Editor’s note: Here’s a look at some of the major news stories about renewable energy, sustainable finance and other cleantech topics coming out of greater Asia in the past few weeks.
China Boosts Target for Renewable Energy
China is taking big steps toward boosting its use of green energy, setting aggressive new goals and promising stiff fines against entities that don’t meet those targets.
The country’s newly revised Renewable Portfolio Standard, released last month, calls for at least 35% of China’s electricity to come from renewables by 2030. The previous target was to have “non-fossil fuels” comprise 20% of all electricity by that time.
The new goals are laudable, but also represent China just running to keep up with much of the rest of the developed world. The European Union has a target of 40% renewable energy by 2030, for example. The U.S. has no national target, but more than 30 states have roughly similar targets. California’s goal is 50% renewables by 2026 and 60% by 2030, while Colorado is gunning for 30% by 2020.
The plan incentivizes private companies to adopt renewable energy: it will levy fines against companies that fail to meet the stipulated targets. The money raised by the fines would be used to fund the government’s subsidy programs for the solar and wind power sectors.
Those subsidies have helped those sectors develop, but the government is also taking steps to reduce that support. China ultimately wants to ensure that those industries can compete without subsidies and still achieve grid parity with fossil fuels.
Toyota to Back $265M Renewable Energy Fund
Toyota says it will back the new Mirai Renewable Energy Fund that Tokyo-based asset manager Sparx Group is launching. The fund will invest in renewable energy projects — including solar, wind, biomass, geothermal and hydropower — with a goal of helping increase renewable power across Japan as the country moves away from nuclear.
Sparx is looking to raise 30 billion yen, or about $265 million, for the fund. The size of Toyota’s investment was not disclosed; Sparx will seek other investors to join in.
Some of the electricity generated by the fund’s projects will power Toyota’s car factories and dealerships. The company wants to trim its own carbon emissions, and has set goals of selling almost no cars powered exclusively by internal combustion engines, and having zero emissions from its factories, by 2050.
Green Loans Taking Hold Across Asia
Green loans, as opposed to green bonds, are starting to gain traction across Asia, particularly for property developers. Some experts say that green loans could one day surpass green bonds.
Last month, Frasers Property secured a roughly $870 million syndicated green loan for the construction of a 38-story, energy efficient office tower in Singapore’s central business district. It is the first loan raised using principles laid out by the Asia Pacific Loan Market Association in March that look to standardize disclosure.
A lack of standardized disclosure has prevented greater uptake of both green bonds and green loans.
Other recent green loans include:
- In June, Macquarie Group raised a $2.6 billion green loan to finance energy efficient projects and buildings.
- In September, Hong Kong’s Leo Paper Group took out an approximately $44 million loan for environmental projects in China.
- Ho Bee Land in August received a green bridge loan for about $260 million to acquire a commercial building in London.
- In Hong Kong, real estate firm New World Development took a green loan of about $460 million in March for a commercial redevelopment project.
Globally, the green bond market was worth about $160 billion last year and is expected to surpass $200 billion this year. Green loans, on the other hand, have been sporadic until only recently; a total amount is hard to come by because of different definitions of what makes a green loan.
But the global head of sustainable finance at ING, Leonie Schreve, says there’s definite momentum building around green loans, and green loans worldwide could grow faster than green bonds over the next few years.
Green loans, Schreve told Reuters in June, are seen as being “attractive and simple for the market.”
BlackRock to Launch Green Fund with Focus on SE Asia
BlackRock is prepping a new fund, called the Climate Finance Partnership, that will invest in renewable energy and low-emission transport projects in emerging economies around the world, with a particular focus in Southeast Asia.
BlackRock expects to launch the fund with at least $100 million from the French and German governments as well as the Ikea Foundation, the Hewlett Foundation and the Grantham Foundation.
The fund will invest in projects across Latin America, Africa and Asia. Former New York Mayor Michael Bloomberg, who is involved in the project, says Southeast Asia will be a particular focus because it is home to many innovative companies that will help drive the global shift toward clean energy.
