AsiaElec: UK provides $150mn to support Green Finance in Asia

The Association of South East Asian Nations (ASEAN) unveiled at COP26 its Catalytic Green Finance Facility, which aims to increase access to finance for renewable energy, clean transportation and urban infrastructure projects in the region’s developing countries.

The facility is to be managed by the Asian Development Bank (ADB) and will receive GBP110mn ($150mn) from the UK government, which is in turn designed to mobilise GBP5bn ($6.8bn) of public and private capital from ASEAN member governments and private investors.

UK Foreign Secretary Liz Truss said that she aimed to boost UK co-investment in clean and reliable infrastructure in developing countries.

“Britain is working closely with allies, through COP26 and beyond, to deliver the clean, honest and reliable infrastructure investment that the world so urgently needs. Co-investing with our friends in Asia provides jobs and opportunities here in Britain and will help the world meet its climate goals, but will also drive growth in developing countries by supporting high-quality infrastructure deals, in line with international standards,” she said.

Truss stressed that government must do more to mobilise private capital from financial markets, and that trade, investment and the open marketplace formed part of the solution to tackling climate change, not the problem.

Southeast Asia is particularly vulnerable to rising poverty levels caused by the coronavirus (COVID-19) crisis, while CO2 emissions are rising in many developing countries as they turn to cheap coal to provide energy.

The ADB involvement comes as a recent report highlighted that nearly all internationally available development financing is now committed to reducing or ending investment in coal-fired power, Reuters reported.

According to new research from Boston University's Global Development Policy Center, the G20’s pledge before COP26 to end finance for all coal-fired power plants overseas meant that 99% of all development finance institutions (DFIs) are committed to cutting coal investment and raising support for renewables.

"If these institutions live up to their commitments, it will be easier for developing countries to find official finance for renewable energy and coal power phase-out than for building new coal-fired power plants," said Rebecca Ray, senior researcher at the GDP Centre and one of the study's authors.

The study also stressed that China’s announcement in September that it would no longer be involved in overseas coal projects would have a major impact on the coal power sector, depriving it of its biggest financial backers, including the China Development Bank and the Export-Import Bank of China.