The world still faces a funding gap if it hopes to reach net-zero, and Asia is no exception, representatives from investment management firms said at a media briefing on Monday (May 30).
Roughly $5 trillion in sustainable solutions is needed annually for the world to reach net-zero, which highlights the need for more financing, Steve Howard, the chief sustainability officer of Singapore state investment company Temasek said.
“We've got a financing gap at this point in time, which we need to bridge to go much further. So we see the opportunities there. We've also seen a widening net, for instance, the energy transition, the shift from fossil fuels to renewables-based energy system is well underway,” he said ahead of Temasek’s Ecosperity conference next week (June 7-9).
“It’s been described as the race of our lives… We have a few years of the carbon budget left for a 1.5-degree Celsius rise in temperature, and only about 20 years before we've gone over the budget for two degrees, and we can see the level of extreme weather we're already getting that is putting a real burden on people in society. So the race is decarbonisation, and it's all about action and scale," he said.
Looking closer to home, Asia needs six times its current levels of financing to achieve net-zero by 2050, Geir Espeskog co-head of BlackRock’s sustainable investing for Asia Pacific said during the same briefing.
“We believe public-private partnerships play a pivotal role in encouraging more private capital to participate in the transition,” he said. “Asia Pacific is also a region of opportunity in this energy transition. For example, Asia has a very rich reserve of natural capital that will be crucial.”
The global economy will need new innovative technologies to support the transition, and existing technologies “that may not be economical right now” will need to be scaled, which involves countries having to increase research and development spending and growing the talent pool, Espeskog said.
The recent energy, food and climate-related crises have highlighted the urgency for sustainable solutions, particularly within the energy transition space.
“There is a war underway in Europe, which has caused significant global geopolitical tensions, and also caused an energy crisis. And we can see it is also triggering a further food crisis - the food crisis interplays with climate,” Temasek’s Howard said.
“Climate change is something we have to come back to, even as we see the tensions around the world at the moment.”
He also highlighted the recent heatwave in India, which will impact food crops across the country. In response to events such as these, Temasek has invested in food-related companies such as alternative protein and plant-based foods.
“We have a company that can produce chicken without an egg, so now when you say ‘what came first the chicken or the egg?’ The answer is ‘none’. We can produce them separately. And this level of innovation now - we can see hundreds of companies focusing on this, which is tremendously promising,” he said.
Despite challenges facing the energy transition, such as spiking prices, he struck an optimistic note that businesses, the private sector and the governments have continued to work towards a net-zero world.
“We can also see with mobility now, the acceleration with hundreds of models of electric vehicles that are in many markets starting to dominate particular categories of vehicle sales," he said.
Howard also pointed out that the world has just installed the first trillion watts of solar, which took 70 years of solar development to attain.
“The next trillion watts will come in just the next few years. So solar in most countries now is the cheapest form of energy. And we can move towards a sort of clean energy abundance,” he said.
“We're also seeing tremendous advantages with hydrogen. We saw this as a topic come up last year, but in the last 12 months, we've seen phenomenal announcements from the private sector, and from the public sector, about putting billions behind accelerating hydrogen from natural gas, and green hydrogen from renewables.”