Mobilise Energy Transition Investments in Asia
3 ways to mobilise energy transition investments in Asia
At the inaugural Marsh Asia Energy Industry Conference (EIC), industry leaders and experts discussed three key business enablers that can empower innovation and mobilise investments for a balanced energy transition.
With Asia contributing to more than half of carbon emissions globally, it is crucial for organisations to mobilise efforts towards clean energy resources to foster sustainable economic growth. Experts at Marsh Asia’s EIC agree that achieving net-zero energy targets and facilitating a successful and sustainable energy transition means focusing on three key business enablers: technology and innovation, people, and capital and finance.
Technology and Innovation |
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Driving innovation for affordable renewable energy solutions |
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| Due to coal’s affordability and reliability as a power source, coal-fired power plants remain essential to several countries in Asia. However, it is crucial to recognise that as many countries in the region continue to develop and experience rapid growth in the coming decades, the need for sustainable energy alternatives becomes increasingly urgent. While renewable energy solutions hold great promise for long-term environmental sustainability, they currently face challenges in terms of cost competitiveness. For renewable energy solutions to be a competitive alternative, innovation and technological advances are vital. | An area that has seen technological innovation improve the financial viability of green energy is wind power. Innovation in the decade leading up to 2021 has resulted in a 60% reduction in the cost of wind energy due to the development of larger and more efficient turbines.1 While there have been challenges in the transportation of larger turbine parts and blades, innovation has led to the design of an aircraft capable of landing on shorter runways, eliminating the need for traditional airports and expanding the number of locations available for onshore wind generation. |
People |
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Developing a diverse and agile workforce to fill new renewable energy skills |
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| The transition to renewable energy promises to create new job opportunities, including an estimated 24 million green jobs by 2023, which necessitates a career shift for 14% of the global workforce. However, the energy industry is facing a challenge in attracting and retaining talent, particularly among the younger workforce, as they gravitate towards careers in more technology and data-oriented roles, companies, and industries. As a result, key players in the energy industry are recognising the need to adapt and capture this younger talent pool. To ensure a successful and sustainable energy transition, it is crucial to have a growing pool of skilled and diverse individuals driving the industry forward. However, research revealed that energy companies may be unprepared for this change, as only 38% have a clear understanding of the skills their existing workforce possesses. | To address this talent gap and mitigate potential disruptions, strategic workforce planning is essential. This involves upskilling and reskilling the existing workforce to equip them with the necessary skills for the renewable energy sector. Additionally, companies need to redesign work structures and provide opportunities for career growth to support employees' professional development. It is imperative to invest in talent development, both within the existing workforce and by attracting new talent. |
Capital and Finance |
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Securing cost-effective green financing and insurance |
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| The renewable energy transition journey necessitates significant capital investment, with projects relying on new technologies requiring financing support. To make this transition possible, investments will need to triple from current levels to reach an estimated annual value of US$4 trillion.6 However, challenges may arise, particularly when it comes to securing cost-effective financing and insurance coverage owing to uncertainties surrounding the viability of projects, especially those involving new technologies. The insurance industry can play a vital role in overcoming these challenges by acting as a strategic partner. By engaging early in project lifecycles, insurance brokers can help mitigate risks and enhance project viability. They can also encourage differentiated pricing for green insurance coverage, which can be known as "greenium”, with favourable terms and incentives. | To successfully support the energy transition, it is crucial to utilise capital and financing as catalysts and enablers for research, development, and deployment. By supporting firms in these stages, we can foster innovation and accelerate the adoption of advanced and sustainable energy solutions. Collaboration with institutes of higher learning can further enhance knowledge sharing and drive advancements in the field. A focus on economic and social viability ensures that the transition is sustainable. |
Navigating the diverse pathways to successful energy transition in Asia |
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With varying demographics, economic conditions, geography, and political situations, each Asian country faces unique challenges in achieving carbon neutrality and net-zero targets. A 2021 report by the UN Economic and Social Commission for Asia emphasised the need for “considerable and focused efforts from governments, civil society, and the private sector” to achieve social development goals, which include the energy transition. |
Collaboration is key to a successful energy transition. From policy development to mobilising private finance, successfully navigating the various possible pathways towards net-zero and carbon neutrality would require productive cooperation among all stakeholders. Multiple stakeholders working together to solve the energy trilemma of balancing affordability and access, energy security and environmental sustainability is critical to ensuring that energy transition efforts can drive sustainable economic growth. |