ERIA Statement on Technology List and Perspectives for Transition Finance in Asia
Jakarta, 10 March 2023: In September 2022 ERIA published a document titled ‘The Technology List and Perspectives for Transition Finance in Asia’ (Technology List). The document examined multiple potential transition technologies and provided a framework for financial institutions to assess the suitability for transition finance.
While ERIA has received responses from various organizations and actors since then, we observe some opinions that are based on false understanding of the purpose and the content about our output. Therefore, we would like to take this opportunity to clarify our view on this matter.
ERIA’s work considers all transition technologies – not just green technologies
The Technology List aims to support the smooth energy transitions in developing Asia with realistic approaches that can facilitate many countries in Asia to embark on individually tailored pathways to carbon neutrality while considering energy security, affordability, accessibility, and environmental protection simultaneously. Various governments and international organisations have established standards and guidelines to ensure financial flows are consistent with a pathway towards net-zero CO2 emissions. However, these tend to focus on only green technologies and do not consider transition technologies and often have limited geographic relevance.
Energy transition solutions are not ‘one-size-fits-all’
ERIA’s work looks into each country’s situation at a granular level rather than imposing any country’s or regions’ ideal scenarios.
For Southeast Asian countries, cost and energy security are key elements of successful energy transition
ERIA’s research does not downplay the role of renewables. Rather, it offers a way to bridge the current fossil fuel-based power generation methods to clean technologies and renewables, bearing in mind that Southeast Asia must consider its existing fossil fuel assets and the price of energy.
Solar and wind are feasible options, but their intermittent power supply requires huge investments in power back-ups. Power grids also need upgrading to work with renewable energy. The high cost of system replacement must be considered within the context of each country to avoid skyrocketing energy prices and stranded assets.
Therefore, the energy cost cannot be measured by a simple calculation as LCOE of the power plant, but it should also include the cost imposed to the entire system.
ERIA’s Technology List does not qualify or disqualify any technology from being considered as a transition technology
The purpose of the technology list is to offer a framework and information for financial institutions to assess whether a certain technology is suitable for energy transition. It includes various potential transition technologies, but does not validate a particular technology’s suitability as a transition technology in a particular context, for example, and does not indicate the potential financial performance of a particular technology, including carbon capture, utilization, and storage (CCUS) or ammonia co-firing.
That being said, it is worth noting that CCUS consists of several technologies which can ‘play an important and diverse role in meeting global energy and climate goals’ according to the International Energy Association (IEA). (IEA, 2022)
ERIA’s technology list addresses the issue of ‘lock-ins’
ERIA's technology list has incorporated the issue by clarifying measures to avoid lock-in for each technology. ERIA’s Technology list does not compromise the goal to achieve net zero, even in when transition technologies are considered.
ERIA is an independent International Organization
Since the beginning of operations in 2008, ERIA has been funded by annual contributions from all ASEAN Member States as well as several dialogue partners including Japan. Our research and recommendations are independent and fact-based.