Knowledge Hub

FILTERS

Browse Content

Filter By: Reset

Topic


Region/Location


Authoring Organisations


Year of Publication

Start Month-Year
End Month-Year
Defining Transition Finance: A Dialogue with Putra Adhiguna on Southeast Asia''s “Energy Shift”

The use of transition finance will be a cornerstone element needed to drive Southeast Asia's shift from fossil fuels to a sustainable energy future. However, the role, definition, and implementation of transition finance remain complex.  This month, SIPET Connect kicks off a "Transition Finance Series" of deep interviews to explore the essential role of financial instruments in advancing the energy transition across Southeast Asia. Each month, for the next five months, we will feature an interview with an expert practitioner, to probe their views on the topic, solicit their suggestions for successful finance strategies, and ask for their candid views on what works, and—frankly—what is holding up progress in the area of transition finance.

 

This month, we kick off the Transition Finance Series with Putra Adhiguna, a co-founder of the Energy Shift Institute and former Asia Technology Research Lead at the Institute for Energy Economics and Financial Analysis (IEEFA.)  Putra brings nearly two decades of leadership experience at the intersection of energy, finance, and policy in Southeast Asia. He has been instrumental in shaping discussions on energy transition strategies in Indonesia and the region. His insights have been featured in prominent outlets such as Straits Times, Bloomberg, and The Wall Street Journal, underscoring his influence in the field. A trusted advisor to corporations, financial institutions, and public officials, Putra combines a deep understanding of Indonesia’s energy landscape with regional expertise, making him uniquely positioned to address the critical role of transition finance in driving Southeast Asia’s sustainable energy future.

In this first installment, Putra talks with Peter du Pont, Senior Advisor to SIPET and Co-CEO of Asia Clean Energy Partners.  He shares his perspectives on the unique challenges and opportunities for transition finance in Southeast Asia—highlighting the distinction between green finance and transition finance, the need for setting pragmatic near-term targets for decarbonization, and strategies for advancing energy transitions in Indonesia and the region.

 

*     *     *     *     *

 

SIPET: Could you introduce the Energy Shift Institute and its focus?

Putra: The Energy Shift Institute is a non-profit think tank dedicated to advancing the energy transition in Southeast Asia. When we set up the Institute, we identified a significant gap in the public discourse: technical experts often have deep knowledge of energy systems but lack the freedom to challenge norms, while activist voices may lack the depth needed to tread the complex subjects.

Our role is to bridge this gap by offering investment-focused, pragmatic discussions that resonate with policymakers and investors. We’re grounded in the realities of the region, focusing on practical solutions that combine technology, policy, and finance to make meaningful progress in the energy transition.

 

SIPET Connect: Why is finance such a strategic focus for the Institute?

Putra: Southeast Asia's energy transition won’t happen without large-scale capital mobilization, but this is a tricky space to navigate. My co-founder specializes in financial regulation and policies, and together we’ve worked to understand the complexities of aligning capital allocation with decarbonization goals.

Transition finance, in particular, sits at the intersection of emerging technology and riskier investment. It's about more than just funding; it’s about managing technological risk, aligning strategies, and ensuring long-term viability. For example, while green finance might be used to fund straight-forward or proven decarbonization projects, such as renewable energy technologies, transition finance typically involves nuanced investments, like supporting heavy industries in decarbonizing incrementally.

Additionally, Southeast Asia is influenced by East Asia’s economic frameworks, which don’t always align perfectly with local needs, adding another layer of complexity. Ensuring that Southeast Asia’s actual needs are catered to is essential or we risk stalling the energy transition in this region.

 

SIPET Connect: How would you define “transition finance” in the context of Southeast Asia’s energy landscape, and how does it differ from “green” or “sustainable” finance?

Putra: Transition finance is about supporting emission-intensive companies and sectors in their gradual shift toward sustainability. Unlike green finance, which has clear-cut criteria for funding solar or wind projects, transition finance deals with the “grey area.” It includes funding for industries such as cement or steel that can’t immediately decarbonize but are working towards it.

