Asia Pacific’s

Energy
Transition
Outlook
Commissioned by

October 16, 2024

 Asia Pacific’s Energy Transition Outlook
October 16, 2024

Contents

Section 1. Executive summary 1

Section 2. Asia Pacific’s energy transition outlook 6
2.1. Scenarios 6
2.2. Emissions 7
2.3. Abatement 8
2.4. Investment 17
2.5. Assessing the ambition of Nationally Determined Contributions against
NEO scenarios 22
Section 3. Technology drivers 25
3.1. Fossil fuel-based power generation 28
3.2. Variable renewables 31
3.3. Dispatchable renewables 39
3.4. Energy storage 47
3.5. Power grids 52
3.6. Hydrogen 57
3.7. Carbon capture and storage 65
3.8. Electric vehicles 69
3.9. Sustainable aviation fuels and clean aviation 74
Section 4. Barriers, opportunities, and the way forward 77
4.1. Accelerating deployment of mature climate solutions 77
4.2. Supporting the development of emerging climate solutions 88
4.3. Scaling up finance for the energy transition 94
Appendix A. Geographies 100
Appendix B. Emissions constraints in the New Energy Outlook 101
Appendix C. Macroeconomic indicators 102
Appendix D. Electricity generation by technology in selected Asia Pacific markets 104
Appendix E. Land use modeling methodology 106

About us 114

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Section 1. Executive summary

Asia Pacific is central to global energy sector decarbonization and the world’s
$88.7 trillion
transition to net zero. The region saw energy-related emissions grow 151%
Energy sector investment and
spending in Asia Pacific over
between 2000 and 2023, driven by strong economic development, population
2024 to 2050 in BNEF’s Net growth and industrialization. However, emissions will need to peak and rapidly
Zero Scenario reduce if the world is to achieve the goals of the Paris Agreement.

Countries must act immediately to decarbonize along a Paris-aligned emissions

50% trajectory
Cumulative emissions • The window to reach net-zero emissions by 2050 is rapidly closing, although
abatement from clean power immediate and accelerated action could still put Asia Pacific on track. In
in Asia Pacific by 2050 in the BloombergNEF’s Net Zero Scenario, global warming is limited to 1.75C by the end of the
Net Zero Scenario versus a century, in line with the goals of the Paris Agreement of well below 2C of global warming.
‘no transition’ pathway Governments need to double down and accelerate decarbonization efforts in the next
decade, starting immediately, or risk missing their climate goals.
•
17.5 terawatts Achieving net zero by 2050 requires India, Indonesia and Vietnam to reach peak
emissions 12 to 18 years earlier than under BNEF’s Economic Transition Scenario.
Wind and solar capacity These three see the largest decarbonization challenges on a country level. Whether it’s an
deployment in Asia Pacific by economic-led pathway or a Paris Agreement-aligned transition, energy-related emissions in
2050 in the Net Zero Scenario key Asia Pacific markets1 peaked in 2023 and are now on a sustained decline out to 2050.

There are actions that countries can, and must, take today
• There is no cookie cutter approach for the decarbonization of Asia Pacific energy systems.
Each market’s optimal portfolio of decarbonization technologies will be influenced by local
policies, access to resources, and geographical constraints. However, there are
commonalities. Today, mature, commercially scalable technologies with proven
business models exist. These include electric vehicles, renewable power, energy storage,
and power grids, all of which require a significant acceleration to get on track for net zero, but
bear little to no technology risk and economic premiums are generally small or non-existent.
• Reducing emissions from the region’s power sectors need to be of utmost priority and
can be implemented immediately with an accelerated scaling of low-carbon technologies
and a swift end to financing of new unabated fossil fuel plants. A low-carbon power system
will be the foundation of a net-zero energy sector, comprising 75% of the region’s energy
consumption by 2050. Clean power alone could abate 50% of Asia Pacific’s cumulative
emissions between 2024 and 2050. However, some markets may still face regulatory and
infrastructure barriers as well as bottlenecks that can impede clean power deployment.
Policymakers will need to address these challenges.

1
In this report, the key Asia Pacific markets discussed are China, India, Japan, South Korea, Indonesia and
Vietnam.

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 Asia Pacific’s Energy Transition Outlook
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Table 1: Opportunities to accelerate deployment of mature climate solutions

Technology Economic Net Zero Key challenge to Possible solutions

(units) Transition Scenario, 2050 keeping on track
Scenario, 2050 (Multiplier for net zero
(Multiplier versus versus 2023)
2023)
Solar 6,781 11,676 Rapid scaling • Binding phase-out targets for unabated
(gigawatts) (x6.9) (x11.8) fossil fuel power plants
Wind 2,970 5,847 Rapid scaling • Regulatory and market reforms to
(GW) (x5.5) (x10.9) unlock renewable opportunities
• Easing potential grid bottlenecks
• Minimizing site acquisition hurdles
through land allocation for renewable
project development
• Clear, long-term procurement programs

Battery storage capacity 1,761 2,227 Rapid scaling • Standalone or hybrid auctions
(GW) (x48.5) (x61.3) • Power market reforms to allow for
participation of batteries in ancillary
service, energy, and capacity markets

Passenger electric 515 671 Rapid scaling • Stringent fuel-economy or tailpipe

vehicle fleet (x22.2) (x28.9) emissions standards
(million vehicles)
• Mandate electrification of business
fleets
• Subsidies and/or tax incentives to ease
purchase barriers
• Developing sufficient charging
infrastructure
• Introduce and legislate a complete
phase-out date for sales of new internal
combustion engines

Power grid 44,036 53,101 Socio-political • Minimizing site acquisition hurdles by

(thousand kilometers) (x1.4) (x1.7) acceptance facilitating easement rights
• Regulatory reforms to spur greater
private investments and open access to
larger pool of capital

Source: BloombergNEF

• The urgency of global decarbonization means governments and corporates need to

intensify efforts to commercialize emerging decarbonization technologies for
deployment at scale within the next 10 years. These include nuclear, carbon capture and
storage (CCS), hydrogen, sustainable aviation fuels, and heat pumps, all of which are under
various stages of development but require more support and partnerships between all
stakeholders to reach the stage of mass deployment necessary under a net-zero pathway.

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Table 2: Opportunities to supporting emerging climate solutions

Technology Economic Net Zero Key challenge to Possible solutions

(units) Transition Scenario Scenario keeping on track
(Multiplier versus (Multiplier for net zero
2023) versus 2023)
Nuclear capacity 240 620 Socio-political • Increased research and development on
(gigawatts) (x2.2) (x5.8) acceptance and new-generation nuclear technologies
technology
commercialization • Safety framework and policies to address
concerns
• International technology and financing
collaborations

Carbon dioxide -* 5,367* Technology • Research and development and pilot

emissions captured commercialization projects in critical sectors
by CCS
(million metric tons of • Tax incentives and/or contract for
CO2 per year) differences to lower upfront development
costs
• Establish shared facilities and infrastructure
among users

Hydrogen demand 73 211 Technology • Pushing existing hydrogen uses (for

(million tons of (x1.8) (x5.3) commercialization instance fertilizer production) to clean
hydrogen (140
megajoules per hydrogen
kilogram)) • Tax incentives and/or contract for
differences to support production and
demand
• Enforceable quotas for clean hydrogen use
• Establish shared facilities and infrastructure
among producers, users and exporters

Heat pumps 66.7 214.3 Rapid scaling • Policies to reduce upfront cost, and improve
(million units) (x3.2) (x10.3) accessibility of heat pumps
• Support adoption in multi-family buildings
and retrofit market

Sustainable aviation 1,844 33,775 Technology • In the short term, provide incentives – both
fuels demand (x66.7) (x1,221.9) commercialization supply-side and demand-side – to scale up
(million gallons)
the infrastructure for sustainable aviation
fuels (SAFs)
• Phase out usage of biofuels for road
transport to ensure availability of feedstocks
for SAF production
• Set targets for replacement of jet fuel with
SAF

Source: BloombergNEF. Note: Hydrogen demand today is largely served by fossil fuel-derived hydrogen, so the multiplier for low-
carbon hydrogen is many orders of magnitude larger. *There is no multiplier for carbon capture and storage due to absence of
operational capacity outside of the upstream extractive sectors.

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Financing the energy transition requires strong mandates from governments and
collaboration between all stakeholders
• The energy transition requires a substantial scale-up of capital directed toward low-
carbon assets and infrastructure. Under BloombergNEF’s Economic Transition Scenario
and Net Zero Scenario, the energy investment opportunity between 2024 and 2050 totals $74
trillion and $89 trillion respectively. The falling costs of some low-carbon solutions, such as
electric vehicles and clean power, and new policy commitments are closing the spending gap
between the two scenarios. However, vastly different investment choices need to be made if
net zero by mid-century is to be achieved.

Figure 1: Annual investment in selected Asia Pacific Figure 2: Annual investment in selected Asia Pacific
markets, Economic Transition Scenario markets, Net Zero Scenario

$ trillion $ trillion
3.5 3.5
3.0 3.0
2.5 Vietnam 2.5 Vietnam

2.0 Indonesia 2.0 Indonesia

South Korea South Korea
1.5 1.5
Japan Japan
1.0 1.0
India India
0.5 0.5
China China
0.0 0.0
2024 2030 2035 2040 2045 2050 2024 2030 2035 2040 2045 2050

Source: BloombergNEF Source: BloombergNEF

• It is critical to accelerate access to low-cost finance for mature low-carbon

technologies, as these tend to be associated with high capital expenditure. The cost to
access this capital remains a limiting factor especially in the current high interest rate
environment. The higher the perceived risks of a project, the greater the unwillingness to
finance or more unfavorable the terms will be. Key concerns such as regulatory risks, off-take
and curtailment risks and a lack of or weak market price signals for decarbonization need to
be managed.
• Emerging technologies may require greater support from governments and multilateral
institutions to catalyze deployment. They may face higher barriers to financing due to
the uncertainties around technology performance, supply chains and profitability.
Collaboration with development institutions and international banks can help mobilize greater
capital flow at more financially viable costs for emerging technology projects.
• Carbon markets can be a funding source for decarbonization activities by transferring
financial resources from other markets into Asia Pacific countries and provide financial
incentives for emissions reductions in multiple sectors. As mature low-carbon technologies
such as wind and solar power are increasingly competitive without further financial support,
there is an opportunity to redirect funding from carbon markets to finance earlier-stage
technologies and into managing phase-outs of fossil fuel plants with long-remaining lifespan
that have greater funding needs.
• Subsidies and carbon pricing mechanisms need to be well designed to achieve
intended outcomes. They are some of the most direct interventions to support an
emerging technology but need to be deployed strategically. Subsidies need to be

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targeted into sectors that need them in the short term, and need to be phased out when
financial support for the technology is no longer required to avoid over-reliance on
government support in the long run. A market’s carbon pricing mechanism also needs to be
sufficiently high and cover a significant share of emissions, without too generous a
concession that could negate the incentive for companies to abate emissions.

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Section 2. Asia Pacific’s energy transition

outlook
Home to some of the fastest-growing economies, Asia Pacific faces a colossal
but not insurmountable challenge to decarbonize, while ensuring sufficient,
affordable and secure energy supply to meet growing needs. Cost-competitive
low-carbon solutions already exist, such as solar, wind and passenger electric
vehicles, and they represent a significant economic opportunity. Getting to net
zero by 2050, however, requires accelerated deployment momentum that needs
to be supported by strong government commitment and an enabling regulatory
environment for project financing and investment.

2.1. Scenarios
This report builds and expands on the results of the New Energy Outlook 2024, BNEF’s
proprietary energy and climate scenarios publication, with a focus on six key markets – China,
India, Japan, South Korea, Indonesia and Vietnam. The New Energy Outlook models the power,
transport, industry, and buildings sectors to 2050 using bottom-up sub-sector models for 12
countries and seven regions, with additional power sector analysis for 19 markets. It covers 16
sub-sectors and more than 75 decarbonization technologies.

