Online, 2 February 2021
The 2nd Government-Private Forum on the Cleaner Energy FutureInitiative for ASEAN (CEFIA) was held virtually on 2 February 2021. The forum was hosted by the Ministry of Energy of the Government of Thailand, in cooperation with The Ministry of Economy, Trade and Industry (METI) of the Government of Japan, with the support from the ASEAN Centre for Energy (ACE) as a Secretariat.
CEFIA was proposed by Japan to serve as a platform to facilitate collaboration between public and private sectors in the deployment of cleaner energy and low carbon technologies in ASEAN. At the 2nd CEFIA forum, government officials, international organizations, universities, and private companies gathered online to share progress on activities and discuss future activities aimed at energy transition and the realisation of a low carbon society in the region.
The forum began with the welcoming remarks by Dr. Prasert Sinsukprasert, Director-General, Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy, Thailand and followed by special remarks from Mr. Munekiyo Kouichi, Parliamentary Vice-Minister of Economy, Trade and Industry, Ministry of Economy, Trade and Industry, Japan. They highlighted the importance of collaboration to achieve energy security, economic growth, and climate goals. Mr. Kouichi also mentioned that each country needs to consider its path to a realistic and sustainable energy transition and reflect the path into concrete actions.
Before entering the main event, which was divided into three sessions: (1) Flagship Projects (FP), (2) ASEAN Plan of Actions and Energy Cooperation (APAEC) Phase II and CEFIA Activities, and (3) Mobilisation of Finance for Decarbonisation Pathways, Mr. Christopher G. Zamora, Senior manager of APAEC Department in ACE gave a review of recommendations from the previous CEFIA forum. The propositions of 1st CEFIA included supporting the APAEC targets particularly on Energy Efficiency (EE) and Renewable Energy (RE) through conducting knowledge sharing and best practices on clean energy, identifying potential collaboration and activities, and recommendations to support policy, projects, partnership, and investment.
Session I: Flagship Projects
In the first session, there were two main agendas: Progress of FP and Future Action, and Idea of New FP Candidates. In the first schedule, representatives of each FP explained their respective project’s progress and mentioned the desirable system and institutional recommendations for promoting their activities. The session started with an overview outlined by Mr. Takahashi Koji from METI.
The first demonstrated project was an activity of RENKEI by Dr. David Banjerdpongchai, Professor of Chulalongkorn University. He mentioned a three-year activity plan of RENKEI (2020-2022). The project aims to disseminate knowledge about RENKEI control by conducting capacity building to propose a new policy to facilitate Greenhouse Gas (GHG) reduction. The core activity of the capacity building began with a potential survey in 2020. In 2021, it focuses on the feasibility study, and later in 2022, it will implement the pilot project. In the end, he also mentioned that the plan requires a good harmony of RENKEI control vendor, academia, industry, and government.
After that, the activity of Zero Energy Building (ZEB) was presented by Mr. Yamamoto Katsuhiko, General Manager of Japanese Business Alliance for Smart Energy Worldwide (JASE-W). Mr. Katsuhiko began his presentation with a statement, “29% of world energy consumption occupied by buildings, and buildings currently constructed are foreseen to continue to exist until 2050”. These are the reasons why ZEB is initiated, moreover, to reach a decarbonised society. While it seems difficult to reach ZEB, he mentioned that it would be possible by following a step-by-step approach.
Subsequently, the activity of microgrid was presented by Mr. Saito Tetsuya, Manager of International Environment Dept., Consulting Operations Headquarters, Nippon Koei Co., Ltd. In his presentation, he mentioned that by 2030, rural electrification’s potential market demand remains high. Together with technology and finance, regulations are essential for promoting micro-grid. He continued by explaining micro-grid projects in various countries, including the Philippines, Maldives, Myanmar, Indonesia, and Vietnam. These implementations of demonstration projects have clarified the benefits and barriers of micro-grid extension. He concluded that governments play a crucial role in realizing the micro-grid project by promoting enabling environment.
Next, in the second agenda of the first session, Idea of New FP Candidates, two presenters proposed their ideas for the new FP. The first is the Idea of ASEAN-wide Collaboration on Cleaner Finance by Ms. Ma Nanette A. Biason from the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP). As financing is one of ASEAN’s critical challenges towards achieving a low carbon economy, this initiative will support financing and investments in the low carbon business.
