BlackRock and the Monetary Authority of Singapore (MAS) are among six parties that will collaborate on a new infrastructure debt programme under the Financing Asia’s Transition Partnership (Fast-P) initiative, which was launched at the United Nations’ climate summit COP28 last year.
The two parties signed a statement of intent (SOI) at COP29 on Nov 12 with the International Finance Corporation (IFC), Mitsubishi UFJ Financial Group (MUFG), Nippon Export and Investment Insurance (NEXI) and AIA Group (AIA) to explore ways to work together on a blended finance debt initiative.
It aims to attract global investors seeking opportunities to finance corporates’ decarbonisation projects at scale in Asia with a focus on Southeast Asia.
According to MAS, this “Industrial Transformation infrastructure debt programme” is one of the programmes under Fast-P, a blended finance initiative announced by the Singapore government in December 2023. It aims to mobilise up to US$5 billion from public, private, and philanthropic partners to finance transition opportunities in Southeast Asia.
Under the SOI, the parties will explore “mutually beneficial opportunities” to provide debt financing to private sector borrowers seeking to decarbonise their businesses, including projects in hard-to-abate sectors, technology solutions for the low-carbon transformation, and industrial opportunities.
Southeast Asia faces a decarbonisation financing gap. According to a joint report by IFC and the International Energy Agency, annual investment (both public and private) in clean energy in Southeast Asia may need to increase more than eight-fold from US$30 billion in 2022 to US$208 billion to US$244 billion a year by the early 2030s to meet rising energy needs.
See also: Singapore announces Asia-focused blended finance initiative Fast-P with US$5 bil target fund size
The potential debt programme will seek to catalyse “additional concessional and commercial capital” to support these projects.
Leong Sing Chiong, deputy managing director, markets and development, MAS, says Asia must decarbonise sectors of the economy progressively, including carbon-intensive or hard-to-abate sectors, in order to reach net zero. “Financing for businesses and sectors that seek to adopt cleaner technologies and processes, is an important enabler. The signing of the SOI is an important step towards accelerating the transition in Asia.”
Dollar-matching
See also: India aiming to finalise carbon deals with Japan, Singapore
The Singapore government has also committed up to US$500 million in concessional funding to support Fast-P, announced Minister for Sustainability and the Environment Grace Fu at COP29 in Azerbaijan.
Singapore will match, dollar-for-dollar, concessional capital from other partners, including other governments, multilateral development finance institutions and philanthropies, says Fu. This combined pool of concessional capital will be used to crowd in commercial capital and other sources of finance to support Asia’s green transition.
Fast-P has expanded its network of partners to prepare for capital-raising and deployment in 2025. Allied Climate Partners (ACP), Asian Development Bank (ADB), Global Energy Alliance for People and Planet (GEAPP), IFC and Temasek are Fast-P’s initial partners.
Meanwhile, AIA, British International Investment (BII), European Commission and Team Europe partners Dutch Entrepreneurial Development Bank (FMO) and the German Development Finance Institution (DEG), HSBC, MUFG and NEXI are in discussions for a potential collaboration with Fast-P.
Three pillars
The Industrial Transformation infrastructure debt programme is the last of Fast-P's three pillars, which were announced at COP28 last year.
At COP29, the governments of Germany, Japan and New Zealand welcomed the progress of Fast-P so far, says MAS, including the establishment of the Energy Transition Acceleration Finance (ETAF) partnership with Singapore and GEAPP.
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This partnership will invest in energy transition projects, including early retirement of coal assets, renewable energy, and grid modernisation and development. MAS is in discussions with Clifford Capital to manage ETAF.
Meanwhile, Fast-P’s Green Investments partnership is supported by ACP, IFC, MAS and Temasek. Pentagreen Capital will manage and deploy capital to marginally-bankable green and sustainable infrastructure in Asia, such as renewable energy and storage, electric vehicle, transport, as well as the water and waste management sectors.
HSBC and Temasek, as the founding shareholders of Pentagreen, will commit capital to support the initiative.
European Commission and Team Europe partners FMO and DEG are in discussions to join this partnership, says MAS.
Read more about COP29:
- US will stay in global climate fight despite Trump, says top official (November)
- COP29 begins with ‘breakthrough’ on carbon market rules, but climate groups criticise lack of scrutiny (November)
- What are COP meetings for? Will this one make a difference? (November)
- UN biodiversity summit COP16 ends in limbo as countries spar over funding (November)
- COP29 Presidency hosts Pre-COP discussions in Baku (October)
- COP29 Presidency to convene ministerial dialogue on climate finance goal today (September)
- Azerbaijan will fund four members of each Small Island Developing State to attend COP29 (September)
- COP29 to call for sixfold increase in global energy storage (September)
- Azerbaijan proposes US$1 bil Climate Finance Action Fund, replacing planned fossil fuel levy (July)
- COP29 Presidency aims to enhance ambition, enable action (July)
- COP29 Presidency sets out agenda, emphasises upcoming work on New Collective Quantified Goal (June)
- COP29 Presidency hosts climate finance dialogue in Washington (April)
