SES Session 3: Green Financing Strategies to Accelerate Asia's Energy Transition

Energy and financial leaders share insights into green financing strategies aimed at hastening Asia's energy transition.

L-R: Gillian Tan, Chief Sustainability Officer and Assistant Managing Director, Monetary Authority of Singapore (MAS); Tatsushi Amano, Managing Executive Officer, Global Head of Energy and Natural Resources Finance Group, Japan Bank for International Cooperation (JBIC); Peter Rawlings, Global Industry Lead – Finance Sector, ERM (Moderator); Justin Oliver, Board Member, Australian Energy Regulator, and Yuki Yasui, Managing Director, APAC, The Glasgow Financial Alliance for Net Zero (GFANZ)

In the pursuit of a net zero future, financing stands as a central pillar. In Session 3 of the Singapore Energy Summit, industry experts delved into green financing strategies, exploring strategies that could propel the energy transition forward. Here are the key insights from the discussion:

1. Regulation can be a valuable ally in the fight for finance.

   When asked about his perspective on the battle for financial support, Justin Oliver, Board Member, Australian Energy Regulator, said: "When people talk about barriers and risks to investments, they say regulation is potentially part of the problem. I'm here to flip the narrative and tell you that regulation is your friend." He highlighted the flexibility that regulatory regimes can provide to address the financing challenges associated with significant investments in transmission networks, which are crucial for the energy transition.

2. Acceleration of coal power plant retirement is a top priority.

   When it comes to Asia's decarbonisation journey, the task of retiring coal power plants demands practical consideration of its impact on economies and communities tied to the coal industry. Gillian Tan, Chief Sustainability Officer and Assistant Managing Director, Monetary Authority of Singapore (MAS), emphasised: "If we are serious about decarbonisation for Asia, we need to be serious about coal." However, she acknowledged that this is challenging for three key reasons:

   1. Scale: Coal accounts for 60 percent of power generation in the region, even as energy demand is projected to increases 2.5 times by 2050.

   2. Downstream social impact: The coal economy is a major source of employment, with 80 percent of the 8 million people in the coal value chain located in Asia.

   3. Coal plants are still "young": The average age of coal plants in Asia is less than 15 years, making early retirement from their Power Purchase Agreements economically impractical.

3. Governments can play a crucial role in guiding policy to mobilise private capital.

   Tatsushi Amano, Managing Executive Officer, Global Head of Energy and Natural Resources Finance Group, Japan Bank for International Cooperation (JBIC), expressed his commitment to reducing risks associated with emerging technologies, while maximising efforts to mobilise private capital.

   Ms Tan agreed that Japan has been a positive example of providing regulatory and policy clarity to promote emerging technology and clean energy. She stressed the importance of contextualised policies for different countries. in addition to regulatory clarity, there is a need for platforms supporting capital flow. The Singapore government is developing a blended finance platform to channel capital at scale. The platform will bring together public, private, and philanthropic capital, and will feature specific programmes for decarbonisation and transition for both established and emerging green projects.

4. Collaboration is the cornerstone of the energy transition.

   "The energy transition is all about collaboration," said Yuki Yasui Managing Director, APAC, The Glasgow Financial Alliance for Net Zero (GFANZ). Collaborative projects involving Asian partners and stakeholders are essential for successful phase-outs. The focus should extend beyond assets and encompass owners' transition plans, the country's vision for coal power, new demand, and retirement plans.

   Sustainable finance innovations require cooperation among regulators and stakeholders. Financiers should not only plan for net zero, but also encourage companies they finance to develop their own net zero transition plans.

The session concluded with moderator Peter Rawlings, Global Industry Lead – Finance Sector, ERM, asking the panellists the top priorities they would like to see to encourage the mobilisation of finance:

• Ms Tan emphasised the 3Ps: pipeline, projects and platforms.
• Mr Amano hoped to see the finalisation of the Japanese government's hydrogen subsidy.
• Mr Oliver highlighted the importance of market design.
• Ms Yasui stressed the significance of "learn(ing) by doing".
• Mr Rawlings himself emphasised that the key to addressing common energy challenges effectively lies in collaboration.

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