The second FP candidate is the Idea of High-Efficiency Mobile Air-Conditioners (H-MAC) demonstrated by Mr. Pradit Mahasaksiri from DENSO (Thailand) Co., Ltd. He began by mentioning the transportation sector generates one of the largest shares of GHG emissions, accounting for about 30% of total GHG emissions in Thailand. One of the solutions for GHG reduction is by implementing H-MAC. It can dramatically decrease CO2 by about 24.2%, compared with conventional mobile A/C. Denso Corp has been suggesting the importance of MAC on environmental impact & promoting H-MAC to the market.
Session II: APAEC Phase II and CEFIA Activities
A panel discussion was conducted in the second session with the theme: CEFIA’s Contribution to APAEC-phase II. The session was moderated by Mr. Septia Buntara, Manager of Renewable Energy and Energy Efficiency (REE) Department of ACE. It discussed the key energy policy and collaborative activities to achieve the APAEC targets in the ASEAN Member States and the energy situation and policy in two ASEAN countries, namely Thailand and Brunei Darussalam.
It began with an overview of APAEC Phase-II, demonstrated by Ms. Dynta Munardy, APAEC Department of ACE. Ms. Munardy elaborated the seven programme areas of APAEC Phase II: 2021-2025: (1) ASEAN Power Grid (2) Trans-ASEAN Gas Pipeline (3) Clean Coal Technology (4) EE and Conservation (5) RE (6) Regional Energy Policy and Planning (7) Civilian Nuclear Energy. She also mentioned that from January to April 2021, ACE is conducting APAEC and the 6th ASEAN Energy Outlook (AEO6) dissemination campaign to the public. The activity is varied from an internal sharing session, a series of the press conference, media interview, webinar, two workshops, 2-to-3-hours FGD, and conferences with respective Special Energy Bodies/Sub-Sector Networks (SEB/SSNs) and relevant Dialogue Partners / International Organisations (DPs/IOs).
The next presentation was about the Clean Energy Policies and Initiatives in Thailand presented by Mr. Watcharin Boonyarit, Director of Strategy and Planning Division, DEDE, Ministry of Energy, Thailand. In his presentation, Mr. Boonyarit mentioned the five energy-related plans of Thailand will be conglomerated to be a national energy master plan. Thailand has also developed long-term EE Implementation 2018-2037 to reduce energy consumption to 49,064 kilotonnes of oil equivalent (ktoe).
The next presenter, Mr. Shaikh Mohamad Faiz Bin Shaikh Hj Fadilah, Special Duties Officer, Sustainable Energy Division, Ministry of Energy, Brunei Darussalam, explained the Clean Energy Perspective, Initiatives, and Policies in Brunei Darussalam. He stated that overall Brunei Darussalam has three strategies to implement energy transition: (1) Increasing renewable share by using energy storage systems to support variable RE integration, (2) Increasing the use of emerging technologies, such as wireless transmission, green hydrogen, and carbon capture, utilisation and storage (CCUS), (3) implementing digitalisation, such as smart metering, smart grid, multi-directional flows, and integrated system.
The last presentation was Idea Note of CEFIA Collaboration Roadmap for Contribution to APAEC Phase-II, demonstrated by Ms. Shinchi Kikuko, Senior Researcher, Climate Change Solutions Group, Sustainability Division, Mitsubishi Research Institute, Inc. Ms. Kikuko highlighted the common ground of APAEC Phase-II and CEFIA, which was to reach energy transition while fostering economic growth. She elaborated on how CEFIA could contribute to APAEC through actions (FPs) and functions (Showcase, Workplace, Databank, and Catalyst in finance and Visualisation).
The session ended with a fruitful exchange of views. One of which was on the benefits and good practices of visualising climate impact action, and decarbonisation plan. Ms. Kikuko responded that more and more financial institutions are asking for accounting the CO2 emissions when they make their investments and financial decisions, not just in Japan but also in ASEAN countries. She gave an example of Vietnam, an EE project on the air conditioner which was supported financially by Japan.
