Renewable-energy investment in Asia booming

Written by Imelda V. Abaño / Correspondent

Sunday, 21 March 2010 18:46

Renewable energy is the way of the future and Asia, as experts agreed, has an opportunity to chart a new course for its energy future—one that uses our abundant natural clean-energy resources to steer us to new economic opportunities and jobs, more robust national security, and a cleaner, healthier environment. In Asia more and more countries look to renewable energy in the quest to mitigate climate change and demand for energy-storage technologies capable of overcoming its intermittent nature is growing rapidly, according to the World Bank. And on top of being more vulnerable to climate change, Asian countries, including the Philippines, have a shortage of infrastructure. According to the World Bank, 1.6 billion people in the developing world still do not have access to electricity, and those who do may have only intermittent service. Renewable energy, as well as energy efficiency, could play an important role in mitigating these problems. The governments must begin to take action now to further incorporate renewable energy and energy efficiency into the world’s energy mix, said World Bank vice president for sustainable development, Kathy Sierra, where she largely focused on the World Bank’s strategy and goals for investing in clean technology in developing regions. Sierra told the BusinessMirror in an interview that the benefits of renewable energy—such as hydropower, geothermal, biomass, wind and solar—are considerable. Although she says the environmental benefits are clear, less obvious is the mitigation of energy-security problems, such as ensuring reliable supply of energy in its various forms. The Bank has become the largest single source of finance for environmental investments, technical assistance and capacity-building in developing countries. More recently the World Bank has been asked to manage the world’s largest new source of concessional resources to stimulate low-carbon and climate-resilient growth, the Climate Investment Funds (CIF), including the Clean Technology Fund (CTF). “Developing countries, including low-income countries, will need to consider how they respond to future risks and opportunities, with renewable energy being one of many solutions to address climate-resilient development,” said Sierra, who was here last week for the Global Forum on Climate Investment at the Asian Development Bank (ADB) headquarters. To boost renewable-energy projects, Sierra revealed that multilateral agencies are mobilizing $40 billion in investment for low-carbon technologies in the developing world. So far, $4.3-billion funding has been provided to several countries in the developing world. With the approval recently of a $400-million investment plan for Indonesia and the tentative approval of a $150-million allocation for Kazakhstan, $1.2 billion has been allocated from the CIF’s CTF for Asian countries. Vietnam, the Philippines and Thailand have been awarded a total of $800 million in support of investment plans for a range of innovative climate activities. These include catalyzing private-sector investments in energy efficiency and renewable- energy through local banks, transmission-system upgrades to reduce losses and support renewable energy development, and significant urban- transport improvements. Altogether, the three national investment plans are anticipated to mobilize nearly $10 billion in cofinancing from the government, private sector and other sources. “We see that there are many economically viable opportunities for renewable energy in both developed and developing countries. But many of these technologies have not been used in developing countries on a significant commercial scale,” Sierra said. The CIF is meant to help developing countries put larger-scale, environmentally sustainable projects in place as the world negotiates how to curb greenhouse-gas emissions after 2012, when the first phase of the carbon-capping Kyoto Protocol expires. Time for low-carbon, green growth Global warming is a crisis and, at the same time, an opportunity to create a gigantic market as it takes a tremendous amount of investment to address it, according to Presidential Adviser on Climate Change Heherson Alvarez. “One way to combat climate change is a low-carbon, green growth and lessening of the Philippines’ dependence on fossil fuel and promoting the development of substitute energy sources, such as solar and wind power, and other technologies enhancing energy efficiency,” Alvarez said. Alvarez explained that although conventional forms of energy will still dominate the energy mix, the expansion of power-generating capacity in emerging markets will at least partly be supplied by growth in wind, solar, biomass and hydropower. “We will be looking to develop renewable energies to avoid power shortages that would stunt development. There is a need to prioritized renewable-energy development as part of our strategy to reduce the carbon intensity of our economy,” he said. As the number of renewable-energy installations in the Asia-Pacific region is increasing fast, many countries like the Philippines are putting in place legislation to better link their energy and climate-security policies, ADB president Haruhiko Kuroda told participants of the CIF forum. “We are encouraged that our developing member-countries are taking a strong lead in transforming and leading their economies on low-carbon, climate-resilient pathways in response to the global climate challenge,” Kuroda said. Kuroda said the ADB aims to double clean-energy investments to $2 billion annually from 2013. “The Asia and Pacific region cannot overcome the problem of climate change alone. Efforts to mobilize adequate funding and transfer appropriate technologies must be global,” Kuroda said. “The CIF are an important piece of the financing puzzle, but they are only a single piece. In this regard we are hopeful of substantial progress in both fundraising and the development of a global financial architecture for climate funds, among other issues, on the way to Mexico.” Greenpeace to WB, ADB: go truly green The ADB watchdog criticizes the World Bank and ADB for their continuous support for fossil fuel-dependent projects such as coal-fired power plants and to invest instead in clean and reliable renewable energy. “It is ridiculous because they are trying to say that they are funding climate-friendly initiatives, but they are really funding robust fossil-fuel projects such as coal plants,” NGO Forum on ADB executive director Renato Redentor Constantino told the BusinessMirror. Constantino, Greenpeace Southeast Asia energy campaigner, explained that in the Philippines, for instance, solar, wind and geothermal are potential clean energy that have been left untapped, adding that funds provided by the two financial institutions should look for solutions that are efficient and cleaner options. He also lambasted the World Bank’s plan to loan South Africa $3.75 billion for a new coal-fired power plant, saying it should study other options than coal-fired power plants so as not to damage the environment. “We understand that they are funding renewable energy, but funding coal plants should not be on their list. This cannot exist at the same time,” Constantino added. While senior government officials and climate-change experts from around the world were in Manila last week to discuss financial measures to help developing countries mitigate greenhouse-gas emissions and adapt to climate change, around 200 ralliers gathered outside the ADB, accusing the lending agencies of refusing to withdraw support from coal use, and urged for genuine climate-change solutions. “Because of their track record for financing fossil fuel and other climate change-inducing projects, these institutions have no credibility to administer the climate funds as they are highly influenced by major polluting countries,” said Virginia Suarez Pinlac, spokesperson of the Philippine Movement for Climate Justice. But World Bank officials, in turn, argue that coal and other forms of dirty energy are still the cheapest and fastest route to powering those without access to electricity. “We don’t expect to do a lot of coal. As of this time, South Africa is being debated. They are keen on finding their energy sources,” Sierra explained. “We are talking about benefiting millions of poor people who do not have access to reliable energy or electricity. It’s a hard choice but, in the end, we want to choose what is best for that country.” Sierra, however, said the bank is in the process of screening any coal projects, saying that “we set ourselves ambitious targets to move to renewable energy, and we want to make sure that any coal plant has a strong energy outcome, and we are looking [to see] if all alternatives are being reviewed.” In Photo: Houses equipped with solar panels stand in Ota City, Gunma Prefecture, Japan. Japan’s utilities have agreed on a voluntary target to reduce emissions 21 percent from the 1990 level by 2020 by increasing nuclear-, solar- and wind-power generation and by buying carbon credits. More and more Asian countries look to renewable energy in the quest to mitigate climate change, and demand for energy-storage technologies capable of overcoming its intermittent nature is growing rapidly, according to the World Bank. (Bloomberg)