This is critical in Southeast Asia, where manufacturing, energy production, and other high-emission industries play a significant role in the economy. Transition finance provides support for pathways that improve emissions intensity while ensuring economic resilience. The tricky element to transition finance is figuring out which technology or company is genuinely working towards decarbonization, and therefore, deserving of this pool of capital. 

 

SIPET Connect: What are the biggest challenges in advancing the use of transition finance in Southeast Asia?

Putra: The lack of commonly accepted understanding of transition finance – including regulatory policies and frameworks such as sustainable finance taxonomies – is a major hurdle in advancing its use. Transition finance is still an evolving concept.   Without clarity, investors are concerned about greenwashing which has financial and reputational implications. This uncertainty affects confidence and complicates project evaluations, although such projects may get along just fine with regular financing.

A key challenge is that some transition technologies are still too risky today from investment perspective. Until these technologies can prove its worth -both technically and economically- certain transition finance applications may be hard to scale.

Transition finance is often perceived as “less green,” but given its importance, defining its use in a credible manner is essential for its growth.

 

SIPET Connect: What innovative financing mechanisms do you see as most effective for Southeast Asia’s energy transition?

Putra: Early-stage capital is crucial, particularly for niche projects that larger institutions might overlook. For instance, SEACEF[1] has funded small-scale solar and battery-swapping projects for EVs, which address untapped opportunities in the market.

Distributed renewable generation, like rooftop solar and industrial park-level systems, is another promising area. Distributed energy business models often bypass some of the regulatory challenges tied to state utilities, making them attractive to private investors and easier to scale in fragmented markets like Southeast Asia.

 

SIPET Connect: Yes, indeed.  It does seem that many project developers in the area of clean energy are working outside the regulated utility space. What trends do you see in that area?

Putra: In Indonesia, developers are increasingly focusing on distributed renewable generation, like rooftop solar and industrial parks with independent energy permits. These types of projects provide a more nimble space for growth while sidestepping some of the complex challenges tied to the wider state utilities..

We’re also seeing innovation in urban energy systems, such as EV battery-swapping stations. While these projects still face challenges, their decentralized nature makes them a vital part of Southeast Asia’s transition strategy.

 

SIPET Connect: How can these mechanisms be scaled across sectors effectively?

Putra: Scaling requires both standardization and regional collaboration. Clear guidelines on what constitutes a "transition pathway" help investors evaluate projects consistently. Defining what transition means will need to consider sector-specific situation and based on science and economics, not on ambiguous preferences.

 

SIPET Connect: How do you balance financial, social, political, and climate goals in financing the energy transition?

Putra: It’s not easy. Climate goals often take precedence, but we can’t ignore the social and political dimensions, such as job creation and community impacts. A good balance often comes through a mix of concessional finance, which reduces risk for private investors with grants to address broader socioeconomic concerns.

For example, industrial decarbonization in Indonesia could include workforce retraining programs alongside the generation of emissions reductions. These initiatives ensure that the benefits of transition finance extend beyond just the environment.

 

SIPET Connect: Are there examples of concessional finance programs that have successfully accelerated clean energy projects?

Putra: Concessional finance has been instrumental in Southeast Asia, including some solar development projects in Thailand.

There are funds that also target early-stage projects, providing the funding needed to de-risk smaller developers and innovative solutions like battery-swapping for EVs.

The challenge, however, is scalability. These programs need clear long-term strategies to attract follow-on investments and ensure lasting impact. They’re great for kickstarting projects, but without alignment with commercial models, they risk becoming one-off solutions.

 

SIPET Connect: What lessons can be learned from these concessional finance initiatives? And how can they reduce risks for private investors?

Putra: De-risking is key. Mechanisms like guarantees and first-loss provisions help address private investors’ concerns, particularly in emerging markets. However, these programs must be tailored to local contexts—what works in Vietnam’s solar market might not apply in Indonesia.There are valid concerns that blended finance may have oversold how much private capital that it can actually mobilize, but there are some signs pointing in the right direction.

Flexibility and strong stakeholder engagement are also critical. Programs that adapt to local needs are more likely to succeed in building trust and encouraging private sector participation.

 

SIPET Connect: What advice would you give to project developers seeking to access transition finance?