Session III: Mobilisation of Finance for Decarbonisation Pathways
In session 3, the discussion’s focus was on finance and decarbonisation. It started with the signing of the Memorandum of Cooperation (MoC) between the Asian Development Bank (ADB) and METI. “The MoC will focus on three areas; RE, Energy Conservation and Efficiency and other technology that contribute to the transition to lower-carbon energy. METI and ADB will support CEFIA by sharing good practices, providing innovating solution and implementing joint RE project and related activities such as feasibility studies, demonstrative project and capacity building” said Dr. Bambang Susantono, ADB Vice-President for Knowledge Management and Sustainable Development.
On the other side of the aisle, Mr. Tanaka Shigehiro, METI’s Vice-Ministers for international affairs, also said that “for achieving energy transition there are three key components namely technology, policy and finance need to synergize. Finance is particularly important because energy transition could happen if only finance is efficiently organised”. Later, Mr. Shigehiro also highlighted the future publication of roadmap for transition finance in the relevant industry sector, guidelines, and other reference documents to enrich CEFIA activities.
The session then continues with presentations from six panellists from Mitsubishi Research Institute, METI, ADB, DBS Bank, and Bank of Ayudhia, and moderated by Dr. Ayuha Shinji, Research Director, Climate Change Solutions Group, Sustainability Division, MRI, Inc. These presentations covered three topics; Expected role of government in promoting cleaner energy finance, current states of Environmental, Social, and Government (ESG) investment in ASEAN and the position and role of transition finance, the effectiveness of climate impact measure in finance institute.
In this session, the first speaker was Mr. Nomoto Tetsuya, Senior Researcher, Climate Change Solutions Group, Sustainability Division, MRI, Inc. He shared the overview of CEFIA’s financial opportunities, challenges, expected future actions, and goals to develop green energy in ASEAN. On this occasion, he showed the current number of green investments in ASEAN is steadily growing by the availability of green bonds, lends, and Sukuk. He also mentioned future green investment opportunities that include countries such as Indonesia, the Philippines, and Vietnam with total green investment opportunities of US $1.14 trillion to finance areas such as railway and green building.
Mr. Tetsuya continued to explain the challenges, such as risks and bottlenecks in low carbon and decarbonised business fields in the ASEAN. These include technical risks, financial and market risks, and government and political risks. To overcome various risks and barriers, CEFIA has consulted and laid several key enablers in last September meetings, resulting in three categories: building awareness and climate portfolios, creating a collaboration platform and public-private cooperation, and national and regional strategies. Considering government-private-ASEAN+3 collaboration, CEFIA is expected future activities; drafting a roadmap to attract cleaner energy finance, ensuring mutual understanding of the issue of risks and solutions especially its linkage to CEFIA FPs, and forming a knowledge-sharing platform for the public-private sector with focusing on ASEAN financial institutions.
Next, is the presentation from Ms. Ogawa Motoko, Deputy Director of Environmental economy office, Industrial Science and Technology Policy and Environmental Berau, METI, Japan. She presented the concept of transition finance as such launched by the Japanese government to help businesses and industries to adopt and innovate to achieve 2050 Net-zero society. Ms. Motoko also talked about how not all industries could leap in the same ways or the same speed; this is because some heavy industries rely on heavy carbon-emitting in the process.
To handle this issue as well as promote improvement on the transitions finance. She stated “METI launched the Climate Innovations Finance Strategy in September 2020. This strategy focused on three components of climate innovation ranges from businesses with a clear path to eliminate GHG, businesses that could reduce GHG by using low carbon technology to GHG limitation, storage and re-use”. Combine with technology such as carbon capture and artificial photosynthesis, she highlighted this could further propel the energy transition if only strong ESG financial support from private as well as public fund as a catalyst is available.
The third speaker is Dr. Yongping Zhai, Chief of Energy Sector Group, ADB. In his presentation, he focused on how ADB’s role in supporting the energy transition. Dr. Zhai explained before the ADB could contribute to the clean energy project. Local and regional governments play a huge role in formulating legal frameworks, strategies, measurements, infrastructure, and capacity to form transparency and efficiency platforms. He later mentioned the focus area of ADB 2030, which tackles climate, including building climate resilience and sustainable development. These focus areas alone counted for 75% of ADB projects by 2030.
