Financing Asia's Green Transition | Climate Trailblazers: Towards Net Zero

Summary

Asia, the world's fastest-growing region, faces challenges as it accounts for half of global emissions. However, efforts to decarbonize are accelerating. Governments and private sectors are investing in renewable energy, green technologies, and sustainable finance, aiming for net zero by 2050. With initiatives like G-FANZ and carbon offset markets, financial institutions are reallocating capital to fund innovation and infrastructure. Singapore emerges as a leader in carbon markets and sustainability. Despite the daunting financial requirements, there is optimism that human potential and new technologies can revolutionize the global push towards a greener future.

Takeaways

• 🌍 Asia, the fastest-growing region, accounts for half of the world's emissions but is starting to accelerate efforts to decarbonize.
• 🚀 There is a pressing need to restructure energy, transport, and food systems rapidly to meet climate goals.
• 💰 Achieving net-zero by 2050 requires a significant financial commitment, with estimates of $131 trillion needed for a renewable energy transition.
• 🏦 The private sector, through initiatives like G-FANS, is stepping up to mobilize $100 trillion in support of net-zero goals.
• 🌱 HSBC and other financial institutions are actively financing green projects, such as electric vehicle batteries and sustainable bonds.
• 🌏 Singapore is positioning itself as a hub for carbon markets, with its first carbon tax and platforms like Climate Impact X driving transparency and trust.
• 💡 Carbon offsets, while not a complete solution, help businesses manage emissions by funding projects like reforestation and clean cookstoves.
• 📊 Companies like Temasek and Decarbonization Partners are investing in new technologies, including carbon capture, alternative materials, and low-carbon products.
• 🔋 Innovations in sectors like renewable energy, carbon management, and synthetic materials are critical for achieving global decarbonization goals.
• 🛠 Reaching net-zero requires coordinated global action, massive investment, and leveraging human potential to create transformative change.

Q & A

Why is Asia important in the global efforts to decarbonize?

Asia is the fastest-growing region and accounts for half of the world's emissions. Its large population and rapid industrial growth have made it a significant contributor to global carbon emissions, making its decarbonization efforts critical for addressing climate change.

What is the current stance of Asian governments regarding decarbonization?

Asian governments are increasingly investing in research and development for decarbonization. Although the region has lagged behind in the past, efforts are now accelerating, driven by policy changes and financial investments aimed at reducing CO2 emissions.

What are the key sectors that need restructuring to reduce greenhouse gas emissions?

The key sectors include energy production, transportation systems, built environments, and food and agriculture. Rapid transformation in these areas is essential for reducing greenhouse gas emissions.

What financial efforts are being made to achieve net-zero emissions by 2050?

Achieving net-zero emissions by 2050 requires significant financial investments, with estimates suggesting around $131 trillion by 2050. Both public and private sectors are stepping up, with financial institutions like the Glasgow Financial Alliance for Net Zero (GFANZ) committing up to $100 trillion to help economies transition.

What is the role of the Glasgow Financial Alliance for Net Zero (GFANZ)?

GFANZ is a coalition of over 450 banks, insurers, and asset managers from 45 countries, committed to accelerating the transition to a net-zero economy. The alliance aims to reallocate capital towards sustainable projects and help financial institutions align their operations with net-zero goals.

How is HSBC contributing to the net-zero transition?

HSBC, a founding member of the Net Zero Banking Alliance, has been financing sustainable projects like green bonds and electrification efforts. For example, HSBC financed Durapower, a company supplying lithium-ion batteries for electric vehicles in Singapore, contributing to greener transportation.

What role do carbon taxes play in decarbonization, and how is Singapore implementing this policy?

Carbon taxes incentivize companies to reduce emissions by making it more expensive to emit CO2. Singapore was the first Southeast Asian country to impose a carbon tax, which will increase progressively from $45 per ton in 2026 to up to $80 per ton by 2030, to help achieve net-zero emissions.

How do carbon offset markets help companies meet their decarbonization goals?