Table 3: Two scenarios in the New Energy Outlook

Economic Transition Scenario (ETS) Net Zero Scenario (NZS)

• Exploratory base case which describes • Normative climate scenario which describes
how the power, industry, transport, and a tough but achievable stretch to get on
buildings sectors might evolve as a result track for net zero by 2050 by meeting
of cost-based technology changes. sectoral carbon budgets.
• Consistent with a 2.6C warming outcome. • Consistent with a 1.75C warming outcome.
• Assumes no further policy support for • No overshoot or reliance on net-negative
energy transition beyond existing emissions post-2050.
measures. • Fully decarbonizes power, transport,
• Low-carbon transition is largely limited to industry, and buildings by 2050.
the power and transport sectors.
• Uses bottom-up sub-sector models, instead of top-down general equilibrium model or
integrated assessment models.
• Uses consistent macro-economic inputs across both scenarios.
• Leverages proprietary data and expertise of 200 analysts.
• Models at yearly granularity for transport, industry, and buildings sectors and hourly
granularity in the power sector to 2050.
Source: BloombergNEF

The base-case scenario used in BNEF research is our Economic Transition Scenario (ETS).
This scenario employs a combination of near-term market analysis, least-cost modeling,
consumer uptake, and trend-based analysis to describe the deployment and diffusion of
commercially available technologies in the absence of new policy regimes. It reveals the

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underlying economic fundamentals driving the energy transition. The Net Zero Scenario (NZS)
uses similar least-cost optimization but shows a plausible pathway to achieve the main goals of
the Paris Agreement and stay well below 2C of global warming, reaching net zero by 2050.

2.2. Emissions
Under both the ETS and NZS, energy-related emissions in Asia Pacific peaked in 2023 and are
on a sustained decline to 2050. Achieving net zero by mid-century requires emissions to decline
sharply, starting immediately, with the power sector leading decarbonization efforts.

The cumulative emissions gap over 2024-2050 between BNEF’s ETS and NZS for Asia Pacific is
226GtCO2. Bridging this gap is no small task. Regional governments will need to bolster policy
measures to further drive decarbonization efforts, particularly in hard-to-abate sectors. New and
existing decarbonizing technologies will need to scale up, requiring a shift in investment
paradigms, and regulatory and market designs.

Figure 3: Asia Pacific’s energy-related emissions and net-zero carbon budget

Billion metric tons of CO2 Hydrogen

2023
20 1 Power
Energy industry
18 Economic Transition 0.9 Non-energy use
16 Scenario (2.6C) 0.8 Other sectors
Rail
14 0.7 Aviation
Net Zero Scenario
12 0.6 Shipping
(1.75C)
2024-2050 cumulative Road
10 emissions gap, ETS 0.5 Commercial buildings
versus NZS: Residential buildings
8 0.4
226GtCO2 Other industry
6 0.3 Chemicals
4 0.2 Cement
Aluminum
2 0.1 Steel
0 0 NZS
2000 2010 2020 2030 2040 2050 ETS

Source: BloombergNEF. Note: NZS is Net Zero Scenario, ETS is Economic Transition Scenario. ‘Non-energy use’ is non-
combusted fuel consumption; consumed mostly in industry (chemicals). GtCO2 is billion metric tons of carbon dioxide.

Even the ETS sees a substantial transition toward low-carbon energy. In this scenario, Asia
Pacific’s energy transition is driven primarily by the impact of current policies and economically
competitive, commercially-at-scale clean technologies. These measures alone see the region’s
emissions fall by 24% from current levels to 13.6 billion metric tons of CO2 (GtCO2) by 2050
(consistent with a 2.6C warming trajectory), less than half of the 29.6GtCO2 by 2050 under a
counterfactual ‘no transition’ scenario in which there is no further progress on decarbonization
(Figure 4).

The ETS assumes no further support for clean technologies beyond existing measures, although
it hinges on a level playing field that allows these solutions to access markets and compete with
incumbent technologies. This sets the stage for the region’s renewables capacity to more than
double by 2030 and then quadruple by 2050, from current levels. With that growth, fossil fuels are

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 Asia Pacific’s Energy Transition Outlook
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toppled as the dominant source of electricity generation as renewables cross a 50% share of
supply at the end of this decade.

Figure 4: Energy-related CO2 emissions in Asia Pacific by market

Billion metric tons of CO2

30

No transition
25

20 Other Asia-Pacific
Southeast Asia
ETS
15 Australia
Japan and South Korea
10
India
China
5
NZS
0
2000 2010 2020 2030 2040 2050

Source: BloombergNEF. Note: ETS is Economic Transition Scenario, NZS is Net Zero Scenario.
The ‘no transition’ scenario is a hypothetical counterfactual that models no further improvement in
decarbonization and energy efficiency. Refer to Appendix A for full list of geographies included.

The NZS shows that while the more ambitious target of 1.5C looks increasingly out of reach, there
are still plausible pathways to stay within 1.75C of warming. Still, significant effort is needed to
achieve the pace of emissions reductions required.

Under the NZS, aggregate emissions across Asia Pacific decline 37% by 2030 and 84% by 2040
against 2023 levels, and hit net zero by 2050, consistent with Paris Agreement goals to keep
temperatures below 2C above pre-industrial levels. The power sector undergoes a radical
transformation as the region’s renewables capacity increases over sevenfold by mid-century from
current levels. The use of unabated fossil fuels is effectively phased out of power systems by
2040, while renewables’ share of supply surpasses 80% by 2050 from 28% today.

2.3. Abatement
There is no cookie-cutter approach for the decarbonization of Asia Pacific energy systems. Each
market’s optimal portfolio of decarbonization technologies will be influenced by local policies,
access to resources, and geographical constraints. Scaling up of mature, commercially ready
technologies, such as renewable energy and electrification, is critical under both scenarios. To
stay on track for net zero, efforts to bring emerging technologies such as hydrogen and carbon
capture and storage to commercial readiness is vital, in addition to accelerating and intensifying
renewable deployment and electrification efforts.

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Figure 5: Energy-related carbon dioxide emissions reductions from fuel combustion by measure in Asia Pacific by
scenario
Economic Transition Scenario Net Zero Scenario
Billion metric tons of CO2 Billion metric tons of CO2

35 2023 35 2023
No transition 30 No
30
transition
25 25

20 20
ETS
15 Oil 15 Oil
ETS NZS
Gas Gas
10 10
Coal Coal
5 5

0 0
2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050

CCS Hydrogen 50
Bioenergy Heat Electrification
0
2…
2…
2…
2…
2…
2…

-50
Clean power Fuel switching Energy efficiency Carbon removals
Source: BloombergNEF. Note: The ‘no transition’ scenario is a hypothetical counterfactual that models no further improvement in
decarbonization and energy efficiency. In power and transport, it assumes the future fuel mix does not evolve from 2023 (2027 in
the shipping sector). For all other sectors, the counterfactual to the Net Zero Scenario is the Economic Transition Scenario. ‘Clean
power’ includes renewables and nuclear, and excludes carbon capture and storage (CCS), hydrogen and bioenergy, which are
allocated to their respective categories. ‘Energy efficiency’ includes demand-side efficiency gains and more recycling in industry.
Includes ‘Carbon removals’ needed to offset incomplete capture from point-source carbon capture processes, which are up to 90%
complete.

In the ETS, clean power accounts for over 70% of the emissions avoided across Asia Pacific
between today and 2050, compared with a ‘no transition’ scenario (Figure 5). The electrification of
end-use sectors, including road transport, buildings and industry, accounts for another 11%.
Improved energy efficiency also lowers overall energy demand and helps avoid 13% of abated
emissions between now and 2050. Despite the significant decrease in carbon emissions under
the ETS, efforts fall short of delivering an emissions reduction consistent with the Paris
Agreement goals. Instead, its emissions profile is consistent with a carbon budget corresponding
to a 2.6C temperature rise.

Getting to net zero by mid-century requires an almost complete phase-out of unabated fossil fuel
use in the entire energy system across Asia Pacific. A much wider suite of decarbonization
technologies will be required to achieve this across clean power, electrification, fuels, and
industrial processes.

In the NZS, clean power is still the single biggest contributor of emissions reductions across Asia
Pacific, responsible for half (249GtCO2) of the region’s emissions reductions over 2024-2050,
compared with 73% (190GtCO2) in the ETS. To be on track for net zero, Asia Pacific needs to
see deeper electrification of end-use applications compared to the ETS, and faster. Electrification
is the second-largest driver of emissions abatement under the NZS, accounting for 17% of total
emissions reductions during this period, compared with 11% in the ETS. Energy efficiency
accounts for a sizable 9% of emissions abatement.

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Emerging technologies such as hydrogen and carbon capture and storage play a larger role
under the NZS, accounting for 4% and 14% of abatement over 2024-2050, respectively. These
technologies are particularly crucial in addressing emissions from hard-to-abate industries in the
NZS, but fail to scale up to any meaningful level in the base-case ETS due to a combination of
insufficient policy support and economic competitiveness.

Carbon removals in the New Energy Outlook

The New Energy Outlook scenarios are focused on technology pathways addressing
emissions associated with fossil fuel combustion using primarily technologies that are already
commercially available. The use of carbon removals under the Net Zero Scenario is limited to
addressing residual emissions from carbon capture and storage. Carbon removals may well
play a role in the decarbonization of the wider economy, particularly to deal with non-fossil fuel
combustion emissions associated with land use, land-use change and forestry (LULUCF).
Scaling up carbon removal technologies such as direct air capture will be critical for addressing
LULUCF emissions.
For more information on emission constraints used in New Energy Outlook modeling, see
Appendix B.

Economic Transition Scenario

The makeup of technologies used to abate emissions can vary significantly across markets in
Asia Pacific, due to differences in relative technology costs, impact of current policies, and
available resources. Figure 6 illustrates the differences between the technology drivers that bring
about emissions abatement across four selected markets in Asia Pacific in the ETS.
• In China, the combination of near-term policies and an economics-led pathway in the ETS
sees carbon emissions decline 45% from 10,126 million metric tons of carbon dioxide
(MtCO2) to 5,527MtCO2 over 2024-2050. Against the ‘no transition’ counterfactual, switching
power generation from fossil fuels to clean power is by far the biggest contributor to its
emissions reductions, accounting for 80% of abatement during this period. Electrification
emerges as the second-most important decarbonization vector, responsible for 12% of
emissions reductions.
• India’s energy-related emissions increase in our base-case scenario, from 2,621MtCO2 in
2024 to 3,117MtCO2 by 2050, peaking at 3,626MtCO2 in 2038, driven by a rapidly growing
population and economic output. Substituting clean power for fossil fuel generation accounts
for the largest share (63%) of abated emissions over 2024-2050, followed by energy
efficiency (27%) and electrification (7%).
• Southeast Asia’s emissions also increase in the ETS from 1,853MtCO2 to 2,376MtCO2
during this period, peaking at 2,594MtCO2 in 2040. Clean power is responsible for half of
total emissions abated, followed by energy efficiency, which accounts for another 31% of
emissions abatement during this period. Electrification accounts for 13% of abatement.
• Japan and South Korea’s energy-related emissions peaked in 2013 and decline 35% from
1,498MtCO2 to 970MtCO2 over 2024-2050 in our ETS. Clean power abates 41% of
emissions against the ‘no transition’ counterfactual during this time, followed by energy
efficiency (26%) and electrification (23%).

Energy efficiency in the New Energy Outlook

Emissions avoided through energy efficiency measures are hard to isolate or quantify. Energy
efficiency captures a range of demand-side reduction in energy intensity to deliver the same

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‘useful’ energy, ranging from more efficient electrical household appliances to improved
industrial processes. BNEF accounts for these in its general electricity demand forecast
models.
Underlying our projections of country electricity-demand growth are two fundamental drivers:
population and economic output. Electricity consumption tends to increase with an expansion
of these two, most notably in economies with low to medium GDP per capita. Economies at
advanced stages of development tend to experience much slower demand growth or even a
decline in electricity consumption as their GDP continues to expand. The forecast is therefore
already accounting for energy efficiency improvements.
For the New Energy Outlook 2024, we show emissions abated via energy efficiency as the
delta between our general demand forecast and a ‘no transition’ scenario, in which demand for
‘useful’ energy continues to evolve but there is no improvement in energy intensity or
decoupling between economic growth and electricity demand. The emissions that would have
occurred without these improvements can be attributed to energy efficiency.

