Southeast Asia’s green energy transition is facing uncertainty due to a notable reduction in climate development finance allocated to the region, a new Lowy Institute report reveals.
The annual Southeast Asia Aid Map shows total official development finance to Southeast Asia fell to a new low of $26 billion in 2022.
The report found that climate development finance dropped 15% in 2022 despite increased policy emphasis from the international community, leaving the region’s green transition at risk.
This contraction in funding could hinder efforts to adopt renewable energy sources and achieve sustainability goals, making it challenging for Southeast Asian countries to move away from fossil fuels and effectively reduce their carbon emissions.
The report highlights that the Asian Development Bank estimates that the region will require approximately $210 billion in climate finance annually to achieve its renewable energy transition goals.
However, the Southeast Asia Aid Map reveals that from 2015 to 2022, the region received an average annual disbursement of only $8.1 billion.
Read more: Transition finance key to achieving Southeast Asia’s net-zero goals, say experts
China is the leading provider of renewable energy financing in Southeast Asia. However, new Chinese development financing has sharply declined, with 2022 disbursements of $3 billion being just one-third of what China spent on development projects in the region eight years ago.
The Aid Map by Lowy Institute is a comprehensive database tracking official development finance (ODF) flows in Southeast Asia. The 2024 edition covers the period from 2015 to 2022 and includes data on more than 120,000 projects carried out by 107 development partners, totalling $255 billion.