South-east Asia should overhaul how it finances green investments and fossil fuel projects, a business group said on Tuesday, while urging a faster "energy transition".
The EU-Asean Business Council (EU-ABC) has called revamping the sustainable finance ecosystem an issue that requires the "most urgent attention" from Asean states.
Proposed measures include rolling out an "energy transition mechanism" (ETM) in individual countries, comprising a carbon reduction facility and a clean energy facility.
Owners of carbon-intensive power assets - usually state-owned power companies - would contribute these assets in exchange for cash or equity or debt in an energy transition mechanism funded by long-term investors such as multilateral banks.
Under such a model, the utility asset owners would use the cash proceeds to invest in renewables, while the carbon-intensive assets are retired on a shorter-than-planned lifetime, as renewable energy capacity and storage improve.
"The EU-ABC, with its members and other key stakeholders, are supportive of the work being led by the Asian Development Bank to explore the feasibility of the ETM in several countries in Asean," said Donald Kanak, chairman of the EU-ABC.
Should such an ETM prove feasible, "it would be a practical way to retire at least 50 per cent of existing carbon-intensive power assets, dramatically scale up demand for renewable energy and provide resources for just transition", the EU-ABC said.
The council added in a statement: "There is a clear need now for Asean to address its over-reliance on fossil fuels, particularly coal, for its energy needs."
The EU-ABC also recommended "de-risking green investments", such as through financial instruments like the adoption of insurance for sustainable projects; and encouraging investments through a carbon pricing mechanism, such as a carbon tax or fee, a cap-and-trade system, or an emissions trading scheme.
Other suggestions included phasing out fossil fuel subsidies, and tapping the private sector to ramp up electricity networks, especially in rural parts of Asean.
Source: The Business Times (Singapore)
Date: 24 August 2021
Reference: https://www.businesstimes.com.sg/asean-business/regional-business-group-urges-new-policymaking-market-tools-to-wean-asean-off-fossil
August 25, 2021
