Reflecting on the just-concluded COP29 deliberations, it’s clear that Asia’s climate journey is entering a more ambitious phase. Talks at Baku highlighted the region’s essential role in tackling global climate challenges, with conversations ranging from robust carbon markets to ramping up adaptation actions. While negotiations over a new collective quantified goal for global climate finance are casting a dark shadow, the conversations coming out of COP29 underscore the willingness of governments, businesses, and communities across Asia to move from commitments to actionable, region-specific climate solutions.
For me, these are the key themes emerging as we look back on 2024. Innovation in the mobility sector: Asia’s mobility sector is rapidly innovating to reduce emissions, with a distinct competition emerging between “electrons” (electric vehicles or EVs) and “molecules” (hybrid and alternative fuels). Both EVs and hybrids are being propelled by government support through subsidies and tax incentives, representing the region’s commitment to exploring multiple pathways to cleaner transportation. This competition is driving innovations that will shape Asia’s energy resilience.
Investment in clean energy infrastructure: China’s momentum in solar and offshore wind is setting an example for clean energy infrastructure for Asia, while India and Indonesia — though not fully on track to meet their 2030 renewable energy (RE) goals — are taking strides in scaling up solar energy across residential and commercial sectors. A critical challenge lies in the cost of financing clean energy. Traditional options from multilateral development banks and development finance institutions remain expensive. However, there is growing optimism around new financial instruments, including green bonds and cheaper refinancing models, which have the potential to lower costs and accelerate RE deployment.
Investment in climate adaptation: As Asian economies push for mitigation, they are equally focused on the critical need for adaptation. Countries across Asia are speeding up development of national adaptation plans to guide multi-sectoral strategies. While financing adaptation at the necessary scale remains a formidable challenge, one solution gaining traction is adaptation and resilience bonds. These could unlock capital to protect vulnerable communities and build more resilient infrastructure.
The private sector is also stepping up, recognising that resilient supply chains and infrastructure are not only essential for long-term business continuity but also for safeguarding communities.
Mobilising climate finance at scale: Perhaps one of the most critical aspects that is emerging is the need to mobilise climate finance at scale. While green bonds, external commercial borrowing, and blended finance models are gaining momentum, the region still lacks the depth and breadth of capital required to meet its ambitious climate goals. The gap between pilot projects and large-scale implementation remains wide.
What is promising, however, is the increasing interest from private capital. Asset owners such as pension funds and private equity are starting to view RE and transition finance as attractive investment opportunities.
Regulatory action to catalyse financing solutions: Across the region, there has been progress in creating mechanisms that support green finance. Central banks and financial regulators in key markets such as Singapore, Hong Kong, and India are now making physical climate risk assessments a mandatory part of financial oversight. This regulatory push is a crucial step to ensure financial institutions integrate climate risk into their portfolios, driving more capital into climate-resilient infrastructure and RE.
South-South partnerships: COP29 also reaffirmed the value of South-South partnerships as countries look to each other for shared solutions. This is one of the most encouraging trends in Asia’s climate strategy where countries are coming together to share knowledge, technologies, and solutions. For example, India’s Voice of Global South Summit and China’s Forum on China-Africa Cooperation are fostering partnerships between developing countries, particularly in areas like clean energy deployment.
Philanthropic organisations such as the Rockefeller Foundation are playing a crucial role in enabling these partnerships by facilitating collaboration between governments, the private sector, and society.
India’s role in Asia’s climate strategy: India’s role in shaping Asia’s climate strategy cannot be overstated. As one of the fastest-growing economies in the world, India faces the dual challenge of meeting its development goals while transitioning from fossil fuels. It is making significant investments in RE, but coal continues to be a major part of its energy mix.
Navigating this delicate balance will require both domestic action and international collaboration. Innovative financing mechanisms will be key to success. The high cost of energy transition means that international financial support is essential. India’s leadership in global platforms such as the G20 provides an opportunity to advocate new financial instruments, such as guarantee platforms proposed by the World Bank and pooled technical assistance facilities from multilateral institutions. These mechanisms could help mobilise the capital needed to finance India’s energy transition while maintaining economic growth.
Overall, with Asia’s approach to climate action grounded in innovation, resilience, and collaboration, the post-COP29 momentum has the potential to move us towards becoming a climate-resilient Asia.