon reserves, political landscape, and renewable energy potential have created diverse conditions where technology can play a significant role.
The challenges are compounded against a backdrop of multiple crises – the wars in Europe and the Middle East, humanitarian crises, climate change, weakening of multilateral institutions, global financial instability, policy shifts and trade disruptions – a stark reminder of the fragility and the vulnerability of the existing energy system and economies heavily reliant on high emissions fuels.
To drive sustainable economic and social progress, a complete transformation of the energy ecosystem is crucial – from energy systems, value chains and materials, to economic policies, business models and consumption behaviours. Also aligning this to ensure that economies can fulfil their aspirations and climate ambition.
To shed light on the transformation needed, Energy Asia convened 22 CEOs from across the energy, finance, professional services and government linked sectors for a Multi-Stakeholder Dialogue themed, ‘Powering Economic Prosperity Through Equitable Transition,’ on the sidelines of PETRONAS 50th Anniversary Celebration.
Each with their position in driving the energy transition agenda, the dialogue held under Chatham House Rules aims to align priorities and perspectives, gain insights from key sectors as well as support each other towards establishing just and responsible pathways in realising a lower carbon future.
Moderated by CERAWeek by S&P Global, areas of discussion revolved around understanding the challenges to energy investments as well as policy and investment choices that need to be deployed to ensure an equitable energy transition that promotes growth, prosperity and job creation in Asia.
As Asia faces the dual challenges of accelerating its energy transition while safeguarding economic and other fundamental interests, key findings from this dialogue will shape the discourse at Energy Asia 2025, a thought leadership platform that advances the region’s net-zero ambitions through actionable solutions for a just and responsible energy transition.
Asia, an Integral Piece to the World’s Energy and Climate Future
There was clear consensus among the CEOs that any pathway to a global net zero is contingent upon Asia but much more is needed to advance and ensure a just and equitable energy transition.
Home to almost two-thirds of the global population, growing affluence, rapid urbanisation and urgent need for poverty alleviation, the region’s demand for energy is projected to grow further in the foreseeable future.
With abundant renewable energy resources, talent, and cutting-edge technologies, Asia holds immense potential for decarbonisation. However, governments and industries formulating energy transition policies and strategies must strike the right balance between accelerating climate actions and ensuring economic resilience.
Notwithstanding, transitions in the developing world and emerging economies must be rooted on access and affordability and cannot come at the expense of energy security and sustainability.
Additionally, without significant investments in clean energy and green technologies, many countries, especially those in developing Asia will continue to rely on traditional forms of energy to drive their economies and ensure the security of supply.
Diversifying Asia’s Energy Mix
Asia’s energy demand and robust economic growth have been underpinned by fossil fuels and energy demand will continue to grow strongly to 2040.
With the region’s reliance on hydrocarbons set to persist in the long term, one of the key standout opportunities was the sustained support for advancing oil and gas projects with gas and LNG identified as the most feasible transition fuel for Asia’s pathway to net zero.
‘A quick win for decarbonisation,’ gas and LNG provide affordable and reliable energy, ensuring a just and orderly shift while carbon capture storage (CCS) technology lower the carbon intensity of the gas and LNG value chain, ensuring continued and sustainable use of these fuels.
Participants further pointed out that technologies such as CCUS, renewables and clean hydrogen are technically viable at present but commercialising these technologies remains a challenge due to lack of financing and supportive regulatory frameworks.
Similarly, renewable energy and grid development were viewed as ‘economically valuable’ opportunities due to rising demand for clean power driven by Asia’s manufacturing sector.
Yet, a sizable supply-demand gap in renewable power remains, presenting substantial investment potential for developers and investors.
Investment is Key to Delivering Asia’s Energy Transition
There was a broad agreement among the CEOs that energy investment in Asia, particularly in clean energies, remain lackluster amidst financing challenges.
Developing economies are only securing 20% of the world’s clean energy financing and significant doubts remain on adequacy of implementation efforts and effectiveness of existing multilateral financing mechanisms.
Furthermore, there is discernable reluctance among the private sector to invest in clean energies due to lack of policy certainty and low returns while sentiments towards financing oil and gas investments in Asia remains mixed among the banking sectors.
To address this, some key enablers identified include introducing blended financing and credit-enhancing financial mechanisms to derisk private capital flows to energy investments in Asia.
The participants also called to ensure adequate and stable returns with government intervention, improve low-cost capital access via monetary policies and leverage technological solutions and partnerships.
Additionally, a regional carbon market has the potential to enhance commercial viability of clean energy projects, while providing an avenue for deeper regional collaboration.
Harmonisation of regional and domestic policies as well as clean energy standards are also crucial in providing greater investment clarity for the region’s financiers and project developers.
Multi-dimensional Collaborations for Asia’s Energy Transition
While the private sector partnerships have been a consistent and integral aspect of energy investments in Asia, the participants agreed that the region presents strong potential for the formation of meaningful and long-term partnerships across the private and public sectors.
Deeper inter-government collaboration is necessary especially in the harmonisation and alignment of clean energy standards and project developers must recognise technology providers as valuable partners.
There is also a call for the development of unified perspective on Asia’s energy transition priorities among multilateral organisations, governments, financiers and industry players.
Lastly, continuous dialogue between the public and private sectors is crucial as it helps align regional priorities to navigate the multifaceted challenges of energy transition and facilitate the exchange of knowledge, foster collaborative approaches to addressing complex issues to drive the energy sector toward a more inclusive, sustainable and efficient future.
Register as delegate at officialenergyasia.com
– The article was originally published in The Edge Malaysia
