The Institute for Energy Economics and Financial Analysis (IEEFA) sees further renewable energy (RE) developments in Asia, including the Philippines, under the Indo-Pacific Economic Framework (IPEF) being led by the United States.
IEEFA said IPEF which has 11 signatory countries — Australia, New Zealand, Brunei, Philippines, Indonesia, Singapore, Japan, Thailand, South Korea, Vietnam and Malaysia — is also seen to complement the China-led Regional Comprehensive Economic Partnership (RCEP) free trade agreement.
IPEF is an economic initiative that aims to make the participants’ economies “grow faster and fairer,” while RCEP is mainly intended to reduce tariffs and red tape in participating economies.
Norman Waite, an energy finance analyst at IEEFA, said the actual framework of the IPEF may take another 12 to 18 months of negotiations to deliver details as each member country can choose to sign up to any or all of its four pillars — fair trade, supply-chain resilience, decarbonization and anti-corruption.
“The initial White House statement on May 23, 2022 explained the decarbonization pillar was designed to accelerate the development and deployment of clean energy technologies by deepening cooperation, providing technical assistance and mobilizing finance, including concessional finance. While all countries in IPEF which sign on to the decarbonization pillar could gain those advantages, the 11 countries shared with RCEP would reap the added benefit of competition and, potentially, cooperation between the US and China,” Waite explained.
Based on an analysis of global consultancy firm McKinsey, IEEFA estimates that the IPEF and RCEP agreements would cover countries which need a combined annual spend of about $1.27 trillion to pull down global net human-caused emissions of carbon dioxide by about 45 percent from 2010 levels by 2030 in order to reach net zero by 2050.
However, the IEEFA said IPEF’s available funding is likely smaller compared to China’s Development Bank and its Export-Import Bank as these are two of the largest development finance institutions in the world that are also bent on funding several power generation projects.
Despite the situation, the US is seen to tap the Development Finance Corp.’s $60 billion wallet as a strategic alternative apart from the fact that Chinese financing is seen to often contain “onerous terms.”
“The IPEF offers a US alternative to Chinese regional influence on market design, regulatory structure, as well as clean energy standards and monitoring. With IPEF’s success, a more engaged US advisory can provide a more diverse selection of options to suit the various development goals of Asian economies,” Waite said. – Jed Macapagal