Carbon offset markets allow companies that cannot immediately reduce emissions to invest in projects that remove or reduce emissions elsewhere, such as reforestation or clean energy projects. These markets enable faster and cheaper reductions in global emissions.

What is Climate Impact X, and how does it contribute to the carbon market?

Climate Impact X is a Singapore-based company launched in 2021 to scale the voluntary carbon market. It aims to provide transparency, integrity, and trust in carbon trading, positioning Singapore as a hub for carbon-related services.

What innovations are necessary to achieve net-zero emissions by 2050, according to Decarbonization Partners?

Decarbonization Partners, a private capital investor, focuses on sectors like carbon capture, renewable energy, bio-based products, advanced mobility, and digital transformations. These innovations are essential to meet the goal of net-zero emissions by 2050.

Outlines

00:00

🌍 Asia's Growing Role in Decarbonization

Asia, the world's fastest-growing region, accounts for half of global emissions but has recently increased efforts to decarbonize. The region's large population has historically contributed to high CO2 emissions. However, recent policies and government investments are accelerating the transition towards lowering greenhouse gas emissions. Key sectors like energy, transportation, and agriculture need swift restructuring to meet these goals. Despite the challenges, there is optimism that with dedication, Asia can significantly reduce its emissions and contribute to global efforts to achieve net-zero emissions by 2050.

05:01

🚗 Financial Support for Green Transportation

Singapore-based Durapower imports lithium-ion batteries for electric vehicles in a major port operation, a part of broader efforts to make transportation greener. HSBC provided green trade financing to support Durapower's work, highlighting the win-win nature of sustainable finance. Singapore’s financial institutions, including Temasek, are making significant investments in sustainable technologies to meet decarbonization goals. These institutions, while late adopters in climate finance, are now focusing on financing the energy transition and assisting clients to align with climate change goals.

10:02

🏦 Leveraging Capital for Carbon Markets and Green Innovations

Singapore's role in the global carbon market has grown, with efforts to facilitate high-quality carbon credit exchanges. The country's lack of significant carbon credits makes it an unbiased broker between carbon credit producers and buyers. Additionally, Temasek's Gen Zero platform seeks to catalyze climate solutions by investing in projects that generate carbon credits and supporting the development of infrastructure for decarbonization. These initiatives focus on building trust and transparency in carbon credits while addressing global carbon reduction goals.

Keywords

💡Decarbonization

Decarbonization refers to the process of reducing carbon dioxide (CO2) emissions, primarily by transitioning to renewable energy sources and sustainable practices. In the video, Asia's efforts to decarbonize are highlighted, with a focus on reducing emissions in areas such as energy production and transportation. The region's large population and significant emissions make these efforts crucial for combating climate change.

💡Net Zero

Net zero means achieving a balance between the amount of greenhouse gases emitted into the atmosphere and the amount removed. The video emphasizes the goal of reaching net zero by 2050, particularly through global cooperation between governments and financial institutions. This concept is central to mitigating climate change and requires major transformations in energy, transportation, and industrial sectors.

💡Renewable Energy

Renewable energy refers to energy generated from natural sources that are constantly replenished, such as wind, solar, and hydropower. The video discusses how Asia and the rest of the world must accelerate the transition to renewable energy to reduce carbon emissions. This transition is critical for reaching net zero goals and is a key focus of both government policies and private investments.

💡Carbon Tax

A carbon tax is a fee imposed on the burning of carbon-based fuels like coal, oil, and gas, aimed at reducing greenhouse gas emissions. In the video, Singapore is highlighted as the first Southeast Asian country to impose a carbon tax, progressively increasing it to encourage decarbonization. The tax incentivizes companies to lower their emissions or invest in carbon offsets.

💡Carbon Offsets

Carbon offsets allow companies or individuals to compensate for their carbon emissions by investing in projects that reduce or remove greenhouse gases elsewhere, such as reforestation or renewable energy projects. The video discusses how businesses can offset emissions they cannot reduce immediately by supporting initiatives that sequester or cut carbon dioxide, thereby aiding in decarbonization efforts.