Further details on the new fund aren’t yet available, but it could be modeled in part on BlackRock’s existing Global Renewable Power II fund. Launched last year, that fund raised $1.65 billion from 67 institutional investors around the world and so far has invested in more than 250 solar and wind energy projects.
In a statement, the partnership says the new fund “will showcase the power and catalytic role of philanthropic and public capital to facilitate top-tier institutional capital investment into climate-related sectors in emerging markets.”
Other recent news items from across greater Asia:
Green Finance in Hong Kong: Hong Kong’s Securities and Futures Commission rolled out a “strategic framework” last month that is meant to accelerate the development of Hong Kong as a green finance hub. A key focus is to get publicly traded companies to be more consistent in how they disclose information around climate-related risks and opportunities, the SFC says. The regulator is also seeking to have asset managers be more clear about how they use environmental factors in their investment process.
Equity Investment for Solar Developer: Macquarie Group, a Singapore-based solar developer that finances, builds, owns and operates projects across Southeast Asia and India, received a $50 million equity investment from Netherlands-based Climate Fund Managers. It’s intended to give Cleantech Solar greater access to long-term institutional capital to help it continue to expand, the companies say.
Standard Chartered Says No to Coal: Standard Chartered said last month it will no longer finance coal power plants, becoming the latest in a growing number of banks and financiers that have sworn off coal. A few days before the Standard Chartered announcement, Japanese conglomerate Marubeni Corp., which has been a major investor in coal plants, said it won’t start any more such projects.
Malaysia Targets Big Jump in Renewables: The government of Malaysia has set a goal of having 20% of the country’s electricity be generated from renewable sources by 2030, up from just 2% today. Yeo Bee Yin, Minister of Energy, Science, Technology, Environment and Climate Change, says the ministry is working to ensure Malaysia’s grid can handle having more renewable energy in the mix.
$100M Target for Woman-Oriented Bonds: Singapore bank DBS wants to raise $100 million through the “Women’s Livelihood Bond” program, aimed at supporting women across South and Southeast Asia. DBS and Impact Investment Exchange are looking to fund and support enterprises working in areas like clean energy access, sustainable agriculture and financial inclusion. The goal is to benefit one million vulnerable women across the region. An earlier bond, issued under the same program with a 5.65% coupon, raised $8 million.
China’s Weichai Buys Into Fuel Cell Company: Vancouver-based fuel cell manufacturer Ballard Power Systems will expand its presence in China now that Weichai Power has invested $163 million in the company, taking a nearly 20% stake. Ballard will supply Weichai with at least 2,000 fuel cell modules for commercial vehicles by 2021. An existing Chinese strategic investor in Ballard, Broad-Ocean Motor, invested a further $20 million in the company to maintain a 9.9% ownership share.
Facebook Signs Up for Solar in Singapore: Facebook says the data center it’s building in Singapore will be 100% powered by solar energy. The social media giant has inked a 20-year agreement with Sembcorp, which will use solar panels on 900 rooftops across Singapore to power the new data center, which is slated to open in 2020. Facebook’s headquarters in Menlo Park, Calif., already gets all of its electricity from renewable sources.
Mongolia to Get First Distributed RE System: A quarter million people in western Mongolia will soon get renewable energy from solar, wind and a thermal pump, when the country’s first distributed renewable energy system is installed. The Asian Development Bank and the Strategic Climate Fund are covering the majority of the $66 million cost. It’s expected to be fully operational by 2023.
Air Sensor Startup Gets Funding: Singapore-based air sensor startup uHoo has raised money through a bridge round ahead of its Series A funding from Wavemaker Partners, with co-investments from real estate developer Seeds Capital, existing investor East Ventures, and angel investors. The company’s coffee mug-sized sensor measures indoor air quality, allowing landlords or others to take appropriate action if dirty air is detected.The amount raised in the bridge round was not disclosed, but is reportedly in the seven-digit range.