Southeast Asia Needs PHP 51 Trillion for Energy Efficiency Goals – PE2

The Philippine Energy Efficiency Alliance (PE2) said the region would need a staggering USD 892 billion, or roughly PHP 51 trillion, in investments to achieve its energy efficiency targets by 2040.

Speaking at the Asia Clean Energy Summit 2024 in Singapore, PE2 President Alexander Ablaza emphasized the urgent need for innovative financial tools to meet this goal.

“Innovative sustainability financial mechanisms and products such as sustainability bonds, real estate investment trusts, blended finance, carbon transition and retirement bonds, sustainability-linked debt, venture capital funds, green mortgages, and most especially, performance contracting and leasing, will play an immense role in mobilizing private capital to bridge the long-term EE investment gap,” Ablaza said.

Ablaza underscored that an estimated USD 595 billion must come from private capital to finance energy efficiency (EE) efforts across Southeast Asia.

He suggested that tools like Energy Service Company (ESCO) contracts, public-private partnerships (PPP), and extensive government-led retrofitting programs will be vital to secure this capital.

ESCO contracts, already successful in countries like China and Japan, are relatively underutilized in the Philippines and Southeast Asia but have shown to be effective in mobilizing private sector funds by guaranteeing cost savings through energy efficiency improvements.

Ablaza also urged policymakers to strengthen frameworks that enable the ESCO sector to function as a specialized financing conduit.

Enhanced policy support, he said, could drive significant growth in the sector, encouraging a wave of energy-efficient upgrades in both public and private buildings.

The Asia Clean Energy Summit also featured discussions on the role of Southeast Asia’s energy sector in global decarbonization efforts.

A report by the International Energy Agency (IEA) previously noted that energy demand in the region is projected to grow by nearly 60% over the next 20 years, driven by population growth and rapid urbanization.

The report emphasized that energy efficiency must be a top priority for governments to manage this demand sustainably.

While the investment target may appear daunting, PE2 remains optimistic that with the right mix of policies, innovative financing structures, and private sector engagement, the region can meet its energy efficiency goals by 2040.