TOKYO (Reuters) – A study group drawn from a number of private financial institutions on Monday laid out guidelines for financing low-carbon technologies and energy transition projects in Asia to help combat climate change.
Led by Japan’s Mitsubishi UFJ Financial Group, the study team, which was formed last year, was tasked with creating practical financing recommendations to supplement existing global standards and frameworks.
Under the non-binding guidelines, presented at the Asia Green Growth Partnership Ministerial Meeting on Monday, banks would be able to offer finance for low-carbon technologies and projects which align with an individual country’s net zero goals.
Besides decarbonisation technology, energy transition activities focused on significantly reducing emissions from existing sources will also be crucial, said the group, which is made up mostly of banks with operations in Asia, including Western peers such as Citigroup, HSBC and Barclays.
Pointing to the risks to energy security highlighted by Russia’s invasion of Ukraine, the group added that the reliability of energy supplies and their affordability should be taken into account.
Lenders would refer to a list of transition technologies selected by Economic Research Institute for ASEAN and East Asia (ERIA) when considering whether to provide financing, which includes the conversion of coal-fired power generation to gas-fired, and the use of hydrogen and ammonia at thermal power plants to cut carbon dioxide (CO2) emissions.
The technologies were chosen based on factors such as emission levels, supply availability and cost, with the list subject to revision and expansion.
Japan, which last year pledged to offer $10 billion for decarbonisation projects in Asia such as renewable energy, is promoting transition finance to back “realistic and feasible” steps toward carbon neutrality in the region as global efforts also pick up, particularly in the European Union.
The EU has created an ambitious green investment rulebook, or taxonomy, to classify which parts of the economy may be marketed as sustainable investments.
(Reporting by Yuka Obayashi; Editing by Kirsten Donovan)