💡Glasgow Financial Alliance for Net Zero (GFANZ)

GFANZ is a coalition of financial institutions committed to accelerating the transition to a net zero economy. The video highlights its role in reconfiguring financial decision-making to drive capital toward sustainable projects, essential for reaching global climate goals. GFANZ's member institutions aim to provide up to $100 trillion in financing to support the net zero transition.

💡Green Bonds

Green bonds are a type of fixed-income financial instrument specifically earmarked to raise money for climate and environmental projects. In the video, banks like HSBC are mentioned as issuers of green bonds to finance sustainable projects, such as electric vehicle infrastructure. These bonds are vital for mobilizing capital toward decarbonization efforts.

💡Carbon Markets

Carbon markets allow companies to trade carbon credits, which represent a reduction of greenhouse gas emissions. Firms that exceed their emissions targets can purchase credits from those that have reduced emissions below their limits. The video mentions how carbon markets, such as those in Singapore, enable faster and cheaper decarbonization by allowing firms to invest in the most efficient reductions.

💡Catalytic Capital

Catalytic capital refers to investment that aims to unlock additional private capital for high-impact projects, particularly in areas like sustainability. In the video, catalytic capital is described as essential for driving innovations in renewable energy, infrastructure, and carbon reduction technologies. This funding helps scale projects that contribute to decarbonization and sustainability goals.

💡Advanced Mobility

Advanced mobility involves transportation systems that use low-carbon or carbon-neutral technologies, such as electric vehicles and sustainable public transit solutions. The video points to the importance of restructuring transportation systems as part of Asia's decarbonization efforts, with investments in advanced mobility reducing emissions and supporting the transition to net zero.

Highlights

Asia, the world's fastest growing region, accounts for half of the world's emissions but is now ramping up decarbonization efforts.

Government investments in research and development will rapidly transform CO2 reduction in the coming years.

To achieve net zero by 2050, rapid restructuring of energy, transportation, food systems, and the built environment is crucial.

The global decarbonization process will require a massive financial investment, with an estimated $131 trillion needed through 2050.

The Glasgow Financial Alliance for Net Zero (GFANZ) is mobilizing over 450 financial institutions to facilitate a $100 trillion investment for a global net-zero transition.

HSBC and other banks are aligning their strategies to support decarbonization, financing green initiatives like electrification and renewable energy projects.

Singapore leads Southeast Asia with a carbon tax, progressively increasing rates to encourage firms to cut emissions and invest in cleaner technologies.

Carbon markets enable businesses to offset emissions through projects that reduce carbon, such as reforestation and energy-efficient technologies.

Singapore has positioned itself as a global hub for carbon services, leveraging its neutrality and financial infrastructure to facilitate carbon trading.

Carbon credits and offsets provide an immediate way for companies to decarbonize, with innovative platforms like Climate Impact X increasing transparency.

Temasek’s platform, GenZero, is driving investment into decarbonization solutions, carbon credits, and monitoring systems to support long-term climate goals.

Decarbonization Partners, a joint venture between BlackRock and Temasek, invests in emerging technologies like carbon capture, low-carbon products, and renewable energy.

New consumer demand for sustainable alternatives is driving innovations in low-carbon industries, such as plant-based materials like mushroom leather.

Mitigating climate change will require $4.5 trillion of investment per year until 2050, highlighting a significant funding gap.

Despite the challenges, optimism remains high, as innovations in decarbonization and renewable resources create unprecedented opportunities for change.

Transcripts

asia the world's fastest growing region

accounts for half the world's emissions

asia has lagged behind in efforts to

decarbonize but now those efforts are

picking up speed

we have a huge population and we used to

emit quite a lot of co2 and we're still

admit quite a lot but at least from the

policy perspective right we have the

idea we have the vision and

government invest a lot

on the research and the development

that will in the next couple of years

rapidly transform

the overall setting to reduce the co2 in

the air

we need to be extraordinary fast in the

way we reduce greenhouse gas emissions

restructure our energy our transport

systems our built environment the way we

use food and agriculture we can do it

but it requires our best efforts

asia is the fastest growing region in

the world

but that growth has come with a price

carbon emissions are warming the planet

now

asia and the world are in a race to

decarbonize

to accelerate a renewable energy

transition

to slash emissions from transportation

and to have capital catalyze innovations

and action across the globe

the race to get to net zero by 2050

has begun

[Music]

