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Finger on the Pulse: 4 Imperatives for Advancing Decarbonisation Efforts in Asian Infrastructure

In this edition of Finger on the Pulse, we detail key learnings from the Asia Clean Energy Summit’s (ACES) 2023 Driving Decarbonisation in Asia workshop. Finger on the Pulse is a content series from Infrastructure Asia that covers key developments and trends across Asia's infrastructure landscape, providing you with key insights from the inside.

Decarbonising infrastructure may be complex in nature, but it is not inherently complicated.

This was the general consensus reached at ACES 2023’s Driving Decarbonisation in Asia workshop, as speakers agreed that the key to effectively scale renewable energy and enhance energy efficiency lies in adopting a synergistic and collaborative approach between public sector agencies and private sector firms.

The complexity in decarbonising infrastructure arises from needing to take into account various interconnected systems and considerations. But with a deep and wide understanding of each component, transitioning to sustainable energy solutions is not necessarily difficult.

With Asia’s energy consumption accounting for 70% of the global increase from 1980 to 2022, and energy demand set to continue escalating, the need for decarbonisation has never been more urgent. The insights gleaned from the workshop emphasise the importance of integrating clean energy strategies, technologies, and financing to pave the way for a decarbonised Asia. Here are four key takeaways from the workshop that highlight what Asia needs to consider for cleaner and more efficient energy adoption.

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1. A Multi-pronged Approach to Decarbonisation

Asia’s decarbonisation pathway is a multifaceted challenge, necessitating a well-defined implementation pathway with specific steps, goals, and timelines. During the workshop, speakers spoke on the need for an accelerated shift to renewables and the adoption of demand-side management measures.

Sylvi Gani, Director of Financing and Investment, PT Sarana Multi Infrastruktur (PT SMI) highlighted the need to understand local market dynamics and structure catalytic projects that drive economic growth while aligning with broader sustainability and decarbonisation goals.

Nilesh Jadhav, Head, Energy & Performance Services – ASEAN, Regional Solutions & Services, Siemens Pte Ltd presented five levers for decarbonisation that provide a multifaceted and comprehensive approach. These levers—energy efficiency, producing clean energy, electrification, procuring clean energy through policy advocacy, and removing carbon—mirror the comprehensive strategies discussed at the workshop. This holistic approach offers a blueprint for Asia’s next step, showcasing the importance of integrating diverse strategies to drive effective and sustainable decarbonisation. Specifically, hydrogen and carbon capture were also identified as untapped opportunities with significant potential.

A clear implementation pathway will be pivotal to achieve the region’s decarbonisation goals. This, combined with robust capacity development, can sustainably address the region's rapid economic growth; while meticulous planning and organisational readiness will help ensure projects follow a well-defined trajectory. Additionally, the recognition of Asia's diverse landscape highlights the need for strategies that are not only clear but also adaptable. This integrated approach ensures that the implementation pathway remains both steadfast and flexible, precisely meeting the dynamic demands of growth while staying aligned with sector-specific nuances, such as energy and decarbonisation requirements.

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2. Rethinking Building Design and Maintenance

During the panel discussion on ‘Decarbonisation of Asia’s Built Environment Through Energy Efficiency’, it was highlighted that emissions coming from buildings account for approximately 40% of global greenhouse gas (GHG) and if left unchecked, are set to double by 2050.

Esther An, Chief Sustainability Officer at City Developments Limited (CDL), shared a pivotal principle for sustainable construction: Conserve as you construct — which emphasises the importance of sustainable practices during the construction phase. Technology and Artificial Intelligence (AI) are game changers that help building developers like CDL seamlessly integrate sustainability into the very design of their buildings and set a new standard for the industry. For instance, a building’s layout, orientation, and other specifics can be planned out digitally to identify the best orientation for maximising natural light sources.