Putra: Understand emerging financing frameworks, like those from ICMA[2] or the Climate Bonds Initiative, as they’re shaping the expectations for transition finance. Having a clear, actionable plan with measurable near-term targets is critical—investors want to see results, not just intentions.

Also, it is important for project developers and entrepreneurs to stay adaptable. This space is evolving rapidly, and developers who can respond to changing market dynamics will be better positioned to attract funding.

 

SIPET Connect: Are you optimistic or pessimistic about the prospects for scaling transition finance in the short term?

Putra: I’m cautiously optimistic. Transition finance isn’t a cure-all—it needs clear definitions and well-designed projects to succeed. Without these, there’s a risk of undermining its credibility.

The key is focusing on near-term targets. Long-term commitments are great, but without measurable progress in the next three to five years, they’ll fall flat. Transition finance needs to deliver real impact to build trust and maintain momentum.

 

SIPET Connect: Can you share exciting projects or research areas the Energy Shift Institute is working on?

Putra: We’re looking at supply chains for critical minerals, like decarbonizing nickel smelting in Indonesia. Producing “green nickel” for EV batteries is a big challenge, but it’s essential for global decarbonization.

We’re also examining the possibility of transitioning the coal sector in Indonesia. The global narrative that coal is being phased out may have little relevance at market level where major coal producers keep on pushing their production limits. Our research focuses on identifying the pressure points that can drive meaningful change in the sector.

Last but not least, we’re continuing our work in empowering investor voices, by ensuring they are informed of risks and opportunities in emerging technologies and weighing in on important developments in transition finance in the region.

 

SIPET Connect: Finally, Indonesia recently announced bold energy transition plans at the G20 Summit. What’s your take on these commitments?

Putra:  Indonesia’s pledge to phase out fossil fuels in 15 years and add 75 GW of renewables is a huge positive signal, but it’s not without implementation challenges. And right now, Indonesia needs to demonstrate it can be relied on by taking real and meaningful action towards fulfilling the President’s bold plan. Bolder short-term commitments is also key.

The RUPTL[3], Indonesia’s power sector roadmap, has been difficult to rely upon in the past, which raises the urgency to increase its credibility. Labeling the projects listed with their order of priorities can be a good start to build investors’ trust and draw their focus.

Financing will be critical. Redirecting subsidies and securing international support will be necessary to make these commitments a reality. Still, these announcements show that Indonesia recognizes the importance of transitioning—and that’s a step in the right direction.

 

[1] The Southeast Asia Clean Energy Facility

[2] International Capital Market Association

[3] Rencana Usaha Penyediaan Tenaga Listrik

11-2024     |     SIPET - Southeast Asia Information Platform for the Energy Transition
Energy Transition Renewables Clean Technology Carbon & Renewable Energy
A Regional Common Use Transmission Assets Concept for Advancing Multilateral Power Trade in ASEAN

Common-use transmission assets are those that provide widespread benefits across a market area, rather than serving only the countries or jurisdictions hosting the infrastructure.

In ASEAN, several potential common-use transmission projects could progress with the support of development banks, aligned with efforts to develop a multilateral power trade (MPT) market. There are several initial conclusions that ASEAN can draw regarding common use assets, including lesson learned from other regions employing this concept:

Advancing Infrastructure: Given its potential for optimal cost allocation, the regional common-use asset concept should be examined by ASEAN stakeholders as a way to accelerate ASEAN Power Grid (APG) infrastructure development and to unlock MPT opportunities.

Identifying Assets: In the absence of regional market structures, a region-wide technical study is essential to assess how interconnections can benefit multiple countries. The AIMS process could be tasked with this analysis.

Regional Market Benefits: Regional market structures would provide mechanisms for identifying common-use project benefits while allocating costs fairly for new assets.

Collaborative Financing: It’s critical to work with development finance institutions (DFIs) and partners to create a financing model tailored to the region’s needs, including for common use assets.

Agreement on Cost Allocation: For the common-use asset model to succeed, participating countries must agree on cost allocation and recovery methods, potentially through a standardized wheeling charge methodology.