Figure 6: Carbon dioxide emissions reductions from fuel combustion in selected Asia Pacific markets, Economic
Transition Scenario versus ‘no transition’ scenario
China India Southeast Asia Japan and South Korea
GtCO2 GtCO2 GtCO2 GtCO2
16 2023 8 2023 5 2023 2.0 2023
14 7
4
12 6 1.5
10 5 3
8 4 1.0
6 3 2
4 2 1 0.5
2 1
0 0 0 0.0
2000 2025 2050 2000 2025 2050 2000 2025 2050 2000 2025 2050
Coal Gas Oil Bioenergy
Heat
20.0
0.0
Electrification
2023 Clean power Fuel switching
Energy efficiency 2000
Carbon removals 2025 2050
No transition ETS
Source: BloombergNEF. Note: GtCO2 is billion metric tons of carbon dioxide. ETS is the Economic Transition Scenario. The ‘no
transition’ scenario is a hypothetical counterfactual that models no further improvement in decarbonization and energy efficiency. In
power and transport, it assumes the future fuel mix does not evolve from 2023 (2027 for shipping). ‘Clean power’ includes
renewables and nuclear, and excludes carbon capture and storage (CCS), hydrogen and bioenergy, which are allocated to their
respective categories. ‘Energy efficiency’ includes demand-side efficiency gains and more recycling in industry. Includes ‘Carbon
removals’ needed to offset incomplete capture from point-source carbon capture processes.

Clean power does the heavy lifting in an economics-led decarbonization pathway

Despite the differences in each market’s decarbonization pathway, clean power’s role as the
single biggest contributor to emissions abatement is a common theme across all Asia Pacific
markets in both scenarios. The substitution of clean power for fossil fuel generation in the ETS
sees solar and wind account for an increasingly larger share of supply across Asia Pacific (Figure
7). The degree of renewable penetration, however, varies between markets based on relative
technology costs, impact of current policies and available resources.

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• China experiences a rapid switch to clean power this side of 2030 as the share of generation
from solar and wind more than doubles from 25% today to 52% by the end of the decade.
After 2030, their share of supply grows further, but slower, to reach 70% by 2050. Hydro also
accounts for 11% of supply for renewables to make up over 80% of power by mid-century.
Clean power also includes nuclear, which sees its share of supply rise from 5% to 9% over
2024-2050. Fossil fuel generation makes up 9% of supply in 2050, down from 54% today.
• Japan’s share of supply from renewables reaches 64% by 2050, the majority of which comes
from solar and wind which increases from 12% today to 22% by 2030. Further cost declines
see this figure more than quadruple from current levels to 50% by 2050. Hydro and bioenergy
are responsible for the additional 14%. Nuclear sees a declining share, at 6% of supply, down
from 10% today. The share of output from fossil fuels declines from 65% to 29% over 2024-
2050.
• In South Korea, solar and wind penetration grows from 7% today, to 12% by 2030 and 23%
by 2050. It relies on nuclear as a source of clean power generation. In 2024, generation from
nuclear accounts for 32% of demand. By 2050, the influx of cheaper solar and wind sees
nuclear’s share halve to 16%.

Figure 7: Share of electricity generation by technology in selected Asia Pacific markets, Economic Transition Scenario
China Japan South Korea
100% 100% 100%

80% 80% 80%

60% 60% 60%

40% 40% 40%

20% 20% 20%

0% 0% 0%
'00 '23 '50 '00 '23 '50 '00 '23 '50

India Indonesia Vietnam

100% 100% 100%

80% 80% 80%

60% 60% 60%

40% 40% 40%

20% 20% 20%

0% 0% 0%
'00 '23 '50 '00 '23 '50 '00 '23 '50
Coal Gas Oil Nuclear Other renewables Solar Onshore wind Offshore wind
Source: BloombergNEF. Note: ‘Other renewables’ comprise all other non-combustible renewable energy, including hydro,
bioenergy, geothermal and solar thermal.

• In Indonesia, solar and wind penetration grows from a negligible level today to 4% by 2030.
During this decade, Indonesia relies more on other renewables like geothermal, which sees
its share of supply double from 5% to 10% over 2024-2030. Solar and wind’s influence

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 Asia Pacific’s Energy Transition Outlook
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increases after 2030, growing more than 10-fold, to 42%, over 2030-2050, while the share
from other renewables remains largely flat. Indonesia’s relatively young coal fleet mean over
one-third of its power still comes from coal-fired capacity in 2050, down from 63% in 2024.
• In Vietnam, solar and wind already account for 14% of supply – a comparably higher share
than many of its peers in Southeast Asia, driven by generous feed-in tariffs to incentivize
uptake a few years ago. Overall, renewables already make up nearly half of Vietnam’s
generation with hydro supplying 36% of power in 2024. By 2050, renewables make up three-
quarters of generation as solar and wind penetration more than quadruples to 60% compared
to today. Hydro’s share of supply falls to 13% by 2050 due to limited untapped potential and
in favor of cheaper wind and solar. Like Indonesia, Vietnam also has a relatively young coal
fleet. Hence, fossil fuels still make up a quarter of generation by mid-century, with coal
accounting for 17%, down from 41% today.

Net Zero Scenario

Accelerated progress over the next 10 years is critical
Early emissions reductions are crucial for Asia Pacific in the NZS. The 2024-2030 period is
dominated by rapid power-sector decarbonization, energy efficiency gains, and rapid acceleration
of carbon capture and storage deployment. Wind and solar alone are responsible for half of net
emissions abatement during this seven-year period, contributing 5.4GtCO2 of net reductions in
the NZS – 35% more than in the ETS.

Figure 8: Net carbon dioxide emissions reductions by period and measure/technology in Asia Pacific, Economic
Transition Scenario and Net Zero Scenario versus ‘no transition’ scenario
Economic Transition Scenario Net Zero Scenario
Billion metric tons of CO2 avoided Billion metric tons of CO2 avoided
14 14 Wind

12 12 Clean Solar
power Other renewables
10 10 Nuclear
8 8 Carbon removals
Energy efficiency
6 6 Fuel switching
4 4 Electrification
Heat
2 2 Bioenergy
0 0 Hydrogen
2024-2030 2031-2040 2041-2050 2024-2030 2031-2040 2041-2050 CCS
Source: BloombergNEF. Note: Data shows the net contribution of each technology to carbon emissions abatement by time period
compared to a counterfactual ‘no transition’ scenario in which there is no further action toward decarbonization. Time period lengths
differ. CCS is carbon capture and storage. ‘Other renewables’ comprise all other non-combustible renewable energy in electricity
generation, including hydro, geothermal and solar thermal. ‘Energy efficiency’ includes demand-side efficiency gains and more
recycling in industry.

While the deployment of renewables continues across 2031-2040, the importance of

electrification grows. Electrifying end uses in industry, transport, and buildings accounts for 25%

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 Asia Pacific’s Energy Transition Outlook
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of the emissions avoided during this period in the NZS. This equates to 3.3GtCO2 of net abated
emissions – almost quadruple that in the ETS. Abatement from hydrogen and bioenergy also
rises in importance as carbon budgets for hard-to-abate sectors tighten.

The third period from 2041-2050 relies on a mix of different technologies aimed at hard-to-abate
sectors, with hydrogen accounting for 14%, or 0.77GtCO2 of net emissions abated – almost eight
times that in the ETS.

Tough choices await beyond clean power and electrification

To understand the scale of change needed to reach net zero, we quantify the contribution of
emissions-saving technologies and other measures, and compare this with a ‘no transition’
pathway, which charts a route whereby we make no further efforts to decarbonize (Figure 9).

Getting to net zero requires an almost complete phase-out of unabated fossil fuel use in Asia
Pacific’s energy sector. Like in the ETS, switching power generation from fossil fuels to clean
power sources is the single biggest contributor to the region’s emissions reduction in the NZS.
However, a more diverse set of technologies will be required to achieve net zero – some of which
may currently not be economically competitive or commercially available at scale, like CCS and
hydrogen, which are too costly under the ETS. The level to which these emerging technologies
must scale to aid efforts to reach net zero varies across markets.
• In China, the need to decarbonize on a net-zero trajectory compliant with Paris Agreement
goals sees its emissions decline 45% from 10,245MtCO2 to 5,588MtCO2 between 2024 and
2030. Over the next decade, emissions decline a further 72% before reaching net zero by
2050. Clean power accounts for 59% of emissions reductions over 2024-2050 in the NZS.
Deeper and more rapid electrification of China’s end use applications makes it the second-
largest driver of its emissions reductions in the NZS, making up 17% of abatement during this
period. CCS and hydrogen make up 11% and 3% of China’s emissions reductions in the NZS
over 2024-2050, respectively. China accounts for nearly 60% of all emissions abated in Asia
Pacific over 2024-2050 – underscoring the importance of its decarbonization journey to the
overall region’s net zero transition.
• India’s emissions decline 18% from 2,638MtCO2 today to 2,156MtCO2 by 2030 in the NZS.
Over 2031-2040, emissions fall a further 64% to 638MtCO2 before reaching net zero by
2050. Clean power makes up nearly half of its emissions abatement by 2050, followed by
CCS (17%), energy efficiency (14%), and electrification of end-use systems (12%). Hydrogen
and bioenergy together account for an additional 8% of emissions reductions.
• Southeast Asia’s emissions decline 20% from 1,850MtCO2 to 1,478MtCO2 over 2024-2030.
Emissions decline a further 64% over the next decade to 490MtCO2 in 2040 before reaching
net zero by 2050 in our NZS. Clean power accounts for the largest share (35%) of abated
emissions over 2024-2050, followed by electrification (19%), CCS (19%) and energy
efficiency (14%). Hydrogen and bioenergy each account for 6% of additional emissions
reductions during this time.
• Japan and South Korea’s emissions decline 40% from 1,504MtCO2 in 2024 to 908MtCO2
in 2030. Between 2031 and 2040, emissions decline a further 75% to 206MtCO2 before
reaching net zero by mid-century under the NZS. Both clean power and CCS each account
for just under 30% of emissions abatement by 2050, followed by electrification (19%), and
energy efficiency (12%). Hydrogen and bioenergy together account for another 11% of
abatement during this period.

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Figure 9: Carbon dioxide emissions reductions from fuel combustion in selected Asia Pacific markets, Net Zero Scenario
versus ‘no transition’ scenario
China India Southeast Asia Japan and South Korea
GtCO2 GtCO2 GtCO2 GtCO2
16 2023 8 2023 5 2023 2.0 2023
14 7
4
12 6 1.5
10 5 3
8 4 1.0
6 3 2
4 2 0.5
1
2 1
0 0 0 0.0
2000 2025 2050 2000 2025 2050 2000 2025 2050 2000 2025 2050
Coal Gas Oil CCS Hydrogen
Bioenergy Heat Electrification Clean power Fuel switching
10.0
0.0
Energy efficiency Carbon removals No transition ETS NZS
Source: BloombergNEF. Note: GtCO2 is billion metric tons of carbon dioxide. ETS is the Economic Transition Scenario. NZS is the
Net Zero Scenario. The ‘no transition’ scenario is a hypothetical counterfactual that models no further improvement in
decarbonization and energy efficiency. In power and transport, it assumes the future fuel mix does not evolve from 2023 (2027 for
shipping). ‘Clean power’ includes renewables and nuclear, and excludes carbon capture and storage (CCS), hydrogen and
bioenergy, which are allocated to their respective categories. ‘Energy efficiency’ includes demand-side efficiency gains and more
recycling in industry. Includes ‘Carbon removals’ needed to offset incomplete capture from point-source carbon capture processes.

