News Room - Business/Economics

Posted on 17 Sep 2009

Clean technology undergoing growth spurt in Asia

Asia is one region of the world where the clean technology sector is seeing rapid growth.

 

And experts said the biggest investments in the industry will take place in the region, even if the level of understanding of renewable energy and its usage is not as widespread as in the West.

 

Investment in Asia's clean energy sector grew at a 40 per cent compounded annual growth rate between 2006 and 2008.

 

Data from the International Energy Agency shows that energy demand in Asia over the next two decades is expected to outpace the combined demand of Europe and the US.

 

Market players said this demand will also drive growth in the clean energy industry.

 

Mumtaz Khan, CEO of Middle East and Asia Capital Partners, said: "Those needs in Asia far outstrip anything in the West, which are already mature... As they say, necessity is the mother of invention.

 

"The big opportunity in Asia at the moment has been, in terms of the commercialisation, in clean energy technology - which has moved to Asia. So all of the solar panel manufacturing globally is going to be done in Asia at a cost competitive basis... (with) market demand coming from Asia."

 

Market watchers said renewable energy has gained traction not only for its economic value, but also for its potential role in ensuring national security.

 

A key aspect of this would be to ensure that sustainable clean energy can be produced domestically, thereby decreasing dependence on external energy sources.

 

One country which has already focused on these concerns is Indonesia, which has a Clean Technology Fund to promote large-scale projects. The fund is sponsored by the country's finance ministry, through an equity participation by its state investment unit.

 

According to Indonesia, international targets require that the country cut emissions by 60 per cent by 2030, based on current emission growth levels. And this will cost the economy US$42.5b annually.

 

"We're looking at ways to achieve greater scale, and that's to provide greater financing to the sector. Bankers are reluctant to get involved now because not many have participated in these industries," said Edward Gustely, senior advisor at Indonesia's Ministry of Finance.

 

He added that the sector is benefiting from a shift in capital flows post-financial crisis, where investors prefer to invest in more tangible, industrial activities.

 

"What has happened is that with the backdrop of the global financial crisis, you've seen a recalibration of how capital and investment is going to flow. Part of that recalibration is getting away from a merchant trade mentality and back to being an industrialist - how do we build new industries, how do we engage the various participants to be a part of that growth story," said Gustely.