Authors: Nadhilah Shani, Marcel Nicky Arianto, Akbar Dwi Wahyono, Beni Suryadi, Putri Apilia Maharani

10-2024     |     ACE - ASEAN Centre for Energy
Power Transmission
Bridging the implementation gap for climate mitigation in ASEAN: A comprehensive capacity-building framework

Purpose - The paper systematically examines the capacity building needs of energy and climate stakeholders in the Association of Southeast Asian Nations (ASEAN). It looks at conditions and opportunities for improvements in institutional, organisational, technological, innovation and financing capacities. This paper provides a guide to concrete capacity building programs and implementations to accelerate the implementation of National Determined Contributions (NDCs) and low-carbon energy transition in the ASEAN region.

Design/methodology/approach - This paper proposes a comprehensive capacity-building framework, drawing on transition management theory and the interactive systems framework for capacity building. The assessment is based on interviews with representatives of the ministry responsible for energy policy and the ministry responsible for climate policy in each ASEAN country, as well as a survey among a broader set of Southeast Asian energy and climate experts from academia, think tanks and international development partners.

Findings - The paper identifies the priority areas for capacity building for each ASEAN country and the region as a whole. Each country has a unique set of needs and priorities. At the regional level, the widest capacity gaps were observed in institutional capacity, technical capacity, human resources capacity, financing capacity and the capacity to develop policy and legislation. Specific gaps for capacity building are discussed in delivering strategic areas of energy transition, such as electrification of transportation, development of the green supply chain, deploying renewable energy, energy efficiency, strengthening finance and investment and reducing dependencies on fossil fuels.

Originality/value - This paper helps fill the gap for detailed capacity needs analysis and facilitates long-term plans/strategies and their implementation. The insights help to increase ASEAN energy and climate stakeholders’ understanding of the interaction between energy and climate, therefore enhanced capability in developing more effective action maps and intervention points in achieving NDCs and sustainable development goals.

Authors: Emi Minghui Gui, Indra Overland, Beni Suryadi, Zulfikar Yurnaidi

11-2024     |     ACE - ASEAN Centre for Energy ,Monash University,Norwegian Institute of International Affairs
Energy Transition
Electricity market designs in Southeast Asia

Discover how policy and regulatory reforms can unlock the potential of solar and wind power in Indonesia, Thailand, Vietnam, and the Philippines. This new report assesses the barriers hindering renewable energy development in Southeast Asia and proposes practical solutions to accelerate the transition to clean energy. Learn about the essential steps to design de-risking mechanisms, enhance planning certainty, and revise power purchase agreements to incentivize flexibility. Explore the proposed strategies for phasing out coal and gas power in a just and equitable manner, including the "Retire, Reserve, Repurpose" approach.

10-2024     |     Agora Energiewende,ERI - Energy Research Institute,NCI - NewClimate Institute
Renewables Energy Policy
ASEAN’s Clean Power Pathways: 2024 insights

This report provides a brief overview of ASEAN’s power sector landscape in 2023, tracks energy transition development in the past five years, presents several scenarios on decarbonisation for ASEAN, documents policy changes in the past year and emerging discourses in ASEAN energy transition. This report presents strategies to fine-tuning policies to reduce dependence on fossil fuels and start the systemic shift necessary for a clean power sector transition, providing strategic guidance for policymakers, researchers and energy practitioners in the region.

10-2024     |     EMBER
Energy Transition Renewable Sources
Electric Vehicles in Indonesia – A Political Economy Analysis

This research, conducted by E3G in collaboration with IESR, aims to delve into the political economy of electric vehicle (EV) development in Indonesia. By analyzing the underlying political dynamics, the study seeks to identify barriers and opportunities for accelerating the transition to EVs. The research builds upon the understanding that political economy factors, rather than solely technical or economic constraints, often hinder significant policy changes. By examining the complex interplay of interests, power dynamics, and institutional factors, this study provides valuable insights for policymakers, industry stakeholders, and civil society to support the effective implementation of EV policies in Indonesia.

 

12-2024     |     IESR - Institute for Essential Services Reform
Energy Transition Electric Vehicle
Indonesia Energy Transition Outlook (IETO) 2025

Indonesia stands at a critical juncture in its energy transition journey. The IETO 2025 report provides a comprehensive analysis of the country’s progress, challenges, and opportunities in the face of a rapidly changing global energy landscape.

