Excellency, Mr. Arifin Tasrif, Minister of Energy and Mineral Resources of Indonesia,
Mr. Francesco La Camera, Director-General of the International Renewable Energy Agency,
Dato Lim Jock Hoi, Secretary General of ASEAN,
Distinguished guests, ladies and gentlemen,
Thank you for inviting me to speak at this panel on the Status of the Global Energy Transition.
The Asia-Pacific region is the region that will determine whether we win the race to net zero.
We should be concerned by the region’s slow progress towards Sustainable Development Goal 7 on affordable and clean energy. Failure to substantially progress on Goal 7 targets by 2030 will not put the region in an adequate position to reach the 2050 targets for net zero emissions. The focus on these issues through Indonesia’s G20 Presidency hosting this forum is very welcome.
Current finance levels request a significant boost to reach the $5.7 trillion level needed to align with Goal 7 and the net zero transition pathways, as identified in a report published by the International Renewable Energy Agency (IRENA).
Public finance alone is insufficient. As countries recover from COVID-19, fiscal space has further narrowed. There is a need to engage greater levels of private sector funds to support the clean energy future.
This requires not just innovative financing instruments that previous speakers have discussed but also the right policy and regulatory environment for clean energy. Investors need to have sufficient confidence in the capacity of the sector to a stable project pipeline with returns over the long term if they are to invest.
The barriers to clean energy investment need to be dismantled. These include fossil fuel subsidies and the integration of renewable energy into the grid. Establishing a price on carbon is one way to support long-term investment in clean energy. Overall transparency must increase as this is an important factor for increasing investment.
Excellencies, ladies and gentlemen,
I would like to highlight two areas of the energy transition where clean energy investment may be overlooked.
The first area is energy access. The International Energy Agency (IEA) estimates that to reach universal access to electricity and clean cooking, the average annual investment required over the last decade of the SDGs is as high as $35 billion for electricity access and $6 billion for clean cooking. This represents a six-fold scale-up on current levels.
Solving this chronic underinvestment requires a greater commitment of public funds but also innovation to bring in private sector resources by de-risking these investments and achieving economies of scale. This sector offers enormous returns in terms of social and gender benefits as well as avoided health impacts.
Unfortunately, these benefits do not always translate to the balance sheet of investors. We need to find ways to make these projects more bankable through more efficient technologies and business models. The Asia Pacific Forum on Climate Finance we organized last week as part of the lead-up to COP27 has generated a positive momentum by showcasing 20 investment opportunities, ranging from coal-phase down in Indonesia and renewable energy in Bhutan to promoting e-vehicles in Fiji.
The second area is regional power grid connectivity. We are working to advance Goal 7 by promoting regional connectivity and collaboration. This approach can help unlock low-cost renewable energy resources but requires substantial investment in capital-intensive transmission infrastructure.
Drawing on our analysis, we have prepared recommendations on how to enable private financing of grids. The recommendations take into account the various structures across power sectors.
Promoting dialogue, such as this under the auspices of the G20, between G20 members, intergovernmental organizations and development banks is essential if we are to unlock this challenge.
I look forward to hearing from the other distinguished speakers.
Thank you once again.