India, China to Boost Low Carbon Investments in APAC
Moody's Investor's Service predicts that India and China will be the driving forces behind low carbon emission investments in the Asia Pacific Region (APAC).
To achieve emissions reduction targets outlined in the Stated Policy Scenario (STEPS), the International Energy Agency (IEA) estimates that India will invest an average of $53 billion and $87 billion annually between 2021 and 2025 and 2026 and 2030, respectively.
During the same period, China is projected to spend between $239 billion and $210 billion. The majority of these investments will be directed towards clean energy and related projects, Moody's stated.
Moody's further noted that the availability of green finance options, supported by diverse funding channels and manageable costs, will strengthen the energy transition of power companies and meet their substantial financing needs. Sustainable bonds, green loans, project bonds, and green funds are commonly included in the sustainable finance plans of APAC's power utilities.
"The renewable energy sector is expected to continue driving growth in sustainable bond markets due to governments' commitments to decarbonisation. Thermal power companies with well-defined energy transition strategies have the potential to access transition finance," Moody's explained.
While coal-fired companies in the region face increasing carbon transition risks, utilities with credible transition plans will encounter lower funding risks. The report acknowledged that coal-fired power will remain crucial to many power sectors in the region in the medium term.
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