Despite government commitments, Indonesia has made limited progress in renewable energy adoption and decarbonization. The continued reliance on coal hinders the transition to a low-carbon future. However, global trends in renewable energy and declining costs present a window of opportunity for Indonesia to leverage its abundant solar, geothermal, and bioenergy resources.

To accelerate the transition, several key challenges must be addressed. These include strengthening policy and regulatory frameworks, mobilizing financing, fostering innovation and technology transfer, ensuring a just transition, and strengthening international cooperation.

By addressing these challenges and seizing the opportunities, Indonesia can pave the way for a sustainable and prosperous future. The IETO 2025 report serves as a crucial tool for policymakers, businesses, and civil society to understand the complexities of the energy transition and to make informed decisions.

Authors: Martha Jesica Solomasi Mendrofa, Ilham Rizqian Fahreza Surya, Alvin Putra Sisdwinugraha, Farid Wijaya, Rahmi Puspita Sari, Putra Maswan, Muhammad Dhifan Nabighdazweda, Shahnaz Nur Firdausi, Anindita Hapsari, Pintoko Aji, Raditya Wiranegara, Faris Adnan Padhilah, His Muhammad Bintang, Julius Christian

12-2024     |     IESR - Institute for Essential Services Reform
Energy Transition Renewables Carbon & Renewable Energy Decarbonization
Driving Climate Finance: A Conversation with Jason Lee, CIMB Thai Bank''s Sustainability Head

Transition finance plays a pivotal role in reshaping Southeast Asia's energy and economic landscape. As the region grapples with decarbonization and sustainability targets, financial institutions are stepping up to address challenges unique to this transition. This month, SIPET Connect continues its Transition Finance Series with insights from Jason Lee, Head of Sustainability at CIMB Thai Bank. 

Jason is a GRI-Certified Sustainability Professional with expertise in frameworks like TCFD1 Recommendations (now IFRS S2) and carbon accounting under the GHG Protocol and PCAF2 Financed Emissions. Holding certifications in Sustainability and Climate Risk (GARP3) and ESG Investing (CFA Institute), Jason combines his engineering and legal training from the UK with extensive experience as a consultant and CEO of one of Asia’s Top 10 ESG & Sustainability Consulting Firms in 2022. At CIMB Thai, he drives sustainability policies, manages financed emissions, and fosters sustainable banking practices across Thailand and ASEAN. 

In this interview, Peter du Pont, Senior Advisor to SIPET and Co-CEO of Asia Clean Energy Partners, speaks with Jason to explore his work on transition finance and understand CIMB’s strategy for using transition finance and related climate finance mechanisms to support their clients’ transitions to low-carbon business models. Their conversation sheds light on how Thai banks like CIMB are leveraging transition finance to achieve meaningful climate impact while remaining competitive, and perhaps even gaining market share. 

 

*     *     *     *     *  

SIPET: How would you define “transition finance” in the context of Southeast Asia’s energy landscape? 

Jason: Transition finance, as I see it, operates on two interconnected levels. First, it’s about managing the emissions tied to our financial portfolios. At CIMB, we’re working to transition our loan books, investment portfolios, and overall balance sheets away from their traditional “high-carbon” nature—toward alignment with low-carbon pathways. This involves assessing and quantifying the emissions linked to every category in our portfolio, whether corporate loans, mortgages, or bonds. Once we have a clear picture, we can chart a structured pathway to achieving our net-zero goals. 

The second level is supporting the real economy as it transitions. This means helping companies decarbonize while ensuring that their operations remain viable. For instance, it’s not always about cutting absolute emissions but also about improving intensity metrics, such as CO₂ per megawatt-hour. Transition finance focuses on practical steps like managing the phase-out of coal plants or supporting shifts to cleaner fuels like natural gas or biogas. It’s about finding actionable solutions that address both business and environmental needs. 

In Southeast Asia, this dual role is critical because our economies are tied to industries like energy and manufacturing that can’t simply turn “green” overnight. Transition finance provides the tools to decarbonize in a managed, gradual way, ensuring that economic stability is maintained while progress is made toward sustainability targets. 