Extending beyond new constructions, Dion Anandityo, Sustainability Leader for ASEAN and East Asia, at Mott MacDonald also underlined the critical need for addressing energy efficiency in existing structures. To curb global warming and maintain a temperature rise below 2°C, every building must achieve 'net zero carbon' status by 2050. As the International Energy Agency estimates current global building stock to be at a staggering 223 billion m² and projected to nearly double to 415 billion m² by 2050, the scale of this challenge becomes apparent. The panel discussion brought attention to the fact that the chance for retrofitting only arises every 15 to 20 years. For countries like Singapore, this makes the current period an opportune time to reassess our built environment. However, it is crucial to acknowledge that this opportune time is subjective to each market, as buildings are developed at different periods. Therefore, it becomes imperative for countries to act decisively when the window of opportunity presents itself, aligning efforts with the global imperative to achieve a net zero built environment by 2050.

This opportunity is driving the rise in the attractiveness of innovative business models from Energy Services Companies (ESCOs), like bbp. Hoe Boon Chye, Chief Executive Office of bbp, emphasised that these models make it easier for businesses to adopt low-carbon solutions without significant upfront capital. He also highlighted the strategic role of data in predicting future energy usage, enhancing decision-making, and improving cost efficiency. Ultimately, this improves infrastructure life cycle management while fostering a more resilient and efficient built environment.

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3. Building a Strong Pipeline of Bankable Projects

Despite new financial instruments and innovative financing mechanisms designed to support sustainable infrastructure projects, Dr. Zulfikar Yurnaidi, Manager of Energy Modelling, Policy, and Planning at the ASEAN Centre for Energy (ACE), emphasised the need for concerted efforts to ensure comprehensive coverage and effectiveness in addressing the bankability of projects across the region. Current policies cover only around 60% of regional projects, underscoring the importance of prioritisation and clarity in the utilisation of funds. Projects must have a clear pathway and sustainability framework. Infrastructure Asia supports this by providing expertise to enhance project bankability and sustainability, thus fostering the realisation of more robust and impactful infrastructure initiatives.

Dr. Yurnaidi stressed that achieving net zero requires constant increases in financing requirements. In order to do so, understanding the funding landscape is crucial, as noted by Jasper Wong, Managing Director & Head of Real Estate & Hospitality and Construction & Infrastructure at United Overseas Bank (UOB). He shared that project owners often fail to secure green financing due to the lack of concrete data on energy usage and a clear roadmap on how they intend to reduce carbon emissions.

By addressing this, he hopes to see more projects leveraging innovative financing mechanisms, such as green bonds, Public-Private Partnerships (PPP), and impact investing, to unlock new possibilities for their sustainability and decarbonisation goals.

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4. Fostering Multilateral Partnerships for Progress

Collaborating with multilateral partners and governments emerged as a crucial strategy for advancing sustainable infrastructure development and decarbonisation initiatives; aligning closely with the work that Infrastructure Asia and the Asian Development Bank (ADB) does—providing essential support, including expertise and financing, to overcome financial and technical barriers.
Dr. Priyantha Wijayatunga, Senior Director for ADB’s Energy Sector Office, illustrated the tangible impact of such partnerships. He spoke about the planned accelerated retirement of Cirebon-1, a 660-megawatt plant owned by Cirebon Electric Power (CEP) in West Java, Indonesia. This project exemplifies how collaborative efforts, in this case facilitated through the ADB’s Energy Transition Mechanism (ETM), play a pivotal role in expediting the transition towards sustainable energy solutions in Asia.

The ACES 2023 session on "Driving Decarbonisation in Asia" sheds light on the significance of innovation, adaptability, and collaboration in the face of climate change challenges. As we navigate this evolving landscape, the strategic prowess of facilitation offices like Infrastructure Asia becomes increasingly vital. By capitalising on regional assets and embracing sustainable development synergies, the industry can chart a course towards a greener, more resilient future.

For those seeking a deeper exploration of opportunities to scale sustainable infrastructure development and unlock financing in the region, find out more in our ASIA Panel Report.

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