The net zero power system undergoes a radical transformation, built around renewables
In the NZS, power systems across Asia Pacific markets shift from relying on unabated, baseload
coal and gas power plants, to ones dominated by variable renewable energy. The shift to cleaner
power happens much faster, at a bigger scale and more fundamentally than in the ETS. Low-
carbon dispatchable alternatives, which can act as backup for renewables whenever they are
unable to meet load, take the place of carbon-emitting power plants. In the NZS, the most cost-
effective option that is available in the short term is CCS, outcompeting hydrogen and long
duration storage in most economies. Nuclear also steps up to decarbonize the power sectors in
Asia Pacific, especially in markets with existing nuclear capacity. However, we expect it to
continue to need strategic government support, which limits its total deployment out to 2050.

Our net zero modeling assumes an immediate moratorium on new unabated coal build, including
the near-term pipeline incorporated in our base-case. Under the NZS, polluting coal plants start to
retire at a faster pace than under the ETS, before the end of their technical lives, to remain
compliant with a carbon budget that achieves a 1.75C warming outcome by 2050 with no
overshoot or net-negative emissions after 2050.
• In China, the share of generation accounted for by unabated fossil fuels falls from 54% to
12% during 2024-2030 and is almost completely phased out by 2038. Fossil fuel generation
paired with CCS starts to scale during this decade, making up 11% of supply in China by
2030 before falling to 6% by 2050. Nuclear also plays a larger role in the NZS, supplying 11%
of China’s electricity by 2050, up from 5% today. These technologies are crucial to provide
backup for solar and wind, which see their share of generation more than double from 24%
today to 54% by the end of this decade, and further rising to 74% by 2050. Onshore wind

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 Asia Pacific’s Energy Transition Outlook
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emerges as the most important source of generation, making up 41% of China’s power mix
by mid-century compared to 27% from solar.
• In Japan, unabated fossil fuels see their share of supply decline from 65% today to 18% by
2030, before being largely phased out in the mid-2040s. CCS-paired coal and gas make up
11% of total supply by 2030 before falling to 8% by mid-century. Nuclear restarts play a more
significant role under the NZS, increasing the share of nuclear power from 10% today to 22%
in 2030, before declining to 10% by 2050 in favor of generation from cheaper, renewable
alternatives. Nuclear and CCS-paired fossil fuels help firm up generation from solar and wind,
which make up nearly 70% of supply by 2050, up from 12% today, and 31% in 2030. Overall,
renewables make up 82% of generation by mid-century. Government policy (such as
auctions) and land constraints see offshore wind emerge as Japan’s largest source of
electricity by 2050, accounting for a quarter of total supply, followed closely by onshore wind,
which makes up just over one-fifth.
• In South Korea, generation from unabated fossil fuels falls from 48% to 17% over 2024-2030
before being phased out by 2050. CCS-paired fossil fuels supply 20% of the country’s power
by 2030 before falling to 16% by 2050. Nuclear plays a significant role in South Korea’s
generation mix but its share of the total halves from 32% in 2024 to 16% by 2050. Solar and
wind, meanwhile, see their share of output rise from 7% today to 18% by 2030, before rising
further to 62% by 2050. Solar emerges as the largest source of generation by 2050 under the
NZS, responsible for 26% of supply.
• Indonesia’s share of generation from unabated fossil fuels sees a steep decline from 83%
today to 29% by 2030, before being phased out in the mid-2040s. CCS in power generation
begins to scale this decade to account for nearly 30% of supply by 2030 in the NZS before
falling to 8% by mid-century. Nuclear, which does not feature in Indonesia under the ETS,
accounts for 6% of the country’s power supply by 2050 in the NZS. Wind and solar,
meanwhile, see their share of Indonesia’s output rise from a negligible level in 2024 to 20% in
2030, rising to nearly 70% by 2050. Solar emerges as the most important source of
generation by mid-century in the NZS, accounting for 49% of all output.
• Vietnam’s share of generation from unabated fossil fuels, much from its relatively young coal
fleet, declines quickly from 53% to 19% during 2024-2030 before being phased out by the
mid-2040s. CCS-paired fossil fuel generation increases in importance simultaneously –
making up 12% of generation by the end of this decade before seeing its share fall to 8% by
mid-century. Vietnam also produces electricity via nuclear in the NZS, starting in the mid-
2030s. The technology makes up 8% of Vietnam’s supply by 2050. Much of the country’s
renewables growth comes from wind and solar – their share of generation grows from 12% in
2024 to 38% by 2030 and 71% by 2050. Hydro plays a similar role in Vietnam in the NZS as it
does in the ETS – its share of output gradually declines from around 34% in 2024 to 11% in
2050. Solar is the most significant source of generation in Vietnam by 2050 under the NZS,
accounting for 40% of total output.

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 Asia Pacific’s Energy Transition Outlook
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Figure 10: Share of electricity generation by technology in selected Asia Pacific markets, Net Zero Scenario
China Japan South Korea
100% 100% 100%

80% 80% 80%

60% 60% 60%

40% 40% 40%

20% 20% 20%

0% 0% 0%
'00 '23 '50 '00 '23 '50 '00 '23 '50

India Indonesia Vietnam

100% 100% 100%

80% 80% 80%

60% 60% 60%

40% 40% 40%

20% 20% 20%

0% 0% 0%
'00 '23 '50 '00 '23 '50 '00 '23 '50
Coal Coal with CCS Gas Gas with CCS Oil Hydrogen
Nuclear Other renewables Solar Onshore wind Offshore wind
Source: BloombergNEF. Note: Includes electricity generation for hydrogen production under the Net Zero Scenario. ‘Other
renewables’ comprise all other non-combustible renewable energy, including hydro, bioenergy, geothermal and solar thermal. CCS
is carbon capture and storage.

2.4. Investment
Decarbonizing Asia Pacific’s energy systems will require a substantial scale-up of capital directed
toward low-carbon assets and infrastructure. Under both the ETS and NZS, the energy
investment opportunity between 2024 and 2050 totals $74 trillion and $89 trillion respectively. The
falling costs of some low-carbon solutions, such as electric vehicles and clean power, and new
policy commitments are closing the spending gap between the two scenarios. However, vastly
different investment choices need to be made if net zero by mid-century is to be achieved.

Investment and spending are only 20% higher in the Net Zero Scenario
In the ETS, companies, financial institutions, governments, and consumers invest a total of $74
trillion on energy-related infrastructure, technology, and products (Figure 11) in Asia Pacific by
2050, representing more than 40% of the total global spend. This is split across $22 trillion for
energy supply (both fossil fuels and low-carbon) and $52 trillion for demand-side products (almost
entirely for vehicles, both electric and internal combustion engine-based).

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 Asia Pacific’s Energy Transition Outlook
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Total investment across Asia Pacific in the Net Zero Scenario is only 20% higher, at $89 trillion –
also around 40% of the global figure. This comparatively small difference between the scenarios
is because EVs are expected to reach cost-competitiveness with ICE vehicles in the coming
years, meaning demand-side spending is only slightly higher than in the ETS at $54 trillion.

But supply-side investment is 57% larger in the NZS than in the ETS at $35 trillion. This is
because clean energy technologies are more capital expenditure intensive than traditional energy
sources. That said, operating expenditure is excluded from this analysis and would likely be
higher for fossil-fuel technologies.

Figure 11: Asia Pacific energy investment and spending across 2024-2050, Economic Transition Scenario and Net Zero
Scenario

Conventional industry
Economic Transition Scenario Net Zero Scenario
Clean industry
$74 trillion $89 trillion Demand-
ICE vehicle sales
side
EV sales
Heat pumps
Hydrogen
52.3 54.2 Carbon capture and storage
Power grids
34.5
Supply- Nuclear
21.7 side Energy storage
Renewables
Fossil-fuel power
Demand Supply Demand Supply Fossil-fuel processes
ETS
Source: BloombergNEF. ETSis internal combustion
Note: ICE NZS engine. EV is electric
NZS vehicle. The numbers above the bars indicate
cumulative investment and spending figures from 2024 to 2050. Investment in bioenergy is included under renewables.

Investment in low-carbon technologies accelerates under the Net Zero Scenario

BNEF’s annual Energy Transition Investment Trends report is the definitive review of investment
and spending on net-zero aligned technology and infrastructure. The report estimated that around
$840 billion was invested in low-carbon technologies across Asia Pacific in 2023. Using the same
scope, the ETS requires this figure to rise to an average of $1.2 trillion per year from 2024 to 2030
– 51% greater than the current pace of investment (Figure 12). The scale-up in the NZS is
breathtaking, requiring annualized investment to triple to $2.3 trillion over 2024-2030. This figure
rises a further 40% over the next decade.

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 Asia Pacific’s Energy Transition Outlook
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Figure 12: Energy transition investment in Asia Pacific – 2023 estimate versus required annualized levels across 2024-
2050, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
$ billion (real 2023) $ billion (real 2023)
4,000 4,000 -9%
+40% Clean industry
3,500 3,500 3,300
2,997 Electrified heat
3,000 3,000
+13% +179% 2,349 Electrified transport
2,500 +41% 2,500
2,030 Hydrogen
2,000 1,796 2,000
+51% CCS
1,500 1,273 1,500
Energy storage
1,000 840 1,000 840
Nuclear
500 500
Power grids
0 0
2023 2024- 2031- 2041- 2023 2024- 2031- 2041- Renewable energy
2030 2040 2050 2030 2040 2050
Source: BloombergNEF. Note: Value for 2023 is an estimate. Excludes investment in fossil-fuel processes and power and
conventional energy, and spending on internal combustion engine vehicles, which are not captured in 2023 investment figures
reported in BNEF’s Energy Transition Investment Trends report (web | terminal). CCS is carbon capture and storage.

The two scenarios’ totals are in the same ballpark, but represent
fundamentally different choices
The 20% difference in the investment totals across Asia Pacific in the NZS and ETS is in the
same ballpark by 2050, and lower operating costs for clean energy could narrow the gap further.
But the difference masks large changes in investment choices, with the NZS representing a huge
leap in the speed of clean technology deployments (Figure 12). This underscores the need for
stable, long-term policy signals – empowered by strong political will – to divert investment away
from fossil-fuel based pathways and toward low-carbon solutions at the scale and speed required
by the NZS. Investment levels can also differ between markets within Asia Pacific based on the
current state of their respective energy transitions (Figure 13).
• China pulls in $40.7 trillion of investment over 2024-2050, or 55% of the Asia Pacific total,
into its energy system under the base-case ETS, underscoring its outsized role in the region’s
energy transition. In the NZS, total investments into China are only 14% higher at $46.3
trillion, or 52% of the region-wide total. The increase is primarily driven by supply-side
investments – which are 35% higher in the NZS. By 2050, investments in renewables and
energy storage total $5.2 trillion to get to net zero in China – 45% higher than in the base
case. Investment in the power grid is also up 39% to $4.7 trillion in the NZS, to accommodate
greater levels of renewable penetration and higher rates of electrification. The NZS also sees
more than a tripling of investment in nuclear compared to the ETS – up to $0.7 trillion by
2050. CCS and hydrogen, which do not feature in the ETS, require $1.1 trillion and $0.9
trillion in investment, respectively. On the demand side, spending on EVs totals $27.2 trillion
in the NZS over 2024-2050, up 21% compared with the ETS. Spending on heat pumps is
around $0.5 trillion, around five times higher than in the base-case.
• India represents a $12.4 trillion investment opportunity in the NZS – 34% more than in the
ETS. The increase is again driven primarily by supply-side investments, which more than
double under the NZS to $6.8 trillion. Investment in renewables and energy storage increases

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 Asia Pacific’s Energy Transition Outlook
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137% to $2.2 trillion over 2024-2050 to get to net zero. The NZS sees a quintupling in
investment on nuclear, totaling $0.3 trillion during this period. Power grid investment is up to
$1.8 trillion – an 88% increase over the base-case ETS to get to net zero by mid-century. On
the flip side, investments across the fossil-fuel value chains declines 46% in the NZS to
around $0.94 trillion compared to the ETS. Demand-side spending declines around 8% in the
NZS relative to the base case to $5.6 trillion, driven by lower spending on vehicles as EVs
become cheaper. Spending on EVs nearly doubles to $4.4 trillion in the NZS compared to the
ETS, equivalent to 36% of the scenario’s overall capital expenditure. Overall spending on
vehicles, including ICEs, declines nearly 16% in the NZS compared to the ETS.

