Financing for clean energy projects pushed for ASEAN economies

SINGAPORE – To push more environment-friendly alternatives into the energy mix of economies in the region, a clean energy financing roadmap has been cast during the 36th ASEAN Ministers on Energy Meeting (AMEM) here.

The crafting of the proposed financing framework had been done in collaboration with the International Energy Agency (IEA), a global energy think tank headquartered in Paris.

In an exclusive interview, IEA Executive Fatih Birol said “clean energy financing is showing some good signs in terms of solar power – and still very big in terms of other clean energy technologies.”

He added that such facility is also building up “for natural gas, especially those coming from the United States and Australia; and in this very region many countries are building energy infrastructure such as the Philippines in order to import LNG (liquefied natural gas), which is very good in terms of diversifying energy sources.”

The IEA in particular had drawn up a toolkit on energy investments and financing for ASEAN – it takes the form of an online repository of resources that may be accessed by member-states. Such includes financial tools and templates for legal documents relating to energy infrastructure investments.

Singapore Trade and Industry Minister Chan Chun Sing noted that they have been working closely with the IEA “on energy investment and infrastructure financing to ensure that there is adequate infrastructure to support the region’s growing energy demand, and to make ASEAN an attractive hub for infrastructure development projects.”

In a paper released during the AMEM meeting, it was stipulated that “to enhance regional capabilities in attracting investments and developing sustainable financing models, Singapore and the IEA have co-developed a Capacity Building Roadmap on energy investments and financing for ASEAN.”

The framework will then be shared to Singapore’s peers in the ASEAN region so they could collaboratively mobilize project funding to required energy investments in the region.

“ASEAN’s energy demand is expected to increase by almost two-thirds from 2018 to 2040 as its population grows in tandem with rapid industrialization. At least US$2.7 trillion of cumulative investment would be needed to meet this energy demand and to improve energy access within the region,” the joint Singapore-IEA paper said.

The investment framework for clean energy, it was emphasized, can be optimized “through enhancing expertise in developing conducive regulatory environments and planning for allocation of capital across technologies.”

The paper similarly stipulated the need “to upgrade skills required to assess the financial sustainability of domestic power generation systems, and to mitigate vulnerabilities on investments for power sector.”

At the same time, ASEAN-countries need to be oriented on how to “enhance competency in project financial tools to better assess investment options, financing requirements and project risks.”

It has been similarly propounded that the energy sectors of the region be able to “develop mechanisms and business models for project de-risking and bankability.”

To this end, it was emphasized that there must be a platform “to deepen public-private engagement, including with financial institutions, which could also serve to equip policymakers with knowledge of new and emerging business models to de-risk projects.”