Spending on decarbonization in Asia and the Pacific will reach $3.5 trillion by 2040

New research by international market research firm Wood Mackenzie suggests that decarbonization spending in the Asia-Pacific region could reach $3.
5 trillion
by 2040.
This must include investments in nuclear, hydro, solar, wind and hydrogen, which are collectively referred to as zero-carbon energy
between now and 2040.

Most of the decarbonization laws and regulations in the Asia-Pacific region will come from the power and transport sectors, both of which accounted for more than
50% of the region's carbon emissions last year.
This major shift requires investment and support from all stakeholders, especially China and
India.

Prakash Sharma, head of markets for Asia Pacific at Wood Mackenzie, said in a statement: "In our base case, we predict that the share of zero-carbon energy will increase from 8% in 2018 to 17%
in 2040.
In the Asia-Pacific transition scenario, we predict that the share of zero-carbon energy will reach 35% by 2040, while green hydrogen will account for 3%
of the energy mix.
In this scenario, electric vehicles will account for 65% of new car sales by 2040, compared to 25%
in the base scenario.
”

By 2040, the region's energy demand is expected to grow by 15%, reaching 6.
8 billion tonnes of
oil equivalent by 2040.
Currently, net fossil fuel imports account for 25%
of the region's demand.
Despite ambitious targets set by the government, national oil and gas companies have been working to boost oil and gas production
.

Gavin Thompson, vice president of Wood MacKenzie Asia Pacific, said: "The situation will change
as the region grapples with severe air pollution and energy transition needs.
The question is, how can the Asia-Pacific region ensure steady energy supply growth and stay on track with decarbonization laws and regulations? ”

"Decarbonizing electricity" is an emerging theme across Asia, with more and more electricity coming from solar and wind power
.
This means reducing the direct combustion of fossil fuels, which increases energy security and lowers carbon emissions
.

According to Wood Mackenzie, the Asia-Pacific region currently has 540 gigawatts (GW) of installed solar and wind capacity and is expected to add 1,528 GW
over the next two decades.
By 2040, Asia Pacific will be the world's largest market
for new installations of solar and wind energy due to rapidly growing electricity demand and a strong desire to reduce energy and control air pollution with carbon blending.

Green hydrogen is a clean energy carrier that can decarbonize
"difficult industries" such as steel, cement, chemicals, heating and heavy trucks.
It can also address the intermittency of renewable energy by diverting excess supply during the day to store hydrogen for use at night for high demand
.

Although the cost of green hydrogen is currently higher than that of traditional sources, Wood Makenzie's latest analysis shows that by 2030, Australia, Germany and Japan could reach comparable prices, calculated at $30 per megawatt-hour of renewable energy
.
Wood Mackenzie estimates that globally, investments in this area have reached $365 million, with projects worth more than $3.
5 billion being commissioned by 2025
.

Sharma said: "While technological progress is accompanied by policy support to achieve decarbonization targets
.
As the Asia-Pacific region is a key demand hub, there is a great deal of uncertainty about new hydrocarbon investments, and government policies may truly shift the energy mix towards renewables and green hydrogen
.
”

Gavin Thompson emphasized, "The energy transition is happening
globally.
As a driver of global energy demand, Asia Pacific now needs to adopt the technologies
needed to achieve sustainable growth.
”