Figure 13: Cumulative energy investment and spending across 2024-2050 in selected Asia Pacific markets, Economic
Transition Scenario and Net Zero Scenario
China India Japan
ETS NZS ETS NZS ETS NZS

$40.7 $46.3 $9.3 $12.4 $5.6 $7.7

trillion trillion trillion trillion trillion trillion

29.3 30.9 6.8 5.7

6.1 5.6 4.8
15.5 3.2
11.4 2.0
0.8

Demand Supply Demand Supply Demand Supply Demand Supply Demand Supply Demand Supply

Indonesia South Korea Vietnam

ETS NZS ETS NZS ETS NZS

$3.3 $3.8 $2.0 $2.7 $1.5 $2.4

trillion trillion trillion trillion trillion trillion

2.1 1.6 1.7 1.4

1.7 1.6 1.7
1.1 1.0
0.9
0.7
0.4

Demand Supply Demand Supply Demand Supply Demand Supply Demand Supply Demand Supply
Fossil-fuel processes Fossil-fuel power Renewables Energy storage
1
Nuclear Power grids 0 Carbon capture and storage Hydrogen
Heat pumps Electric vehicle sales ICE vehicle sales Clean industry
Conventional industry
Source: BloombergNEF. Note: ICE is internal combustion engine. The numbers above the bars indicate cumulative investment and
spending figures from 2024 to 2050.

• Japan’s energy system requires $7.7 trillion in investment over 2024-2050 to get to net zero
– a 38% premium over the ETS. Supply-side investment doubles to $2.0 trillion in the NZS,
while demand side investment increases 21% compared to the ETS. Investment in
renewables and energy storage in the NZS is nearly $1.0 trillion, a 151% premium over the

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 Asia Pacific’s Energy Transition Outlook
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base-case. Power grids require 67% more investment than in the ETS to get to net zero,
totaling $0.7 trillion over 2024-2050. Spending on CCS and hydrogen, which play a prominent
role in getting to net zero, is $0.2 trillion and $0.1 trillion, respectively. Investments across the
fossil-fuel value chain totals just $0.009 trillion during this period in the NZS, 75% lower than
in the ETS. On the demand side, spending on heat pumps totals $0.1 trillion in Japan under
the NZS, up nearly 80% compared to the ETS. EV sales are almost twice the amount in the
ETS to get to net zero, equaling $4.8 trillion.
• Indonesia requires $3.8 trillion in investment to get to net zero by 2050, just 15% more than
in the ETS. Supply-side investment over 2024-2050 hits $2.1 trillion, 32% more than in the
ETS. Investment on renewables and energy storage reaches $0.9 trillion, a 138% premium
over the ETS. Investment in power grids also increases 66% over the ETS, totaling $0.5
trillion. Investment in CCS and hydrogen in Indonesia during this period totals $0.2 trillion and
$0.05 trillion, respectively, in the NZS. Investment across the fossil-fuel value chain totals
$0.5 trillion, 48% less than in the ETS. Demand-side investment is the same across both
scenarios at $1.7 trillion, but the makeup of the investment changes significantly between
them. In the NZS, spending on EVs during 2024-2050 in Indonesia is $1.5 trillion – 88% more
than in the ETS, while spending on ICE vehicles is 90% lower at $0.1 trillion.
• In the NZS, South Korea’s energy system represents $2.7 trillion of investment and
spending over 2024-2050, 37% higher than in the ETS. Supply side investment almost triples
in the NZS compared to the base case, reaching $1.1 trillion by 2050. Investment in
renewables and energy storage almost quadruples over the ETS to $0.4 trillion to reach net
zero by mid-century. Spending on nuclear also increases 23% to $0.04 trillion to get to net
zero by 2050. Around $0.3 trillion is invested in power grids over 2024-2050 in South Korea
under the NZS, a 73% premium over the ETS. Investment across the fossil-fuel value chain
totals just $0.01 trillion in the NZS, 68% lower than in the ETS. Demand-side investment rises
just 3% in the NZS compared to the ETS, but the makeup of the spending varies drastically
between the two scenarios. Spending on EVs, for instance, reaches $1.3 trillion between
2024 and 2050 to reach net zero, a 46% increase over the ETS. At the same time, spending
on ICE vehicles declines 73% to $0.2 trillion in the NZS.
• In the NZS, Vietnam requires $2.4 trillion in investment, 54% more than in the ETS. Supply
side investment doubles to $1.4 trillion under the NZS during this period. Investment in
renewables and energy storage jumps 127% compared to the base-case to reach net zero,
requiring $0.6 trillion over 2024-2050. Around $0.05 trillion is also invested in nuclear during
this period in the NZS. Power grid investment jumps 81% over the ETS to $0.3 trillion in the
NZS. Simultaneously, investment across the fossil-fuel value chain declines 49% in the NZS
relative to the ETS, totaling $0.1 trillion. Nearly $0.3 trillion is also spent across CCS and
hydrogen to help scale up these emerging technologies in the NZS. Total demand side
spending in the NZS is around 14% higher in Vietnam compared to the ETS. EV sales jump
92% between 2024 and 2050 in the NZS relative to the ETS to equal $0.8 trillion, while
spending on ICE vehicles declines 87% relative to the ETS to $0.05 trillion over the same
period.

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2.5. Assessing the ambition of Nationally Determined

Contributions against NEO scenarios
This section assesses the ambition levels of six Asia Pacific markets’ ‘Nationally Determined
Contributions’ (NDCs) – their climate plans to help meet the goals of the Paris Agreement –
against the two scenarios developed in the New Energy Outlook 2024.

Under the 2015 Paris Agreement, countries committed to collectively limit the increase in the
global average temperature above pre-industrial levels to “well below 2C”, and to “pursue efforts”
to limit warming to 1.5C. The latest UN assessment of NDCs concluded that signatories of the
treaty need to ratchet up their emissions pledges to meet either of these pathways,2 and BNEF
analysis shows that all six of the markets outlined in Table 4 have scope to examine potential
opportunities to increase the ambition of their NDCs. Parties to the deals are due to submit their
next set of NDCs over the next year.

A step change in ambition is needed

Many parties need to ratchet up the ambition of their NDC targets to get on track to reach net-
zero emissions by 2050. Crucially, policymakers will also need to implement sufficient support to
achieve these ambitions. The six markets covered in this analysis were responsible for an
estimated 47% of global energy sector emissions in 2023. Based on their NDCs as of April 2024,
we find:
• Japan and South Korea, which were responsible for 5% of global energy sector emissions
in 2023, have NDCs that are more ambitious than BNEF’s Economic Transition
Scenario, but not enough to be aligned with the Net Zero Scenario. This suggests that
achieving their NDC targets would deliver more emissions abatement than our economics-
driven base case. However, they would need to ratchet up their 2030 goals to be consistent
with global net zero by mid-century.
• India, representing 8% of global energy sector emissions in 2023, has an NDC in line with
the ETS, meaning it is aligned with a pathway that optimizes the use of economically
competitive technologies. As a developing economy, India’s trajectory is, at least apparently,
cost-efficient. But given that the ETS is consistent with a 2.6C warming outcome, India’s NDC
target falls significantly short of the Paris-aligned goal of limiting the global temperature
increase to well below 2C.
• China, Indonesia and Vietnam accounted for an aggregate 35% of global energy sector
emissions in 2023 and each have an NDC that is less ambitious than the ETS (Table 4).
This implies that if these markets realize their NDCs, a substantial share of global energy
emissions would be above – and in the case of China, well above – even the pathway that
optimizes the use of current technologies. They would therefore need to significantly ratchet
up their NDC targets to get on track for a net-zero trajectory. What is more, these NDCs even
fall short of an economically efficient energy transition pathway. Raising their ambition could
thus reduce energy system costs compared with their current plans.

2
The UN’s ‘synthesis report’ published in November 2023 found that if parties deliver on their 2030 targets,
global emissions would decrease by 5.3% over 2019-2030. This is far short of the 25% reduction needed
to limit global warming to 2C and the 43% cut required for a 1.5C pathway. For more, see UN Climate
Talks: Was the 28th Time the Charm? Not So Much (web | terminal).

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 Asia Pacific’s Energy Transition Outlook
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More transparency on commitments

Performing an accurate like-for-like comparison of parties’ goals is challenging, mainly due to the
diverse types of emissions targets, sectors and greenhouse gas coverage, base years, unique
national circumstances, and equity- and development-related considerations. But transparency of
NDCs and emissions reporting is important, as it builds trust among parties and credibility for the
annual COP climate meetings and outcomes. This year will see governments issue their first
biennial reports based on the new rules to improve consistency and transparency, though some
variability will remain as developing economies were granted flexibility provisions.

Table 4: Change in selected Asia Pacific markets’ energy-sector emissions under their Nationally Determined
Contributions and BNEF’s Economic Transition Scenario and Net Zero Scenario – 2030 versus base year

Energy-sector emissions change,

2030 versus base year
Market Target Description Base NDC ETS NZS NDC ambition
year
Japan Absolute Reduce greenhouse gas emissions by 46% 2013 -46% -30% -55% More ambitious
emissions in fiscal year 2030 from fiscal year 2013 than ETS
reduction levels
South Absolute Reduce greenhouse gas emissions by 40% 2018 -40% -18% -50% More ambitious
Korea emissions by 2030 from 2018 levels (727.6 million than ETS
reduction metric tons of CO2 equivalent) by 2030
India Emissions Reduce emissions intensity of its GDP by 2005 175% 192% 106% In line with ETS
intensity 45% by 2030 from 2005 levels
Vietnam Baseline Unconditional target of 15.8% emission 2020* 83% 60% 2% Less ambitious
scenario reduction relative to business-as-usual than ETS
(BAU) scenario; conditional target of 43.5%
relative to BAU
Indonesia Baseline Unconditional target of 31.89% emission 2020* 74% 60% 4% Less ambitious
scenario reduction relative to BAU, conditional target than ETS
of 43.2% emission reduction relative to
BAU
China Emissions Lower its carbon intensity by over 65% in 2005 179% 51% 6% Less ambitious
intensity 2030 from 2005 levels than ETS

Source: BloombergNEF, Fourth Biennial Update Report of the Republic of Korea, greenhouse gas data from World Resources
Institute CAIT, Nationally Determined Contributions (NDCs) from United Nations Framework Convention on Climate Change, GDP
data from International Monetary Fund. Note: ETS is Economic Transition Scenario; NZS is Net Zero Scenario. Applies parties’
economy-wide, unconditional, greenhouse gas targets for 2030, apart from China, which only has a CO2-related target. Where
target is a range or is for a reduction of “at least x%”, the least ambitious figure is used. France and Germany use the EU-level
target of “at least 55%”, as the bloc submits one climate plan. NDC ambition assessments take into account the absolute difference
in emissions, crossover points and overall trajectory. Does not distinguish between Annex I and non-Annex I countries, as defined
by the UN. *For Indonesia and Vietnam, this NDC value is based on the governments’ estimated baseline scenario for 2030
emissions. We then calculated the implied change in emissions between 2020 (the latest year for which we have data) and 2030.

A key next step would be for parties to use a consistent structure for their emissions targets. In
that respect, an absolute, economy-wide greenhouse gas target delivers the most certainty in
terms of projected outcome. This may be a tough ask. Rapidly growing developing economies
such as India and Indonesia show little sign of moving away from intensity-based targets that
allow them to grow their economies but meet their climate goals. There are early indications that
China may shift away from an intensity-based target for its 2035 NDC. As the charts in Figure 14

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 Asia Pacific’s Energy Transition Outlook
October 16, 2024

illustrate, this suggests that even if such markets deliver on their 2030 targets, they could
increase emissions beyond an economics-driven pathway – and far beyond a trajectory
consistent with the Paris Agreement.