 

SIPET: How does transition finance differ from green or sustainable finance? 

Jason: Green finance is more straightforward. It’s governed by well-established principles, such as the Green Bond Principles or Green Loan Principles, and typically focuses on projects with clear environmental benefits, like solar power installations or wind farms. It’s about financing projects that are entirely “green” from the outset. Regulators around the world has also made it easier to counter greenwashing by issuing Taxonomies in their respective jurisdictions, such as the Thailand Taxonomy and the E.U. Taxonomy, to enable business and financial institutions to clearly classify “green” use-of-proceeds.  

Transition finance, however, is more nuanced and flexible. It’s not limited to financing green projects but instead supports the transition of industries that are traditionally carbon-intensive. For example, a cement plant looking to adopt carbon capture technology or a gas-fired power plant phasing into biogas would fall under transition finance. It also includes products like sustainability-linked loans, where financial benefits, like reduced interest rates, are tied to meeting emissions reduction targets or other sustainability metrics. 

This broader approach allows us to work with clients who are on their way to becoming greener but aren’t there yet. It’s especially relevant in Southeast Asia, where critical industries like energy, construction, and agriculture need financial backing to implement gradual but meaningful changes. Transition finance meets these sectors where they are and provides pathways for decarbonization. 

 

SIPET: What are the key drivers for Thai banks in financing climate and sustainability initiatives? 

Jason: For Thai banks, regulatory pressures and market demand are two major drivers. The Thai financial sector is increasingly aligning itself with global frameworks like the NZBA4, which requires banks to set and work toward sector-specific decarbonization targets. This alignment has made it essential for banks to rethink their exposure to carbon-intensive sectors. For instance, many now have "no coal" policies or are phasing out financing for upstream oil and gas projects. 

In addition to regulatory incentives, there’s growing demand from corporate clients for sustainability-linked financing. Many companies are under pressure to meet ESG [environmental, social, and governance] criteria and are turning to banks for tailored products that can help them achieve their climate and sustainability goals. Offering innovative solutions not only strengthens the relationship between banks and their clients but also positions the banks as partners in sustainability. 

Another driver is reputational. As awareness around climate change grows, banks need to demonstrate that they are part of the solution. Clients and investors are increasingly scrutinizing how financial institutions contribute to sustainability efforts, making climate-focused financing a competitive necessity rather than a choice. 

 

SIPET: Sustainability-Linked Loans are becoming more common among Thai banks.  These types of loans are designed to encourage borrowers to meet specific ESG [environmental, social, and governance] goals. But unlike green loans, which must fund eco-friendly projects, Sustainability-Linked Loans can be used for general business activities while linking financial terms to a company’s sustainability performance. Can you share an example of a sustainability-linked loan that CIMB Thai has financed? 

Jason: One standout example is the 3 billion baht ($88 million) sustainability-linked loan we provided to Asset World Corporation, a leader in real estate and hospitality. This loan is directly tied to emissions reduction targets across their operations, with annual external assurance audits to verify their progress. If the company meets its targets, their interest rate is reduced in the subsequent cycle. 

Another interesting case is our work with S Hotels & Resorts. For them, sustainability-linked finance helped implement measures such as renewable energy sourcing and waste reduction at their properties. These initiatives align with global ESG benchmarks while reducing their operational costs. 

What makes these loans effective is the alignment between financial incentives and environmental performance. It’s not just about financing projects but fostering partnerships where both parties are committed to meaningful environmental outcomes. 

 

SIPET: What are the challenges for banks to scale up sustainability-linked loans in Thailand? 

Jason: Yes, it’s a tricky balance. While sustainability-linked loans are gaining traction, they challenge traditional banking margins. When we reduce interest rates as clients meet sustainability targets, it directly impacts on our profitability. This creates an internal tension—banks aim to achieve better net interest margins, yet the incentives in these loans can reduce them. 

To address this, we’re rethinking how we manage funding costs. For instance, by ring-fencing ESG-linked deposits or accessing better interbank rates, we ensure that our lower lending margins are supported by reduced funding costs. It’s not just about profitability, though. These loans help build long-term relationships with clients, offering them not just financing but a path to decarbonization. 

