By Eileen Mencias
Domestic banks are playing a crucial role in the pivot towards renewable energy, adding 70 gigawatts of renewable energy capacity to the pipeline from 2023 to 2024 alone, according to a report from the Center for Energy, Ecology, and Development (CEED).
At COP29 in Baku, Azerbaijan, CEED presented its report entitled “Southeast Asia at a Crossroads: Deterring SEA’s Fossil Future with Renewables,” which highlighted that domestic banks are taking the lead in financing renewable energy, while international financial institutions from developed countries continue to support the expansion of fossil fuel power.
While the surge in renewables is a welcome development, the threat of massive fossil fuel expansion remains.
“Southeast Asia suffered severely from what is set to be the warmest year on record, and from devastating calamities even in the weeks leading up to COP29. Unfortunately, despite the region’s vulnerability to climate change and its rich renewable energy potential, massive coal and gas expansion continues in Southeast Asia,” said Gerry Arances, executive director of CEED.
Since the Paris Agreement took effect in 2016, Southeast Asia has commissioned 54.5 GW of coal-fired power plants and 33.2 GW of gas-fired power plants. Power from fossil fuels totaled 87.7 GW, more than double the installed renewable energy capacity of 33.8 GW.
“As the climate talks unfold, the Philippines is being battered by a series of devastating storms. An urgent transition away from fossil fuels is necessary to strengthen our region’s climate resilience, avert even more catastrophic climate change, and ensure the survival of our people. The fact that fossil fuels continued to receive nearly three times as much financing as renewables in Southeast Asia since the Paris Agreement means that money to fuel an urgent energy transition and ambitious climate action is available — it’s simply not going to the right places,” said Arances.
CEED noted that financial commitments to fossil fuels amounted to $142.1 billion in investments since the Paris Agreement, while financing for renewable energy projects and related operations totaled only $52.8 billion.
Arances said, “Southeast Asia is demonstrating remarkable leadership in renewable energy. On the other hand, continued fossil fuel expansion threatens to undermine these efforts and lock the region into a fossil fuel future.”
He blamed international financial institutions from the global north for the continued expansion into fossil fuels, adding that they are the top shareholders and bondholders of many of the region’s biggest fossil fuel companies. He also noted that developed nations are supporting financing for fossil fuels. The Japan Bank for International Cooperation, for instance, represents 23% of the region’s total financing.
CEED is calling for an end to fossil fuel financing, as it exacerbates Southeast Asia’s climate vulnerability.