Figure 14: Selected Asia Pacific markets’ energy sector emissions targets in Nationally Determined Contributions
compared to Economic Transition Scenario and Net Zero Scenario, 2000-2030
Japan South Korea India
Relative to reference year Relative to reference year Relative to reference year
10% 0% 250%

0% -10% 200% 192%

-10% -18% 175%
-20% 150%
-20%
-30% 100% 106%
-30% -30%
-40% -40% 50%
-40%
-46% -50% -50% 0%
-50%
-55%
-60% -60% -50%
2000 2010 2020 2030 2000 2010 2020 2030 2000 2010 2020 2030

Vietnam Indonesia China

Relative to reference year Relative to reference year Relative to reference year
100% 100% 200%
80% 83% 179%
80%
60% 74% 150%
60%
60% 60%
40% 100%
20% 40%
0% 2% 20% 50% 51%
-20% 0% 4%
0% 6%
-40%
-20%
-60% -50%
-80% -40%
-100% -60% -100%
2000 2010 2020 2030 2000 2010 2020 2030 2000 2010 2020 2030

Source: BloombergNEF, greenhouse gas data from World Resources Institute CAIT, Nationally Determined Contributions from
United Nations Framework Convention on Climate Change, GDP data from International Monetary Fund, Korea emissions data
from Fourth Biennial Update Report of the Republic of Korea. Note: ETS is Economic Transition Scenario; NZS is Net Zero
Scenario. Applies parties’ economy-wide, unconditional, greenhouse gas targets for 2030, apart from China, which only has a CO2-
related target. Where a target is a range, the least ambitious figure is used. France and Germany use the EU-level target; both
markets have an NDC of “at least 55%”. Does not distinguish between Annex 1 and non-Annex 1 countries, as defined by the UN.
Legend: More ambitious than ETS; in line with ETS; less ambitious than ETS.

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 Asia Pacific’s Energy Transition Outlook
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Section 3. Technology drivers

Achieving net zero in Asia Pacific’s energy systems will require a portfolio of
technologies of varying maturity that jointly deliver the deep decarbonization
required. BNEF’s modeling identified nine technology pillars that will make or
break the region’s transition from a high- to low-carbon energy system.

Figure 15: Selected technology drivers in BNEF’s Asia Pacific scenario modeling
Passenger electric vehicle fleet Wind and solar capacity Battery storage capacity
Million vehicles Terawatts Terawatts
800 20 2.5

600 15 2.0
NZS 1.5
400 10
ETS 1.0
200 5
0.5
0 0 0.0
2020 2030 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050

Nuclear capacity Carbon dioxide sequestered with CCS Hydrogen demand

Gigawatts Billion metric tons of CO2/year Million metric tons of hydrogen
800 6 250
Thousands

600 200
4
150
400
2 100
200
50
0 0 0
2020 2030 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050

Sustainable aviation fuel demand Power grid length Heat pumps installed
Billion gallons Million kilometers Million units
40 60 250

30 200
40
150
20
100
20
10
50
0 0 0
2020 2030 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050

Source: BloombergNEF. Note: ETS is Economic Transition Scenario. NZS is Net Zero Scenario. Wind includes offshore and
onshore. Solar includes small-scale and utility-scale solar photovoltaic. Battery storage includes stationary storage. CCS is carbon
capture and storage and the Economic Transition Scenario shows the current project pipeline.

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 Asia Pacific’s Energy Transition Outlook
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By 2050, in the NZS for Asia Pacific:

1. The EV fleet grows to 671 million vehicles and while the region does not see a complete
phase-out of internal combustion engine (ICE) vehicles before 2050, new ICE vehicle sales
fall 97% by 2040 against 2023. Between 2041 and 2050, new ICE vehicles sales stagnate at
an average of 2.3 million vehicles per year.
2. Total wind and solar capacity reaches 17.5 terawatts (TW) – this represents 57% of global
capacity in 2050. Total renewable energy capacity almost quadruples from today by 2030,
and then triples again from 2030 to 2050.
3. Installed battery storage capacity hits 2.2TW by 2050 – more than 60 times of 2023 levels,
representing 56% of global capacity.
4. Nuclear power capacity grows almost sixfold to 620 gigawatts (GW).
5. Carbon capture capacity grows to 5.4 billion metric tons of carbon dioxide (GtCO2)
sequestered per year from nearly zero today.
6. Clean hydrogen use reaches 211 million tons per year by 2050 – five times today’s fossil-fuel-
based hydrogen demand and 54% of global demand in that year.
7. Sustainable aviation fuel consumption hits 34 billion gallons per year – up from minimal levels
today. By 2050, Asia Pacific represents 38% of global SAF demand.
8. Asia Pacific’s power grid grows to 53 million kilometers in length – almost double from today
to account for nearly half of the world’s power grid in length.
9. Heat pumps reach over 200 million installed units cumulatively – a near 10-fold increase from
today.

Among the nine pillars, only four are mature, commercially scalable technologies with proven
business models: electric vehicles, renewable power, energy storage, and power grids. These still
require a significant acceleration to get on track for net zero, but there is little to no technology risk
and economic premiums are generally small or non-existent. However, these technologies may
still face different levels of regulatory risks in each market. As seen in Figure 15, each of these
technologies sees strong growth in the ETS, demonstrating their maturity and economic
competitiveness.

By contrast, nuclear, carbon capture and storage (CCS), hydrogen, SAFs, and heat pumps are
not currently cost-competitive or face challenges scaling up commercially. As a result, their
deployment stagnates under the ETS. But each of these technologies must scale rapidly to
achieve the trajectories laid out in the NZS, and each plays a different role in the transition.
Achieving commercialization of these technologies within the next decade will be imperative. The
following sections explore the trajectory of each technology in greater depth.

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Table 5: Technology scale-up required under Economic Transition Scenario and Net Zero Scenario in Asia Pacific

Technology Economic Transition Scenario Net Zero Scenario Key challenge to

(units) keeping on track for
net zero
2023 2050 Multiplier 2050 Multiplier
versus 2023 versus 2023

Solar 987 6,781 x6.9 11,676 x11.8 Rapid scaling

(gigawatts)

Wind 536 2,970 x5.5 5,847 x10.9 Rapid scaling

(GW)

Battery storage 36 1,761 x48.5 2,227 x61.3 Rapid scaling

capacity
(GW)

Passenger electric 23 515 x22.2 671 x28.9 Rapid scaling

vehicle fleet
(million vehicles)

Power grid 30,509 44,036 x1.4 53,101 x1.7 Socio-political

(thousand kilometers) acceptance

Nuclear capacity 107 240 x2.2 620 x5.8 Socio-political

(GW) acceptance and
technology
commercialization

Carbon dioxide - - 5,367 Technology

emissions captured by commercialization
carbon capture and
storage
(million metric tons of
CO2 per year)
Hydrogen demand 40 73 x1.8 211 x5.3 Technology
(million tons of commercialization
hydrogen (140
megajoules per
kilogram))
Sustainable aviation 28 1,844 x66.7 33,775 x1,221.9 Technology
fuels demand commercialization
(million gallons)
Heat pumps 21 67 x3.2 214.32 x10.3 Rapid scaling
(million units)

Source: BloombergNEF. Note: Hydrogen demand today is largely served by fossil fuel-derived hydrogen, so the multiplier for low-
carbon hydrogen is many orders of magnitude larger.

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3.1. Fossil fuel-based power generation

Rapidly growing economies and industrial activities in many of the Asia Pacific markets drives
significant growth in electricity demand under both the ETS and NZS. Total generation in the
region increases 31% from 15,152 terawatt-hours (TWh) in 2023 to 27,135TWh by 2050 under
the ETS. By comparison, total generation increases by 86% to 45,619TWh by 2050 under the
NZS.

Achieving net zero by 2050 means the NZS is not merely an evolution of the ETS – it will have to
function and operate as a completely different power system, as shown by Figure 16. The
increasing cost-competitiveness of clean power, and the ever-rising decarbonization ambitions of
nations, are fundamentally changing how power systems are developing, transforming them from
being fossil fuel-centric to dominated by renewables. In particular, solar and wind supply the bulk
of electricity across the Asia Pacific. For a net zero-aligned pathway, Asia Pacific must also see
the phase-out of unabated fossil fuel use. This is a significant challenge given the dominance of
coal and gas in the power sector today.

Figure 16: Electricity generation by technology/fuel in Asia Pacific, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Terawatt-hours Terawatt-hours
50,000 2023 50,000 2023

45,000 45,000

40,000 40,000

35,000 35,000

30,000 30,000

25,000 25,000

20,000 20,000

15,000 15,000

10,000 10,000

5,000 5,000

0 0
2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050
Coal Coal with CCS CCGT CCGT with CCS Gas peaker
Gas peaker with CCS Oil Hydrogen Nuclear Small modular nuclear
Bioenergy Hydro Geothermal Utility-scale PV Small-scale PV
Onshore wind Offshore wind Other

Source: BloombergNEF. Note: Refer to Appendix A for the full list of geographies included in the chart. CCS is carbon capture and
storage. CCGT is combined-cycle gas turbine. PV is solar photovoltaic.

Today, fossil fuels collectively supply two-thirds of the region’s power demand, of which unabated
coal dominates with 54% of total generation. By 2050, under the ETS, coal’s share of the region’s
generation mix falls to 14%. However, in some markets with relatively young coal fleets, such as
Indonesia, its share remains as high as 32% by mid-century. Under the NZS, unabated coal’s
share of generation in the region falls precipitously to 12% by 2030 before being largely phased

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 Asia Pacific’s Energy Transition Outlook
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out by 2040 in all Asia Pacific markets. In both scenarios, the region’s unabated coal fleet will
struggle to compete economically against new solar and wind generators but needs to see a
faster phase-out in the NZS than in the ETS to stay on track for net zero.

Gas will progressively play a larger role, supplying high value, low volume electricity to the
region’s power systems in times of need. By 2050, unabated gas accounts for just 5% of
generation in Asia Pacific under the ETS, and is completely phased out under the NZS, from 12%
in 2023.

CCS allows coal and gas to retain a role, albeit a small one, in the region’s power system. Under
the NZS, coal and gas paired with CCS account for 5% and 3% of the region’s generation in
2050, respectively.

Unabated coal phase-out can be costly for many Asia Pacific markets
Phasing down and eliminating the use of coal can be a financially costly and politically sensitive
task for many of the Asia Pacific countries with deeply entrenched coal industries beyond the
power sector. Many countries in the region have acknowledged the need to and expressed their
commitment to transition away from unbated coal. Bringing these plans into action and
accelerating the momentum to be in line with a net-zero pathway will require increased
government will and potentially international financial support.

Many Asia Pacific markets such as India and Vietnam face the uphill task of ensuring a secure,
affordable, and stable power supply to drive economic growth and industrialization while
balancing long-term climate targets. Historically, coal has been the technology of choice for
expanding power market across the region thanks to the abundance of coal resources in China,
India, Indonesia, and Australia. In response, power grids were built around large, centralized
generators. A power grid dominated by decentralized intermittent generators, such as solar and
wind, needs to be operated very differently, prompting hesitancy and reliability concerns from
power system operators and regulators who are less experienced with it.

Figure 17: Coal generation capacity addition in Asia Pacific by market and time period

Terawatts
15
1.3TW per year Vietnam
Other Southeast Asia
10 Indonesia
Australia
0.6TW per year 1.6TW per year
South Korea
5 Japan
Other Asia Pacific
India
0
China
2000-09 2010-19 2020-23

Source: BloombergNEF. Note: Time period lengths differ. Refer to Appendix A for the full list of
geographies included in the chart. Figures above bars are annual average coal-fired capacity
additions.

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The region is also host to a relatively young coal fleet, which will be costly to retire early. Rapid
economic growth over the last two decades drove a significant increase in Asia Pacific’s coal
capacity. Half of the region’s coal generation assets that were added from 2000 to 2023 occurred
in the 2010s alone. Between 2020 and 2023, the region added an average of 1.6TW of coal
generation capacity per year, compared to the average of 0.6TW per year in the 2000s and
1.3TW per year in the 2010s (Figure 17).