As we enter the second year of the Covid-19 pandemic, Dr. Zhai said that RE industries are immune to the economic downturn caused by the pandemic. In 2020 alone, ADB has launched US $4 billion programmes in the climate-related sector and the US $2 billion in RE. Even though some utility companies are affected by the current economic condition, ADB projected more stable growth in clean energy and later energy transitions in the coming years.
The next presentation is from Ms. Yulanda Chung, Head of Sustainability, Institutional Banking Group, DBS Bank Ltd. She explained the transition finance framework and what the private sector could receive in transition finance in her presentation. Ms. Chung started by showing the type of loans that private and public usually can access for the transition finance. She also shared the data of the world’s region’s performance in term of financing decarbonisation and green energy. While the Southeast Asian market cap is comparably small, the opportunities are vast, considering many areas that could use the transition finance. To access transition finance, Ms. Chung mentioned sectors such as energy, heavy industries, shipping, and power generation must show their commitment to reduce carbon-intensive assets, diversify their industry towards the green industry, and demonstrate a transitional process to lower carbon business.
The last speaker in this session is Mr. Prakob Phiencharoen, EVP of Head Commercial Banking, and Acting Head of Corporate and Investment Banking, Ban of Ayudhya. Mr. Phiencharoen presented three focus areas within the ESG finance in Thailand; development of ESG finance in Thailand, the importance of government support for ESG finance to go forward, and the measurement of ESG financing success in Thailand. He stated that Thailand’s ESG bond market has reached THB 86.4 billion in 2020. This exponential growth was driven by ESG financing needs from the private and public sectors. Mr. Phiencharoen also explained several essential government involvements to accelerate ESG such as identified priority sector, incentives programmes, taxonomy study of how local standard compared to other regions and provides training and campaign to raise awareness about the ESG finance.
After several presentations about transition finance. The discussion opened a very comprehensive question-and-answer session. Began with focusing on the government role over ESG finance, Mr. Phiencharoen shared his point of view about how the government should take actions to create strategies, incentives, and help financial institutions comply with international standards. Dr. Zhai then stated, “ADB can help government formulating strategies and long-term plan, formulating government policy on the green project and also share best practice and financing assessment”.
The session continues with the discussion about the transition finance perspective in ASEAN. Ms. Chung expressed her optimism in the market of transition finance despite some hurdle in the acquiring process for some companies. She stated a positive attitude in the market, especially with some industries that have already committed to decarbonization. This, combined with the signalling effect, will spread the transition finance market even further. Later added by Mr. Muto Tomoki Managing Director, Head of Global Structured Finance, Mitsubishi UFJ Financial Group (MUFG), Inc. Mr. Tomoki explained it is crucial to create a bridge between the international financial community and ASEAN financial community. He also mentioned many costumers are not yet having a clear understanding of the definition and guideline of transition finance. Therefore, it is essential to set rules and a roadmap to help the private sector acquiring finance they needed.
After acquiring knowledge about the transition finance from ASEAN’s perspective, the last question discussed is how to measure ESG finance’s effectiveness and its impact on the climate. Mr. Phiencharoen started with the concept of beginning with a small number and studying the conditions and opportunities better. He added government involvement in determining priority sectors is very important to help financial institutions. Dr. Zhai then explained how ADB uses RE capacity and total generation as measurement. He added, “ADB also measured how much energy savings and CO2 reduction achieved under a project”.
Lastly, Mr. Tomoki, mentioned the MUFG measured the investment based on the positive impact produce by a project. This includes the environmental impact on investments using internal carbon pricing and the expected reduction of CO2 emission from the project. He also shared his view on the challenges ahead, which are how to diversify measurement to other industries and setting a clear target in a broader market.
After a very fruitful question and answer session, the 2nd CEFIA was closed by Dr. Nuki Agya Utama, Executive Director of ACE and Dr. Sinsukprasert. In his closing remarks, Dr. Utama emphasized his hopes in future programmes and the implementation of CEFIA’s FPs, such as transition finance, EE in the form of highly efficient air conditioner standardization across ASEAN. He also noted the possibility of collaboration in APAEC-Phase II with the CEFIA.
Later Dr. Sinsukprasert added his views on the 2nd CEFIA. He believes the forum is a good starting point on the common goals of enhancing EE and facilitating energy transitions as the pathways toward a low carbon society. He also asked every stakeholder from the private sector, government, academic institutions, and financial corporations to collaborate to become a decarbonised society.