Financing ASEAN’s energy future: Unlocking green growth
Why bold financial solutions are needed to accelerate ASEAN’s energy transition, address climate vulnerability and sustain economic growth.
Produced in Partnership with Bloomberg Media Studios.
Record temperatures across Southeast Asia in 2024, including a high of 53C (127F) in the Philippines triggered a surge in electricity demand. This underscored the region’s continued reliance on fossil fuels to power itself, and reinforced the urgency of the shift to renewable energy.
As the world’s fourth-largest energy consumer, the 10-nation Association of Southeast Asian Nations (ASEAN) is projected to account for 25% of global energy demand growth by 2035 — fuelled by a growing population, rapid economic expansion, and its strategic role as a global manufacturing hub.
Recognising the region’s climate vulnerability, ASEAN countries are prioritising cleaner, renewable energy solutions. This shift requires significant investment—approximately USD1.5 trillion by 2030 for ASEAN to be on a Paris-aligned trajectory. However, only USD45 billion in cumulative investments from public and private sources have been made since 2021.
Against that backdrop, the region’s ambitious renewable energy goals depend on unlocking affordable alternatives to fossil fuels such as wind and solar. This will require investment in the necessary clean energy infrastructure, the creation of innovative financing solutions, and closer collaboration between the public and private sectors.
The Southeast Asia Green Economy 2024 Report, produced by Bain & Company, GenZero, Standard Chartered, and Temasek, highlights key initiatives, investable opportunities, and innovative financial mechanisms to unlock the potential of ASEAN’s energy transition and get it on track to meet its climate goals.
Overcoming regional challenges through collaboration
ASEAN’s energy transition is complicated by disparities in resources and infrastructure across its member nations. Wealthier nations attract infrastructure investments more readily, leaving less developed economies struggling with limited funding for clean energy initiatives.
Bridging this divide will require the public and private sectors to work together to mobilise the capital and resources needed to drive the transition.
With this in mind, Standard Chartered works with governments, central banks, and other private-sector financial institutions to provide these requisites through various partnerships. One example is the Just Energy Transition Partnership (JETP), which allocates capital to help phase out the use of fossil fuels in emerging markets. Standard Chartered and its JETP partners have committed USD15.5 billion to support Vietnam’s energy transition and USD20 billion in Indonesia to phase out coal and invest in renewable energy.
Another example of collaboration driving impact is the closer partnership between Puro.earth, Standard Chartered and Swedish bank SEB, which aims to enhance the Carbon Dioxide Removal (CDR) market. By facilitating offtake agreements for high-quality, Puro Standard-certified carbon removal credits, the two banks will drive liquidity in the market and raise production of CO2 Removal Certificates (CORCs).
How financial institutions help to accelerate the energy transition
Financial institutions play a pivotal role in ASEAN’s energy transition by channeling investments into renewable energy and deploying innovative financial solutions that enable long-term sustainable growth. With a presence in all 10 ASEAN markets, Standard Chartered is uniquely positioned to connect capital to critical growth opportunities.
The bank has pledged to mobilise USD300 billion in sustainable finance by 2030, with USD17.6 billion already deployed as of June 2024 and growing at 31% on year. This includes funding for projects such as the Cirata Floating Solar Power in Indonesia, the largest of its kind in Southeast Asia. The investment aligns with Standard Chartered’s broader strategy of supporting low-carbon growth in hard-to-abate sectors.
To meet the timeline for a low-carbon economy, Standard Chartered has developed innovative products tailored for hard-to-abate sectors. The bank’s multidisciplinary teams in ASEAN offer expertise in areas such as transition finance, ESG, and carbon accounting, while its sustainable finance offerings—spanning loans, bonds, trade finance, and carbon trading—are rapidly evolving to address diverse client needs.
Driving these efforts are Standard Chartered’s four global innovation hubs led by senior experts:
- Adaptation Finance: Dedicated to developing financial products that help communities and businesses adapt to climate change.
- Blended Finance Programs: Public and private sector capital is combined to deliver projects that were not considered bankable previously.
- Carbon Markets: Focused on promoting innovative financial solutions that facilitate investments in high-quality carbon removal projects
- Nature Positive Solutions: Focused on the integration of nature-related considerations into financial decision-making.
Leading the way through innovative financing
Accelerating ASEAN’s green transition will demand significant investment in critical infrastructure. Innovative financing solutions have already driven several successful projects across the region, highlighting their potential scalability.
In Vietnam, Standard Chartered partnered with the Asian Development Bank to finance the 257MW Phu Yen Solar Power Plant, the country’s largest operating solar project and one of the biggest in Southeast Asia. Through its onshore operations in Vietnam, Standard Chartered provided critical debt structuring expertise and long-term interest rate hedging to bring this landmark project to life.
Demonstrating its commitment to sustainable innovation, Standard Chartered participated in Asia’s first green B-loan facility, certified by the Climate Bonds Initiative. With the potential to reduce 123,000 tonnes of CO2 emissions annually, Phu Yen set a benchmark for renewable energy financing in the region, and was recognised as the Green Project of the Year in Vietnam.
In Singapore, Seatrium, a prominent player in the offshore and marine industry, secured significant financial support from Standard Chartered in the form of a USD500 million credit facility, which included an embedded sustainability-linked conversion option aligned to sustainability-linked loan principles. This has strengthened Seatrium’s efforts to integrate sustainable practices into its operations while contributing to the broader energy transition of the industry.
Towards a greener and more resilient ASEAN
Globally, innovative financial mechanisms are transforming sustainability efforts and offering valuable lessons for ASEAN. A notable example is Standard Chartered’s pioneering debt conversion initiative in the Bahamas, which unlocked USD124 million for marine conservation by repurchasing USD300 million of external debt. This approach provides a compelling blueprint for ASEAN countries to mobilise capital for renewable energy projects, ecosystem restoration, and climate resilience.
Bridging investment gaps is essential to realising ASEAN’s net-zero ambitions. Success will depend on strong partnerships backed by bold and innovative financing solutions. With its strategic location and dynamic economic growth, the region is well-positioned to lead the charge toward a greener, more resilient future.
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