ambitious targets have been set to

mitigate climate change

but the vision of a net zero world is an

expensive one to realize

in 2019 it was estimated that

131 trillion dollars would be needed

through to 2050

just on spending to achieve a renewable

energy transition

governments can't do it alone

so private capital is stepping up

the glasgow financial alliance for net

zero or g fans is a coalition of leading

financial institutions around the world

their mission to accelerate the

transition to a net zero economy

harry cho is a steering committee member

of g-fans

g-fans represents the shared ambition

and implementation towards net zero or

financial institutions that have

committed across the whole of financial

sector if the private sector

does not

enable that need for massive

reallocation of capital which requires

reconfiguring of decision making in

strategic asset allocation

for asset owners

banks as their managers insurers and the

financial service providers what we will

be facing is a world that is not going

to be on average net zero by 2050

[Music]

g fans has a membership of more than 450

banks insurers and asset managers across

45 countries

it promises to deliver up to 100

trillion us dollars to help economies

transition to net zero over the next

three decades

well the net zero movement also brings

some of the

biggest commercial opportunities of our

lifetime

you know eighty percent of the world gdp

is already committed to net zero pathway

and it is estimated about 100 to 150

trillion us dollars will be needed over

the next three decades

the financial institutions who get this

and aligning their pathways to net zero

are going to be able to capture some of

these biggest opportunities that's going

to be coming out

hsbc is a founding member of the net

zero banking alliance which is a member

alliance of g fans

in 2021 the bank was named best bank by

euromoney for sustainable finance in

asia the middle east and western europe

the urgency is great it's now or never

they say it's therefore important

actually to now garner capital to

support basically a more sustainable

future and this uh capital usage will be

used for re-technology development in

terms of helping in build infrastructure

to support this hsbc has done a plethora

of green bonds sustainably linked bonds

with our customers

the recent example that we did where

hsbc financed a local singapore company

in order to supply batteries and what we

did was to provide green trade financing

for a company called durapower so

durapower imports lithium-ion batteries

in support of electric vehicles to be

operated in the trust mega pot

and we have incentivized

trade financing for dural power and it's

a win-win situation where durapower can

supply electrification of vehicles in

the pot and to also make the transport

more green

other investment companies in singapore

are also spending big on sustainability

temasek actively shapes its portfolio to

achieve long-term sustainable returns

and impact

that includes providing capital to

companies developing new sustainable

technologies that contribute towards

decarbonization goals

financial institutions i would say that

they were late adopters on climate but

now financial institutions have really

woken up how do we finance the energy

transition how do you help use

all of the banking relationships you

have to make sure you're working with

your clients

to finance and support things that are

aligned with tackling climate change

[Music]

a cleaner greener future looks possible

with a combination of catalytic capital

and the carrots and sticks of economic

policy

in 2019 singapore became the first

southeast asian country to impose a

carbon tax the tax rate would be

progressively increased reaching 45

dollars per ton in 2026 and between 50

to 80 per ton by 2030

this is with the aim of helping

singapore move decisively on new goals

to achieve net zero emissions by the

middle of the century

i'm a strong believer in the need for

carbon tax and that's why we've seen

that pretty much every country around

the world has been putting place carbon

taxes they vary a lot

all the way from like one dollar and all

the way up to 100 plus in some countries

so so i think it's a firmly important

part of the solution here but if we

really want to get to an optimal

solution for the world it isn't a

complete solution it's not an optimal

solution

that's because while carbon taxes compel

many firms to decarbonize

some firms can't do it right away

maybe they don't have the means or the

technology isn't ready yet

what they can do instead is offset their

emissions

a business offsets its residual carbon

emissions by paying for the removal or

reduction of emissions somewhere else

performed by somebody else

they can pump funds into equipment such

as more energy efficient cook stoves

that reduce deforestation for firewood

and improve local livelihoods

they could also help to restore tropical

forests that sequester carbon dioxide

from the atmosphere

[Music]

