Introduction: The State of Energy Transition Bank Financing in Asia
Energy transition bank financing in Asia Pacific is facing significant challenges as it tries to outpace support for fossil fuels. While the region, excluding China, is among the world’s fastest-growing markets for energy transition investment, a new BloombergNEF report reveals that capital flows to low-carbon energy have yet to surpass investments in fossil-fuel supply. This struggle is further complicated by the region’s heavy expenditures on fossil-fuel imports and entrenched banking strategies that continue to prioritize traditional energy sources.
Investment Ratios: Clean Energy Trails Behind Fossil Fuels
According to BloombergNEF’s analysis of eight Asia Pacific economies—Japan, South Korea, Taiwan, Singapore, Malaysia, Thailand, Indonesia, and the Philippines—banks headquartered in these countries facilitated 83 cents in clean energy supply for every dollar of fossil-fuel financing in 2024. Although this is the highest level since 2021, it remains below the global average ratio of 0.89:1. The disparity highlights the ongoing challenge of scaling energy transition bank financing relative to fossil-fuel transactions.
Financial institutions such as JPMorgan Chase, Citigroup, and Scotiabank have adopted financing ratio calculations and disclosures. This practice offers greater transparency for investors and serves as a strategic benchmarking tool, encouraging banks to monitor and improve their clean energy commitments.
Trends and Developments in Low-Carbon and Fossil-Fuel Financing
Banks in the Asia Pacific region facilitated approximately $240 billion in energy supply financing annually between 2022 and 2024. While fossil-fuel financing volumes have gradually declined, growth in low-carbon transactions has been marginal, with 2024’s total clean energy deals still falling short of 2021 levels and remaining well behind fossil-fuel volumes. Encouragingly, some improvement in the ratio of low-carbon to fossil-fuel financing was observed in 2023 and 2024, particularly among banks in Japan, Taiwan, Malaysia, Thailand, and the Philippines.
Key institutional players driving these positive changes include Japan’s MUFG and Mizuho, Taiwan’s Mega Financial Holding, Indonesia’s Bank Mandiri, Malaysia’s Maybank, and Thailand’s Krung Thai Bank and Kasikornbank. International banks like Standard Chartered, BNP Paribas, Groupe BPCE, and Deutsche Bank have also played a notable role in facilitating energy supply financing to Southeast Asian markets.
Drivers of Low-Carbon Financing Growth
The report highlights that, across low-carbon sectors, bank financing to wind and solar projects remained mostly flat between 2023 and 2024. However, significant growth was seen in power grid and energy storage financing, which drove overall increases in low-carbon financing for most markets during 2024. Large-scale projects, such as the biggest solar and battery initiative in Southeast Asia, were particularly influential in boosting low-carbon financing volumes for banks in countries like the Philippines.
Banks in Thailand and Indonesia saw a decrease in fossil-fuel transactions, primarily due to limited refinancing needs from major energy companies such as PTT and Pertamina. In five of the eight markets analyzed, domestic transactions were increasingly tilted toward low-carbon activities during 2023-2024, reflecting a gradual but growing shift toward cleaner energy investments.
Asia Pacific’s Energy Transition: Investment Growth and Remaining Gaps
Energy transition investment in Asia Pacific (excluding mainland China) grew an impressive 23% in 2025—outpacing the global average growth rate of 8%. Despite this, the investment ratio stood at just $1.3 in low-carbon energy supply for every dollar invested in fossil-fuel supply in 2025, significantly lagging behind Europe’s ratio of 3.5:1. South Korea’s case is particularly striking; the country invested only 11 cents in local clean energy supply for every dollar spent on fossil-fuel imports.
Globally, experts suggest a 4:1 investment ratio between low-carbon and fossil-fuel energy is necessary this decade to align with scenarios that limit global warming to 1.5 degrees Celsius above pre-industrial levels. The Asia Pacific region, with its structurally lower investment in fossil fuel-producing markets, may need to achieve an even higher ratio to make meaningful progress on climate goals.
Conclusion: Overcoming Barriers to Energy Transition Bank Financing
Despite encouraging signs of growth, energy transition bank financing in Asia continues to face structural and strategic barriers. Banks are making incremental progress, but fossil-fuel financing still dominates overall capital flows. For Asia Pacific to align with global climate targets and unlock the full potential of its energy transition, a decisive shift in bank financing priorities is imperative.
This article is inspired by content from Original Source. It has been rephrased for originality. Images are credited to the original source.