Countries have taken steps toward phasing out coal, but progress is slow
Governments and coal asset owners in a few Asia Pacific markets – Indonesia, Vietnam and the
Philippines – have initiated discussions with both private financial institutions and multilaterals like
the Asian Development Bank, and initiatives such as the Just Energy Transition Partnership
(JETP) to potentially accelerate the phase-out of coal power plants. However, apart from a
successful case by ACEN in the Philippines, little progress has been made. Governments have
run up against the harsh realities of JETP negotiations and challenges in reaching agreement on
terms that all parties would find palatable No funding has been released so far under the JETP
deals secured in 2022 by both Indonesia and Vietnam.

What about ammonia co-firing in coal plants or blending of hydrogen with natural gas?
Many Asian markets are eyeing ammonia co-firing and blending of green hydrogen with natural
gas to abate coal- and gas-fired power plant emissions, respectively. Fuels like hydrogen and
ammonia do not release carbon dioxide during combustion given the absence of carbon in
their molecular chemistry. These markets also hope to prevent existing assets from becoming
stranded. Governments in Japan and South Korea, along with companies in each country, are
rushing to scale the technology on a commercial basis across the region, leading to a frenzy of
announcements and activity around these fuels.
BloombergNEF analysis finds that coal ammonia co-firing and blending of green hydrogen with
natural gas are not cost-effective emission reduction approaches as they entail higher safety
and financial risks. Co-firing of ammonia and blending of green hydrogen with natural gas have
limited emissions reduction benefits at low ratios.
To achieve tangible emission reduction, an existing coal power plant would have to be
retrofitted to be capable of co-firing ammonia with coal at energy ratios above 50%. Currently,
only co-firing 20% ammonia with coal (on an energy content basis) has been tested in pilot
projects. Higher co-firing ratios require significantly more investment in retrofitting the thermal
power plant. They also raise fuel procurement costs for countries dependent on hydrogen and
ammonia imports and may jeopardize a country’s energy security.
Seaborne transportation and onsite storage of ammonia is also more costly and entail higher
safety risks than coal and LNG. Combustion of ammonia creates nitrogen oxides (NOx) – a
major pollutant – as well as nitrous oxide (N2O) emissions – a greenhouse gas more powerful
than CO2.
BNEF’s Net Zero Scenario sees a role for 100% ammonia or hydrogen compatible peaker gas
turbines as critical back-up in fully decarbonized power systems. However, the annual
utilization rate of such peaker plants is still relatively low in this scenario due to their higher fuel
costs.

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3.2. Variable renewables

Solar and wind are the main drivers of decarbonization in Asia Pacific and are set for a massive
Figure 18: Asia Pacific scale-up across the region under both the ETS and NZS, driven by declining costs, generous
installed solar capacity in incentive schemes, and improving routes-to-markets for projects (through programs like auctions).
BNEF’s scenario modeling
Together, wind and solar accounted for 75% of Asia Pacific’s generation capacity additions in
Terawatts
2023. However, the level of development varies significantly across the region. China is a global
14
Thousands

12
leader in solar and wind deployment driven by government ambition, incentive support, and
10 economies of scale from its the large domestic clean energy manufacturing sector. Today, China
8 accounts for 69% of installed solar capacity and 85% of installed wind capacity in Asia Pacific.
6 Some 87% of solar and wind capacity additions in 2023 took place in China. On the other end of
4 the scale, Indonesia only has 0.7GW of combined solar and wind capacity, which represents a
2 mere 0.05% of the country’s coal-dominated power system as of 2023.
0
2020 2030 2040 2050 Regardless of each country’s starting point, solar and wind installations see a large jump under
both of BNEF’s modeled scenarios. In the ETS, wind and solar combined make up 41% of power
generation in the region by 2030 and 64% by 2050. Under the NZS, the two renewable energy
Source: BloombergNEF. sources collectively contribute 46% of the power mix by 2030 and 73% by 2050. The NZS sees
Note: Includes small- and accelerated deployment of solar and wind compared to the ETS to lower power sector emissions
utility-scale solar photovoltaic. for a much larger electricity system in line with the carbon budget compliant with the goals of the
Paris Agreement.

Table 6: Installed solar and wind capacity in Asia Pacific by market and scenario – 2023 versus 2050

Economic Transition Scenario Net Zero Scenario

Gigawatts 2023 2050 Multiplier versus 2050 Multiplier versus
2023 2023
Australia 45 166 x3.7 290 x6.5
China 1,137 5,925 x5.2 8,408 x7.4
India 139 1,616 x11.6 4,328 x31.1
Indonesia 1 346 x495.5 891 x1,275.1
Japan 96 275 x2.9 580 x6
South Korea 29 94 x3.2 304 x10.4
Vietnam 26 331 x12.8 682 x26.4
Other Asia Pacific 39 612 x15.9 1,146 x29.7
Other Southeast 12 385 x32.8 895 x76.3
Asia
Asia Pacific 1,523 9,751 x6.4 17,523 x11.5
Source: BloombergNEF. Note: ‘Other Southeast Asia’ includes Malaysia, Thailand and the Philippines. Refer to Appendix A for the
full list of geographies included under ‘Other Asia Pacific’.

Solar
Solar, utility- and small-scale collectively, sees massive expansion in Asia Pacific under both the
ETS and NZS to become the second-largest source of power supply by mid-century. Increasing to
31% and 33% of generation, respectively, up from a mere 6% in 2023. Solar already leads
installations in Asia Pacific, accounting for 60% of capacity additions in 2023.

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Figure 19: Annual average solar capacity addition in Asia Pacific by time period, Economic Transition Scenario and Net
Zero Scenario

Economic Transition Scenario Net Zero Scenario

Gigawatts per year Small-scale PV Gigawatts per year Small-scale PV
600 Utility-scale PV 600 Utility-scale PV
510
500 500
412
400 342 400 334
278 278
300 300
223
200 151 200

100 100

0 0
2023 2024-2030 2031-2040 2041-2050 2023 2024-2030 2031-2040 2041-2050
Source: BloombergNEF. Note: PV is solar photovoltaic.

Solar technology and supply chains are mature and well established, allowing for the rapid scaling
up. To stay on track for net zero, the region needs to ramp up deployment immediately, with
efforts concentrated in this decade. Between 2024 and 2030, Asia Pacific needs to add an annual
average of 342GW of solar capacity under the ETS and 510GW per year under the NZS. This
translates to a 23% increase under the ETS and 84% jump under the NZS against actual solar
capacity installed in 2023.

Figure 20: Installed solar capacity in selected Asia Pacific markets, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Terawatts Terawatts
12 12

10 10

8 8

6 6

4 4

2 2

0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
2,500
2…
2…
2…
2…
2…
2…
2…

China India Japan South

-2,500Korea Indonesia Vietnam

Source: BloombergNEF

• China’s uptake of solar grows rapidly until the mid-2030s in both scenarios, before tailing off.
Installed capacity increases from 680GW in 2023 to just under 4TW by 2050 in our base-case
ETS. To reach net zero, China’s uptake of solar grows a further 29% over the ETS by 2050 to
an astonishing 5.1TW. Small-scale solar systems make up 60% of the solar capacity installed

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 Asia Pacific’s Energy Transition Outlook
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in the ETS. In the NZS, utility-scale projects make up the majority, with just over half of the
total installed capacity by 2050. Solar constitutes around 30% of China’s generation in both
the ETS and NZS, up from less than 6% in 2023.
• India’s uptake of solar accelerates over every decade in both scenarios, increasing from a
base of 94GW in 2023 to 1.1TW in 2050 under the ETS. The NZS sees a near-tripling of the
installed capacity under the ETS, rising to nearly 3.2TW by mid-century. Utility-scale
installations dominate solar build in both scenarios by 2050, making up 66% of capacity in the
ETS and 88% in the NZS. Solar accounts for 33% of supply in the ETS and 46% in the NZS
by 2050, up from 8% in 2023.
• Indonesia’s installed solar capacity grows from a low base of just 0.5GW in 2023 to 333GW
by 2050 in the ETS. To reach net zero, uptake must more than double the level in our base
case to 758GW by 2050. Like India, the rate of uptake accelerates every decade and utility-
scale installations make up most of the capacity in both scenarios, with 78% in the ETS and
91% in the NZS by 2050. Solar is responsible for 38% of Indonesia’s supply in the ETS mid-
century. In the NZS, it accounts for nearly half of the country’s generation.
• Solar capacity in Vietnam accelerates during the 2030s and 2040s, growing from 21GW in
2023 to 274GW by 2050 in the ETS, and 512GW in the NZS. The country already has a
larger base of solar capacity than many of its peers in Southeast Asia due to a generous
feed-in tariff program it ran a few years ago to encourage uptake. Utility-scale projects make
up 66% of installed solar capacity in the ETS and 82% in the NZS, by 2050. Solar accounts
for around 40% of Vietnam’s total output by 2050 in both scenarios, up from 8% in 2023.
• Japan’s installed solar capacity growth accelerates during the 2030s but slows down
significantly after 2040. Uptake rises from 90GW in 2023 to 194GW by 2050 in the ETS and
366GW in the NZS. In the ETS, small-scale systems account for 60% of the buildout, as land
constraints and technology costs hinder the implementation of utility-scale solar photovoltaic
(PV). In the NZS, these large-scale projects make up 68% of total solar capacity by 2050.
Solar is responsible for 21% of Japan’s electricity generation by 2050 in the ETS and 24% in
the NZS, up from 9% in 2023.
• South Korea sees its installed solar capacity grow from 27GW in 2023 to 77GW by mid-
century in the base case. Uptake in the NZS more than doubles that in the ETS to 194GW by
2050. Utility-scale solar projects make up most of the capacity in both scenarios to 2050 –
59% in the ETS and 84% in the NZS. Overall, solar accounts for 15% of South Korea’s
generation in the ETS by 2050. This rises to 26% under the NZS – up from 5% in 2023.

Wind
Wind development in most Asia Pacific markets, except for China and India, pales in comparison
to solar due to relatively poorer wind resources, especially for onshore projects. Developing a
wind project is also more complex than solar and requires a longer development time frame, and
therefore needs more time to build up domestic capabilities.

However, wind generation is helped by the technology’s higher capacity factors and more stable
generation profile compared to solar. Although solar capacity additions between 2024 and 2050
outstrip wind, the latter grows to become Asia Pacific’s single-largest source of power. By 2050,
wind supplies 34% (9,126TWh) of the region’s electricity demand under the ETS and 40%
(18,329TWh) under the NZS, from 7% (1,018TWh) in 2023.

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Figure 21: Annual average wind capacity addition in Asia Pacific by time period, Economic Transition Scenario and Net
Zero Scenario

Economic Transition Scenario Net Zero Scenario

Gigawatts per year Offshore wind Gigawatts per year Offshore wind
Onshore wind 350 Onshore wind
350

300 287
300

250 250
208
200 200

130 150 139

150
104 101
100 71 100 71

50 50

0 0
2023 2024-2030 2031-2040 2041-2050 2023 2024-2030 2031-2040 2041-2050

Source: BloombergNEF

While solar additions take center stage between 2024 and 2030, the momentum for wind
development in Asia Pacific also needs to pick up over the remainder of this decade and peak in
the 2030s. Under the ETS, the region sees an average of 104GW of wind capacity added each
year to the end of the decade, an almost 50% increase against the 71GW installed in 2023. Under
the NZS, almost twice as much wind capacity needs to be added every year over 2024 to 2030
compared to 2023 levels, and annual new build doubles again in the 2030s to 139GW.