and it sounds a bit like you couldn't

you're letting polluters off the hook

but you're actually allowing the best

opportunities to be pursued fastest

because the atmosphere doesn't care

where a ton of co2 comes from it

basically blends into the total

atmosphere and we cause the entire

planet to warm so if you can reduce

carbon emissions fastest where it's

easiest then that's fantastic

opportunity so carbon markets can make

this happen so much quicker and so much

cheaper

carbon marketplaces and exchanges enable

firms to purchase high quality credits

as carbon offsets

there is one such company in singapore

climate impact x was launched in 2021

with the goal of helping to scale the

voluntary carbon market with

transparency integrity and trust

and help position singapore as a hub for

carbon-related services

singapore has a wonderful track record

as being what i would call an unbiased

broker um it means that singapore

doesn't have a lot of carbon credits

that it can offer to the world but on

the other hand although we have a carbon

footprint is also not very large so in a

way we don't have a vested interest in

one side of this equation so we can

become an unbiased broker between

countries who have carbon credits and

though who needs them and singapore has

done that with success before if you

think about how we dealt with iron ore

zincophore doesn't produce much iron ore

and we don't use much iron ore but still

we're the global hub for iron ore

and some of the things that works really

well for singapore is it's just a

trusted place to operate people believe

in our rule of law they know we can make

things happen people understand the

transparency in this country here and of

course we have the skilled labor force

here as well so all these things means

that we naturally have become a

financial center of the world and i

think we can be very very proud of that

and it's exactly the same reason

that i think will

put us in good standing for the carbon

market

another platform has a broader set of

objectives gen zero established by

thomasic seeks to catalyze grow and

operationalize climate solutions to

create impact at scale

this new platform company will invest in

and catalyze

new transformational decarbonization

solutions

secondly they will invest in carbon

credit generating projects

and thirdly they will invest into the

broader carbon ecosystem to be able to

enable decarbonization solutions to be

introduced at scale even as we invest

into maybe nature-based projects that

can actually yield common credits

we are also going to be developing a

marketplace where those credits can be

sold in a price transparent high-trust

way we're also investing into project

developers and consultants that will

help us to be able to manage the project

development of these common credit uh

generating projects and also investing

into what we call mrv or monitoring

reporting and verification companies

that will help us to be able to build

trust and ensure that the quality of the

government credits are maintained

throughout the lifetime of those

projects

carbon credits help businesses and

economies achieve some level of

decarbonization right away

but it would take a lot more capital to

fund innovations urgently needed to

really move the needle on climate change

to reach net carbon zero by 2050 or

sooner we need to invest 4.5 trillion

dollars per year every year from now

until 2050.

there's a 60 gap in where those

investment dollars are coming from and

where they're going

megan sharp is the global head of

decarbonization partners a partnership

between blackrock and the music

it is a private capital investor that

supports a new generation of

technologies that will help get the

world to net zero by 2050

the most exciting investments that we're

seeing are in sectors like carbon

capture utilization and storage carbon

management bio and low carbon products

low carbon and renewable energy

advanced mobility as well as the digital

transformation that underlies all of

this

decarbonization partners has also made

some investments on future materials

we're looking at one opportunity and the

synthetic material space it's an

alternative leather it's a plant-based

leather made out of mushrooms

leather is a very carbon intensive

product and consumers are demanding a

more sustainable alternative and a lot

of consumer product brands have their

own net carbon zero goals that they're

trying to deliver

it's more urgent than ever to mitigate

climate change

but new streams of capital offer hope

that efforts to decarbonize will pick up

greater speed

i'd say hope is also a renewable

resource

because the future is going to be

a revolution in how we produce things

how we feed ourselves how we transport

ourselves and each other

and how the energy systems are and we

can all play our part

so i think we've never had so much human

potential for change so many people that

are educated

so much awareness

human potential is at an all-time high

so if we unlock that together then we

will surprise and delight ourselves

[Music]

this program is produced in partnership

with temasek's ecosparity platform