South-east Asia’s green sector worth US$1t by 2030, but only US$15b invested: Bain, Temasek

SOUTH-EAST Asia’s green sector will see US$1 trillion in economic opportunities by 2030, but only US$15 billion has been invested since 2020, a new report by Bain & Company and Temasek has found.

Of this US$15 billion, around 45 per cent was deployed between Q3 2021 and Q1 2022.

Corporate firms were the largest investors in the green sector, with US$11 billion deployed over 86 deals since 2020. Around S$6.6 billion went to solar or wind renewable energy, while US$2.5 billion went to other renewables like hydro and geothermal energy. Around US$1.1 billion in investments were for the built environment.

In terms of where capital was deployed, notably, 37 per cent of value was in Thailand-based targets, while 22 per cent was in Philippines-based targets.

Other investors in the green sectors include private equity (PE) and venture capital (VC) firms, infrastructure funds, sovereign wealth funds and pure-play green funds.

PE and VC firms deployed some US$1 billion over 23 deals, largely in startups which scale existing solutions. Around US$600 million was invested in alternative proteins and US$100 million in mobility. About 70 per cent of the capital deployed was in Singapore-based targets, while 21 per cent was for Indonesia-based targets.

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Bain and Temasek noted that energy, nature and agriculture will capture around 90 per cent of South-east Asia’s carbon budget, particularly forest conservation, renewables (solar and wind), electric mobility, sustainable farming and the built environment.

Forest conservation, which represents a US$20 billion opportunity by 2030, is a growing investible space in the region – particularly in Indonesia and Malaysia.

The renewables sector represents a US$30 billion opportunity by 2030, of which US$20 billion will be for solar energy. The report said that corporate investment in renewable energy solutions accounted for at least US$6.6 billion in corporate green investment.

Although the region has seen some growth in green investments, a large emission gap of 2.6 to 3.2 gigatonnes still exists when pit against 2030 targets even after accounting for marginal improvements in emissions levels based on the latest Nationally Determined Contributions and planned policies projections.

Around US$3 trillion in cumulative investment is still required to be on track to the 1.5°C by 2030 target, Bain and Temasek noted.

Dale Hardcastle, partner and director of the Global Sustainability Innovation Center at Bain & Company, said: “We remain bullish on the US$1 trillion economic opportunities in SEA, but we need to step up as a region to strengthen the investable market and increase green capital flows.”