From renewable energy (RE) installations to clean technology-underpinned infrastructure facilities, a whopping US$15.6 trillion worth of quantifiable investments are seen channeled to key East Asia and Pacific countries.
As reported by the International Finance Corporation (IFC) of the World Bank Group, the anticipated investment influx shall be led by grid-tied renewable energy developments, primarily in ‘super power’ Asian countries like China and Japan; and could be supplemented by project rollouts in economically thriving Southeast Asian countries chiefly Indonesia and Vietnam.
“The East Asia and Pacific region is a major driver in global growth of demand for climate smart technologies,” the IFC said, highlighting that “other major markets include Indonesia and Vietnam…and the Pacific islands are becoming attractive markets for off-grid solar and mini-grid systems.”
For renewable energy developments alone, the scale of investment dollars anticipated to be mobilized in the Asia Pacific region could reach as high as US$11.0 trillion; while in ‘green buildings’, the extent of capital outlay that could be unlocked would be to the tune of USS3.4 trillion.
“Renewable energy investments could climb to $11 trillion cumulative by 2040,” the IFC stressed, adding that “reforms such as renewable energy auctions, land title reforms and supportive energy storage policy frameworks would make this possible.”
For green buildings, capital mobilization could run up to more than US3.0 trillion through 2025, with East Asian countries leading the charge. Other clean technologies that could draw additional trillion-dollars worth of investments would be those on transport infrastructure, agribusiness, water system and urban waste management, according to the IFC.
The multilateral lending firm emphasized that “more than $1.0 trillion in investments are flowing into climate-related projects in these areas.” Nevertheless, the IFC qualified that “trillions more could be triggered by creating the right business conditions in emerging markets.” It was similarly noted that over $23 billion a year in investments through 2025 could be brought in by off-grid solar and energy storage ventures.
The IFC expounded that such has been set on assumptions wherein “countries use differentiated tariffs, have clear technical and safety standards and targeted financial incentives while supporting new business models for community-based solar, such as ‘pay-as-you-go’ and innovative finance solutions such as securitization assets.”
With these developments, IFC Chief Executive Officer Philippe Le Houérou stressed that the private sector certainly holds “the key to fighting climate change,” citing its capacity on innovation as well as having the financing and tools for investments.
The IFC similarly contended that “developing countries can meet climate targets promised in the landmark Paris Agreement by catalyzing trillions of dollars in private investments through a combination of smart policy reforms and transformative business frameworks. Houérou thus noted that “we can help unlock more private sector investment,” but this needs to be backed by government reforms and innovative business models.