Across Asia, post-pandemic rebound is in full swing. Infrastructure is once again on the upswing accelerating the momentum to revitalize economies. Climate change and its increasing severity underscores the importance of resilient and sustainable infrastructure.
At the same time, the region is also experiencing a boom in its digital economy. From cloud computing, artificial intelligence to the Internet of Things (IoT), their rapid adoption is shining a spotlight on the need for secure and energy-efficient projects. With Asia’s energy demand on the rise, achieving a just transition from fossil fuels to renewable energy has become an urgent priority.
Infrastructure, indeed, will serve as a catalyst for Asia’s next stage of growth. The region, however, has huge financing requirements. According to the International Monetary Fund, countries in the Asia-Pacific are confronted with a shortfall of at least US$800 billion in climate financing.
But government budgets are under strain, multilateral funding is getting tight and private capital participation is still low. On the bright side, infrastructure is emerging as an attractive asset class. Asset managers and private equity firms are flocking to this market as infrastructure investments provide long-term and stable returns
Governments are also ramping up effort to attract institutional investor to this space. Singapore is encouraging insurers to allocate more capital for infrastructure projects and to develop insurance solutions for renewable energy and emerging technologies.
There is also a growing acceptance of transition finance in Asia to support the decarbonization of its high-carbon high emitting sectors. Moreover, the region is also promoting other funding avenues such as blended finance, securitization and clean energy REITs to support infrastructure projects.
In the face of the climate finance challenge in the coming years, regulators, financiers, and project developers will need to come together and device a multi-pronged approach. It will require phasing out high-emission energy sources while also accelerating the adoption of technology to improve and uncover better, cleaner alternative.
The Asset, is pleased to be hosting the 9th Asia Sustainable Infrastructure Finance Leaders Dialogue. The summit brings infrastructure finance leaders to discuss how Asia’s infrastructure can be secure and ready for the future.