{"id":35526,"date":"2023-03-20T22:34:53","date_gmt":"2023-03-20T22:34:53","guid":{"rendered":"https:\/\/energytracker.asia\/?p=35526"},"modified":"2023-03-20T22:34:57","modified_gmt":"2023-03-20T22:34:57","slug":"energy-transition-technologies-deficiencies-of-the-japan-led-guidelines","status":"publish","type":"post","link":"https:\/\/energytracker.asia\/energy-transition-technologies-deficiencies-of-the-japan-led-guidelines\/","title":{"rendered":"Energy Transition Technologies: Deficiencies of the Japan-led Guidelines"},"content":{"rendered":"
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The newly introduced transition finance guidelines for Asian countries focus extensively on energy transition technologies<\/strong> with questionable efficiency on cost decarbonisation. At the same time, they don\u2019t pay the needed attention to renewables and energy system. Banks and countries that follow the guidelines blindly without considering their unique use cases risk delaying and derailing their net-zero journeys. <\/p>\n\n\n\n

The ‘Banking on Transition Technologies’ Report: Examining Asia\u2019s New Transition Finance Guidelines<\/strong><\/h2>\n\n\n\n

September 2022 saw the publishing of two transition finance documents: the Asia Transition Finance (ATF) Guidelines by the Asia Transition Finance Study Group, a part of a Japan-led initiative, and the Technology List and Perspectives for Transition Finance in Asia by the Economic Research Institute for ASEAN and East Asia (ERIA).<\/p>\n\n\n\n

The Banking on Transition Technologies: Beware of Lock-in Traps<\/a> report by the Asia Research and Engagement (ARE) initiative analyses the guidelines.<\/p>\n\n\n\n

While mostly agreeing with the proposals, the authors note that Japanese energy policies largely influence the guidelines. Due to this, they now reflect the Japanese authorities\u2019 obsession with questionable energy transition technologies<\/em> like carbon capture, utilisation and storage (CCUS) and ammonia co-firing across the power sector.<\/p>\n\n\n\n

The report warns that the guidelines \u201cmay be inappropriate for countries in Southeast Asia where the circumstances differ from Japan\u201d and where investing in renewable energy sources is viable.<\/p>\n\n\n\n

ARE\u2019s report cautions Asian banks from blindly following the guidelines. It also highlights the importance of avoiding the financial risks that might stem from it. <\/p>\n\n\n\n

Guideline Loopholes and the Risks of Proposed Energy Transition Technologies<\/strong><\/h2>\n\n\n\n

The main issue with the new transition finance guidelines stems from the technology list published by the ERIA. It promotes using energy transition technologies like CCUS and the co-firing of ammonia for the power sector, based on Japan\u2019s strategy.<\/p>\n\n\n\n

However, the report\u2019s authors recognise this as the guidelines\u2019 main weak point due to two main reasons.<\/p>\n\n\n\n

1. The<\/strong> Failure to Account For Other Countries\u2019 Circumstances <\/strong><\/h3>\n\n\n\n

Southeast Asian countries all have their own unique situations. As a result, using the same guidelines as Japan for these nations does not address each country’s needs in a specific manner.<\/p>\n\n\n\n

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For example, Japan\u2019s officials often cite energy security and diversity as a reason to invest in ammonia co-firing capacity. Currently, the country has a very low<\/a> energy independence score. It relies on imports to meet nearly 96%<\/a> of its energy needs.<\/p>\n<\/div>\n\n\n\n

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