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Lauren Huleatt

Every line of Chinese President Xi Jinping’s new climate commitments will be analysed and interpreted to the bone. But the most salient part of the Climate Ambition Summit, held on December 12, was the absence of any dialogue on overseas energy finance.
While that absence is the most alarming in China’s case due to the volume and direction of its finance, the lack of leadership on sustainable climate finance is a global crisis.
Whether governments extend nationally determined contributions of emissions and net-zero carbon commitments overseas relies heavily on China, the de facto climate leader. China, followed by Japan and South Korea, make up the world’s three biggest public financiers of coal.
From 2009-2019, public banks from the three nations invested US$78.9 billion in overseas coal and gas projects, according to a Greenpeace Japan report﻿. During that 10-year span, only US$9.1 billion went to solar and wind energy projects.
Most of China, Japan and South Korea’s overseas energy investment goes into Southeast Asia, which has the largest number of coal-fired power plants under planning or construction outside China. It is also home to four of the 10 countries most vulnerable to climate change. As a developing area that is heavily reliant on East Asia to meet rising energy demand, Southeast Asia must be ground zero for a better global climate finance strategy.


The Greenpeace Japan report also showed that Southeast Asia’s renewable energy market is worth up to US$205 billion over the next 10 years. This figure was drawn from the calculation of the invested capital required to meet the region’s electricity demand by 2030 while keeping emissions under a net-zero carbon commitment.
The energy mix includes US$125.1 billion in solar energy, US$48.1 billion in wind energy, and US$32.6 billion in other renewable energy sources.
That is 2.6 times larger than the coal market in Southeast Asia from 2009-2019. However, the region’s renewable energy market potential will rely heavily on foreign investments, just as the coal industry did in the past.
Southeast Asia’s up-and-coming green bond market and locally tailored financing tools such as solar auctions – where companies bid to build solar capacity based on the lowest price per unit of electricity they deem feasible – and feed-in tariffs – which guarantee reasonable prices and long-term demand for renewable energy providers – have laid the groundwork for investment.
Coal should have no future in Southeast Asia’s energy mix
Public development banks have been a trailblazer for foreign investment, from China and other countries around the world. What is needed now is climate finance leadership.
China was the top fossil fuel energy financier from 2009-2019 with US$45.7 billion of public money invested in coal and gas plants, mostly in Southeast Asia. Politically, China is also the leading player of the East Asian trio. Japan and South Korea’s net-zero carbon commitments followed quickly after China’s, mirroring both the language and scope.


Japan and South Korea have also invested most of their overseas energy finance in Southeast Asia, where the three of them categorically neglect solar and wind energy finance on similar terms.
A global transition away from fossil fuel finance is under way. But the global transition into renewable energy finance is not here yet. China’s public banks have a key role to play in supporting Southeast Asia’s energy sector, even as coal finance disappears.
It is time to extend climate commitments to include overseas investments. Climate pledges and commitments, such as to net-zero emissions, are, by nature, global in scope. If major investing governments do not extend their low-carbon objectives to their overseas investments, they will not meet the ultimate aim of tackling climate change.
Lauren Huleatt is a sustainable finance campaigner at Greenpeace East Asia


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The world’s three biggest public financiers of coal should target Southeast Asia’s renewable energy market, worth up to US$205 billion over the next 10 years
China can show by example that climate commitments should include overseas investments



The world’s three biggest public financiers of coal can target Southeast Asia’s renewable energy market, worth up to US$205 billion over the next 10 years. China can show by example that climate commitments should include overseas investments.


Energy

Climate change

China economy

Japan

South Korea

Xi Jinping

Environment

Asean

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


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Eye on Asia