Xiaodong Wang

Unlocking Commercial Financing for Clean Energy in East Asia was written for government decision makers in middle and high-income countries, members of international financing communities, and practitioners. In East Asia, all middle-income countries have national targets for energy efficiency and renewable energy, and some even have targets for carbon reduction. However, a major hurdle to achieving a sustainable energy path is mobilising the required financing. Policy makers must determine how to unlock commercial financing to scale up clean energy investments. This title builds on recent experience in applying public financing instruments and attempts to address the following issues: when and under what circumstances to use public financing instruments, which instrument to select, and how to design and implement them most effectively. First and foremost, effective and conducive policies are essential to catalysing commercial investment in clean energy. Once the right policy regime has been put in place, public financing mechanisms designed to mitigate risks and close financing gaps have proven to play a major catalytic role in kick-starting substantial investments in clean energy. Public financing mechanisms for energy efficiency are particularly important to mitigating financiers' risk perceptions, to aggregating small deals, and to enhancing the interest and capacity of domestic banks. Public financing for renewable energy can provide long-term loan tenure to match the long payback period, mitigate technology risks, and increase access to financing for small and medium enterprises. The selection of public financing instruments should be tailored to the market barriers, the targeted market segments, the regulatory environment, and the maturity of the financial market. Engaging domestic banks through credit lines and guarantees has had the greatest impact in unlocking private financing. Dedicated funds and mezzanine and equity funds can effectively increase access to financing for small and medium enterprises and clean energy start-ups. Finally, the impact of public financing instruments can be substantially increased if they are packaged with technical assistance.

East Asia has experienced the fastest economic growth in the world over the last three decades, accompanied by a 10-fold gross domestic product increase and rapid urbanisation. Energy consumption has more than tripled during this period and is expected to double over the next 20 years. This remarkable trend has led to twin energy challenges in the region - environmental sustainability and energy security. Written for an audience of energy policy makers and practitioners, Winds of Change explores the region's energy future over the next two decades through two energy scenarios. It outlines the strategic direction East Asia's energy sector must take to meet its growing energy demand in an environmentally sustainable manner, and presents a pathway of policy frameworks and financing mechanisms to get there. The six East Asian countries - China, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam - examined in this book could, with the right policies and financing, stabilise CO2 emissions by 2025, improve their local environment, and enhance energy security without compromising economic growth. They must move their energy sectors toward much higher efficiency and more widespread use of low-carbon technologies, while obtaining substantial financing and low-carbon technologies from developed countries. This clean energy revolution requires major policy and institutional reforms, including energy pricing reforms, regulations such as energy efficiency standards, financial incentives such as feed-in tariffs for renewable energy, and accelerated research and development. Finally, building low-carbon cities will be key to containing the rapid urban energy growth through compact urban design, public transport, clean vehicles, and green buildings. The window of opportunity is closing fast - delaying action would lock the region into a longlasting high-carbon infrastructure. The technical and policy means exist for such transformational changes, but only strong political will and unprecedented international cooperation will make them happen.