Bloomberg New Energy Finance: The Future of Energy APAC Summit

In November, Bloomberg New Energy Finance held its first APAC Summit on the future of energy, covering three main themes: trade, technology, and the transition to a lower-carbon energy system. It was attended by industry, finance and policy thought-leaders, with Collective Responsibility having the opportunity to participate. Here are some of the insights from the first day:

China’s new normal:

  • China’s electricity development is lagging behind. Currently only 20% energy is used for electricity, but this is going to change as China’s economy shifts and urbanization continues.
  • “Old” energy is still vital – coal, oil, gas – especially to supply China’s growing international tourism, but due to both supply pressures and international commitments (soon to take place at COP21), China will need to decarbonize rapidly.
  • New energy is weak in comparison, predominantly due to economic costs, and therefore there is a need for state policies to support its growth. However, this is not a long term solution, and new energy must be market-driven in the long run, as a result policies are seen more as guidance for investors.
  • Chinese utilities and power companies are financially innovating and selling abroad – Shanghai Electric already has 20-30% of its business overseas by selling equipment. New business models are enabling China to provide free equipment to nations while selling the power. And more recently China has made an agreement to provide nuclear to the UK.

Ma Jun, Chief Economist at People’s Bank of China, spoke about China’s $1trn green financing gap and his expectations for the 13th Five-Year Plan:

  • Only 15% of energy investments are in clean energy, therefore private investment is essential.
  • More “green” financial products are required across different themes, including green credits, green insurance, and green industrial funds.
  • The Agricultural Bank of China only recently released a $1bn green bond in London, and Ma expects the Chinese government to promote green bonds soon.
  • Modification of a security law will reveal the environmental credentials of companies, and low cost software is to be developed to assess emissions in order for investors to have greater transparency.
  • Alongside this, investors should be trained on responsible investing and the green economy.

Other sessions during the day included a keynote by the Minister of Environment from Australia, a panel on Green Infrastructure in Asia, and the significance of Yieldcos as a new method for financing renewable energy projects.

Overall, the day painted a hopeful picture for the new energy sector going into 2016, with an emphasis on the importance of solar across Asia for the coming year, although the risks of unstable policy regimes and currency fluctuations remained highlighted.

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