- First-of-its-kind report, powered by CDP’s data of 1,170 companies, ranks the competitiveness of ten key Asian markets for renewable electricity.
- The ten selected markets represent 11,000+ TWh in total annual electricity demand – close to half of global demand.
- India, Mainland China and Japan top the index, which tracks and analyses multiple market, policy and corporate indicators.
- Actions needed to recognize current market barriers and improve RE support mechanisms to accelerate the decarbonization of our region’s energy systems.
27 October 2021 (Hong Kong): First-of-its-kind research, REenergising Asia: Assessing Renewable Electricity Readiness Among Key Asian Markets, developed by global environmental disclosure platform CDP and funded by HSBC, reveals the comparative competitiveness of Asia’s ten key markets for renewable electricity (RE) representing more than 11,000 TWh in total annual electricity demand – close to half of the global demand.
Released today, the report features CDP’s proprietary index Asia Renewable Electricity Competitiveness Index (AREC-Index) which assesses individual electricity markets and corporate RE sourcing practices using CDP’s climate change disclosure data of 1,170 companies in the selected markets, including Mainland China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, South Korea, Taiwan, and Vietnam.
As the region gears up for a future increasingly powered by renewables, the report recommends critical actions required to address market barriers. These include cohesive policy and financial incentives, standardization of data and reporting, capacity building, and aligning RE growth plans with National emissions reduction and decarbonization strategies.
The International Energy Agency estimates the global transformation to net-zero emissions would require renewables to rapidly expand from the current 29% to at least 90% of all electricity generation by 2050. More and more Asian markets are heeding the call on climate action by committing to raised RE ambitions or even a net-zero pathway by 2050. In 2020, over 40% of new corporate members joining the RE100 initiative were headquartered in the Asia Pacific.
However, as the region gears up for a future increasingly powered by renewables, ambition gaps and market barriers remain. By tracking multiple indicators including RE use across industries, voluntary RE consumption, generation-related commitments as well as RE sourcing models, the report analyses the different stages of RE development across the ten markets and identifies actions needed to address these gaps and catalyze the growth of RE. The report also outlines recommendations gleaned from 36 corporate, financial and policy stakeholders in renewable electricity across the region.
The AREC-Index’s market ranking recognizes the region’s top three leading markets for RE. India and Mainland China dominate Asia’s RE growth in terms of market policies and corporate sourcing, with India being the only market that has implemented all eight key policies studied by the report. Nevertheless, to further spur the growth of RE, India needs to improve its electricity distribution companies’ operational efficiency and financial health, and set sub-national targets in line with national ambitions for a more cohesive roll-out of RE policies.
Mainland China dominates global investment in RE capacity, primarily driven by policy-led commitments, and is well placed to gain technological competitive advantage from the transition to net-zero. Private companies operating in Mainland China, however, face challenges in accessing power purchase agreements (PPAs) to directly procure RE, and the current design of the country’s Green Electricity Certificate (GEC) system presents considerable hurdle for prospective buyers.
Home to the second highest investment in installed RE capacity across key Asian markets in 2019, Japan signals the largest potential demand for RE as the country races to achieve its 2050 low carbon strategy, which will see the share of renewables at 50-60% of electricity demand. While its corporates perform well in self-generation, Japan’s policy rankings are relatively lower due to the absence of policies with respect to net metering, Renewable Portfolio Standard (RPS) or other RE-related tax incentives.
Elsewhere in the region, challenges persist in scaling up RE generation. Indonesia, for example, currently uses less than 2% of its RE potential despite its abundant reserves of solar and tidal energy. This is largely attributed to the lack of synchronized, nationwide RE regulation. Meanwhile, only 3% of South Korean companies responding to CDP reported sourcing any renewable electricity using PPAs, as they are not standardized or bankable, thereby rendering PPA procurement financially risky.
In addition to these market and regulatory barriers, many markets surveyed by the AREC-Index also face significant administrative burdens, such as land issues and lengthy permitting and licensing processes.
CDP identifies five key recommendations across all Asian markets for renewables to become the dominant source of electricity over the coming decade:
- Clearly-defined and cohesive RE policies with specific targets for different technologies;
- Streamlining licensing regimes, financial incentives and RE sourcing options;
- Adopting standardized and credible tracking mechanisms for RE;
- Building capacity by providing guidance to corporates on sourcing options, tax or credit incentives and financing opportunities; and
- Aligning emissions reduction and decarbonization strategies with national RE targets.
Nicolette Bartlett, Chief Impact Officer at CDP, said: “It is clear that Asia is at the forefront of accelerating the transition to a green, resilient economy, as well as protecting its populations and ecosystems from the increasingly adverse impacts of climate change. Scaling up renewable energy is front and center in this transition; It also presents a major business opportunity for the region. This first iteration of our AREC-Index aims to help speed up the transition and to better inform key stakeholders of critical actions required in Asia’s race to net-zero.
“Through this insights-driven research, CDP will continue to build upon our corporate action data while expanding on our market selection criteria and the scope of the multi-stakeholder insights in our forthcoming reports.”
Surendra Rosha, HSBC’s Co-CEO Asia Pacific said, “Renewable energy is key to a sustainable future. We see rising demand for it in Asia, as governments and businesses transition to more sustainable models, and ultimately work to meet net zero pledges. HSBC aims to support clients on this journey – in the energy sector and beyond – with a suite of sustainable financing solutions. We are also making good progress on becoming operationally net-zero ourselves.”
NOTES TO EDITOR
The methodology for defining renewable electricity competitiveness across selected markets is available in the full report.
For more information, or exclusive interviews, please contact:
Communications Manager, CDP
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CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 590 investors with over $110 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Over 14,000 organizations around the world disclosed data through CDP in 2021, including more than 13,000 companies worth over 64% of global market capitalization, and over 1,100 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net or follow us @CDP to find out more.
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 64 countries and territories in its geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of US$2,976bn at 30 June 2021, HSBC is one of the world’s largest banking and financial services organisations.