Another challenge is awareness and adoption. Sustainability-linked loans are still relatively new in Thailand, and many businesses—especially SMEs—find the process complex or intimidating. To scale these products, we focus on simplifying terms, increasing awareness, and helping clients understand how these loans can directly benefit their operations and sustainability targets. It’s a learning curve, but one we’re committed to navigating.

 

SIPET: What aspects of de-risking and bankability are prioritized in renewable energy financing? 

Jason: De-risking is essential, especially for renewable energy projects in emerging markets. At CIMB, one of our key strategies is ring-fencing the use of proceeds. For example, if we’re financing a solar or carbon capture project, we ensure that the funds are strictly allocated to that purpose and don’t inadvertently support high-emission activities like coal plants. 

We also focus on regulatory risks. A good example is how we’ve supported projects anticipating Thailand’s carbon pricing mechanisms. By aligning financing with potential policy changes, we ensure that our clients are not only compliant but also ahead of the curve. 

For instance, when working with an energy company on green and transition projects, we conducted in-depth scenario analysis to assess future energy tariffs and carbon tax impacts. By doing so, we helped the client reduce risks and secure the financial viability of their project. 

 

SIPET: How does CIMB support clients who are transitioning from traditional to low-carbon business models? 

Jason: Supporting clients in their energy transition requires both financing and strategic guidance. For example, Banpu has undergone a significant transformation over the years. Initially a regional coal company, Banpu has diversified into a broader energy player with significant green energy investments. Their phased approach illustrates how transition finance can support companies in adapting their business models to align with decarbonization goals. Financing these shifts involves understanding their long-term strategy and aligning with their intermediate milestones. 

Another strong example is our engagement with a petrochemical company where we mapped out a decarbonization pathway involving cleaner energy sourcing and green hydrogen integration. These projects highlight how traditional industries can adopt innovative solutions while remaining competitive. 

But it’s not just about financing projects; it’s also about providing technical and strategic guidance. Many clients face transition risks but lack the expertise to navigate them. We aim to bridge that gap by offering insights into how they can achieve sustainable growth. 

 

SIPET: What trends do you foresee for Thailand’s financial sector in the area of transition finance? 

Jason: I see two key trends emerging. First, there is the adoption of sector-specific decarbonization targets, particularly in high-emission industries like energy, cement, and steel. This is being driven by frameworks like the NZBA, which provide clear benchmarks for banks to follow. 

Second, there’s a growing focus on innovation in financial products. For example, combining sustainability-linked loans with other ESG instruments could open new opportunities for clients while reinforcing the bank’s market positioning as a climate leader. 

 

SIPET: What guidance would you offer to banks in Thailand, or in Southeast Asia more broadly who are seeking to play a leadership role in transition finance? 

Jason: My advice would be to start by integrating science-based targets and pathways into your financing frameworks. This ensures that your efforts align their business operations with global decarbonization pathways and this will enhance your credibility with clients and investors. 

Second, focus on providing advisory services. While Thai banks traditionally don’t charge fees for advisory work, offering guidance on frameworks like the Thai Taxonomy or Green Bond Principles can build long-term value. It positions the bank not just as a lender but as a trusted partner in the client’s sustainability journey. 

Finally, be proactive. Transition finance is a rapidly evolving space, and banks that can adapt to changing regulations and market demands will have a significant competitive advantage. 

 

*     *     *     *     *  

Editor’s note: This conversation with Jason Lee underscores the pivotal role of transition finance in reshaping Southeast Asia’s energy future. By aligning financial strategies with decarbonization pathways and fostering innovation in sustainability-linked products, CIMB Thai Bank is setting a strong example for the region’s financial sector. 

However, the journey is not without challenges. From addressing profitability trade-offs to navigating evolving regulatory landscapes, financial institutions must act as both enablers and advisors to their clients. Jason’s insights highlight not only the opportunities for banks to lead in transition finance but also the importance of collaboration—across sectors, industries, and geographies—to achieve a sustainable and inclusive future for Southeast Asia. 

12-2024     |     SIPET - Southeast Asia Information Platform for the Energy Transition
Energy Transition Climate Change Energy Policy