Figure 22: Wind capacity installed in selected Asia Pacific markets, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Terawatts Terawatts
6 6

5 5

4 4

3 3

2 2

1 1

0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
2,500
2…
2…
2…
2…
2…
2…
2…

China India Japan South

-2,500Korea Indonesia Vietnam

Source: BloombergNEF

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• China’s installed wind capacity increases from 457GW in 2023 to 1.9TW by 2050 in our ETS
and 3.3TW in the NZS. In both scenarios, build accelerates in the 2030s, but slows down in
the 2040s, particularly in the ETS. Onshore wind accounts for around 89% of installed
capacity by 2050 in both scenarios, with offshore wind accounting for the rest. Wind makes
up 40% and 47% of China’s generation in the ETS and NZS by 2050, respectively, up from
9% in 2023.
• India’s cumulative wind capacity grows 45GW in 2023 to 515GW by 2050 in the ETS, and
double that in the NZS with nearly 1.2TW. Offshore wind only begins to be built in 2030 in
both scenarios and it is a small fraction of additions. By 2050, onshore wind represents 97%
of total installed capacity in the ETS and 96% in the NZS. Wind makes up over 30% of India’s
generation in both scenarios by 2050, up from 4% in 2023.
• Japan’s installed wind capacity grows from a relatively small base of 6GW in 2023 to 81GW
in the ETS by 2050. NZS uptake is almost triple that in the ETS, with 215GW by 2050. Japan
sees a much more even split between onshore and offshore wind capacity than other markets
in both scenarios. Land constraints, existing policies, and relative costs give offshore wind the
edge in the ETS as it accounts for 54% of wind build by 2050. In the NZS, onshore wind
accounts for 54% of total wind capacity deployed by mid-century. Wind makes up 29% of
Japan’s generation in the ETS, rising to almost half in the NZS by 2050 – up from less than
2% in 2023.
• Vietnam’s uptake of wind jumps from 5GW in 2023 to 56GW by 2050 in the base case by
2050. In the NZS, uptake is triple that in the ETS, reaching 171GW by mid-century. Onshore
wind makes up 79% of wind installations in Vietnam by 2050 in both scenarios. Wind
accounts for 19% of Vietnam’s generation in the ETS by 2050 and 30% in the NZS, up from
just 2% in 2023.
• Indonesia’s wind power capacity grows from a low base of less than 0.2GW in 2023 to
13GW by 2050 in the ETS. Uptake is limited by challenging economics and low wind speeds.
However, the NZS calls for a 10-fold increase over the ETS, reaching 133GW by mid-century.
Onshore wind makes up about 80% of wind installations in both scenarios. Wind constitutes
just 4% of Indonesia’s generation in the ETS by 2050. In the NZS, it makes up a larger share
of the power mix with 14%.
• Like Indonesia, Vietnam, and Japan, South Korea also experiences a significant divergence
in installed wind capacity between the two scenarios. Cumulative build increases from 2.1GW
in 2023 to 110GW in the NZS – more than six times the 17GW in the ETS. Like Japan, a
combination of relatively lower costs, government policy and land constraints drive offshore
build to make up the majority of wind installations by 2050 in South Korea with 65%. In the
NZS, onshore wind deployment accelerates to comply with the carbon budget, accounting for
67% of wind capacity by 2050. Wind is responsible for just 8% of total output in South Korea
under the ETS by 2050. In the NZS, its share of supply rises to 35% by mid-century.

Technology improvements and cost declines drive the economic transition

Technological improvements, economies of scale in manufacturing capacity, and increased
financing and development capabilities have substantially lowered solar and wind costs over the
last two decades.

Solar is the poster child for the power of the experience curve in energy: the price of modules has
fallen from $30 per watt in 1976 – which, adjusted for inflation, is $129 in today’s money – to
$0.125 at the end of 2023 and $0.113 per watt as of April 2024 (Figure 23). Wind turbine price

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developments have been less dramatic, but per-megawatt prices for turbines in 2023 were
typically half those in 2014.

Figure 23: Price of solar modules and cumulative Figure 24: Average efficiency of commercial solar modules
deployment, 1976-2023

$/watt (2023) 23% 22.3%

1,000 22% 21.6%
21% 21.3%
20%
1976 19%
100
18% 17.6%
1985 17%
15.8%
10 2003 16%
2008 15% 15.4%
14%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023e
1 2015

2022
2023 Mono module Mono TOPCon
0 Mono PERC Multi module
1 100 10,000 1,000,000
Cumulative capacity (megawatts)
Source: BloombergNEF Note: TOPCon is tunnel oxide passivated contact. PERC is passive emitter rear contact.

Figure 25: Price of wind turbines worldwide, and key drivers

$ million per megawatt (2023 real)

3.0 Global onshore turbine prices
Subsidies drive up demand Auctions ignite price
and prices; global competition; large
2.5 commodity prices surge as platforms drive down per-
prices in China grow megawatt price

2.0
Turbine maker filings
1.5
Technology advancement, maturing
supply chain, and economies of Excluding China
1.0 scale drive down prices

0.5 Disclosed onshore contracts Material cost inflation and supply chain
disruption are headwinds; subsidy
phase-out and competition drive prices in
0.0 China to a record low
1985 1990 1995 2000 2005 2010 2015 2020

Source: BloombergNEF, Lawrence Berkeley Laboratory (LBL), ExTool (Germany and Denmark), turbine maker company filings.
Note: Pre-2008 global onshore wind prices are based on data from ExTool, LBL and contracts compiled by BNEF. Turbine
manufacturer data points calculated from company filings, typically ‘order intake value per order intake megawatt’. Prices converted
to US dollars using exchange rate on day, or year, of order, then values were converted to real 2023 dollar terms. Prices grouped
by contract signing date and company filings’ publication date.

Today, a new wind or solar plant is the cheapest source of bulk power generation in markets,
accounting for 59% of global electricity generation. New wind and solar projects are also

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 Asia Pacific’s Energy Transition Outlook
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outcompeting existing fossil fuel power plants in markets that account for more than half of total
electricity generation and global GDP.

Figure 26: Global levelized cost of electricity benchmarks

$ per megawatt-hour (real 2022)

450
414
400
397
350

300

250 Hydrogen 248

Nuclear 231
200
218 Battery storage 135
150
Gas + CCS 118
105
Coal + CCS 120
100 127 Gas 83
Offshore wind 81
85 Coal 72
50 Tracking PV 48
Fixed-axis PV 41
Onshore wind 40
0
2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H
09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Source: BloombergNEF. Note: Levelized cost of electricity figures are as of 2H 2023. The global benchmarks are capacity-weighted
averages using the latest country estimates – apart from nuclear, hydrogen and carbon capture and storage (CCS), which are
simple averages. Offshore wind includes offshore transmission costs. Coal- and gas-fired power include carbon pricing where
policies are already active. PV is solar photovoltaic. Dotted line for battery storage reflects LCOE values implied by historical battery
pack prices and solid line reflects values from project data.

The total levelized cost of electricity has risen over the last three years due to upticks in
commodity prices stemming from inflation, supply chain disruptions, and interest rate increases.
However, generally clean technologies are still far cheaper than they were a decade ago, and
costs are once again falling (Figure 26).

The cost-competitiveness of renewables against fossil fuel generators varies around Asia Pacific.
Mainland China and India deliver renewables at some of the lowest costs worldwide. China is
home to the cheapest onshore wind ($33 per megawatt-hour) and offshore wind ($63/MWh), due
to its manufacturing capabilities. The $39/MWh cost of fixed-axis PV in China is only second to
those in India, at $34/MWh. In contrast, a new coal plant is still the most cost-competitive in some
markets such as Indonesia and Japan, but variable renewables are on track to becoming the
cheapest source of bulk electricity generation.

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Figure 27: Levelized cost of electricity for new-build power Figure 28: Levelized cost of electricity for new-build power
plants in India plants in Indonesia

$ per megawatt-hour (real 2022) $ per megawatt-hour (real 2022)

350 350
CCGT CCGT
300 Coal 300 Coal
Solar Solar
250 Onshore wind 250 Onshore wind
200 200
150 150
100 100
50 50
0 0
2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050
Source: BloombergNEF. Note: CCGT is combined-cycle gas Source: BloombergNEF. Note: CCGT is combined-cycle gas
turbine. turbine.

This transforms the optimal least-cost portfolio of generation technologies for many Asia Pacific
markets, from one where fossil-fuel based plants provide the majority of baseload requirement to
one where renewables dominate. The greater proportion of variable renewables in the dispatch
mix will require power systems to operate very differently.

Figure 29: Indonesia’s hourly generation in a week in July Figure 30: Indonesia’s hourly generation in a week in July
2024, Economic Transition Scenario 2050, Economic Transition Scenario

Gigaw atts Gigaw atts

50 350
Demand
300
40
250
Demand
30 200

150
20
100
10
50

0 0

Thu Fri Sat Sun Mon Tues Wed Thu Fri Sat Sun Mon Tues Wed
Batteries Solar Wind Biomass Coal Gas
Other renewables Oil Gas Other renewables Wind Solar
Coal Biomass Pumped hydro Batteries Curtailment
Source: BloombergNEF. Note: ‘Other renewables’ include hydro and geothermal.

The economic limits of additional renewables deployment

In both the ETS and NZS, renewable energy penetration tends to grow more slowly or level off
after a certain point. While solar and wind are edging out other generation technologies on a cost

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basis, further build of these technologies is constrained by their basic properties and the limited
flexibility of the power system.

New wind and solar plants generate energy at the same time of day as existing plants, often
exceeding power demand even with many loads shifted to provide system flexibility. This means
that new renewable energy plants have high curtailment and therefore low useful capacity factors,
pushing up their per-megawatt-hour cost until they are no longer worth building.

Markets reach a saturation point when adding more variable renewables does not lower overall
system cost further, though this point is dynamic and these markets will build more renewables
again when overall power demand increases, flexibility rises, or existing power plants
decommission.

Figure 31: Solar electricity penetration, selected Asia Pacific Figure 32: Wind electricity penetration, selected Asia Pacific
markets markets

Share of total power generation Share of total power generation

60% 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0%
2023 2030 2035 2040 2045 2050 2023 2030 2035 2040 2045 2050
China India Indonesia China India Indonesia
Japan South Korea Vietnam Japan South Korea Vietnam
Source: BloombergNEF. Note: Dashed lines indicate Net Zero Scenario, solid lines indicate Economic Transition Scenario.
Generation figures are modeled results.

3.3. Dispatchable renewables

To achieve net zero, countries need to leverage all available low-carbon energy resources. While
solar and wind dominate renewable capacity expansion in the region, hydro, geothermal, and
nuclear also play crucial roles in markets where they are available. All three technologies can help
boost clean power penetration that is required under the various net-zero pathways.

However, the technologies are also complex and expensive to develop with costs varying widely
between sites. Nuclear often also faces safety concerns from local communities. Projects often
experience delays due to developmental challenges such as land acquisition and permitting
issues. This underscores the importance of policy support from the government for the success of
these technologies.

Hydro
Hydro already plays a prominent role in the power systems across Asia Pacific with total installed
hydro capacity in the region reaching 554GW in 2023. The region’s hydro capacity is highly

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 Asia Pacific’s Energy Transition Outlook
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concentrated in just a few markets. China leads with a wide margin at 377GW of hydro capacity
as of 2023, or 68% of the region’s capacity, followed by India (47GW) and Vietnam (23GW).
However, hydro generation globally is facing growing volatility due to extreme weather events that
frequently coincides with the summer months and higher power demand.

Hydro power costs are highly site specific and are often not cost competitive against solar and
wind. Under the ETS, hydro capacity in the region grows just 20% from 2023 levels to reach
666GW in 2050, mostly driven by existing pipeline projects in each respective countries and
government ambitions. Three countries – China, India and Indonesia – account for 92% of all new
hydro capacity addition between now and 2050 under the economic-led pathways.

In China, hydro capacity grows 8% from 2023 levels to 405GW in 2050, driven by the country’s
current pipeline of under-construction projects. Over the next three decades, India’s hydro
capacity more than doubles from 47GW in 2023 to 96GW in 2050, the largest hydro capacity
addition in gigawatt terms among all Asia Pacific countries.

In Indonesia, hydro capacity grows more than 4.5 times from 2023 levels to 32GW in 2050 under
the ETS, driven by the state-owned utility’s ambition for the technology under the country’s
electricity supply plan (or locally known as the Rencana Usaha Penyediaan Tenaga Listrik or
RUPTL), which strongly governs the technology choice for power sector development in the
country. Indonesia has turned its attention to hydro to support growing industrial demand in the
country.

Hydro has been central to Vietnam’s power system, accounting for 27% of installed capacity and
36% of electricity generation in 2023. Under the ETS, the country adds just 6.5GW of additional
hydro capacity between now and 2050 as growing demand is met through lower-cost solar and
wind generation.

Figure 33: Annual hydro capacity addition in selected Asia Pacific markets, Economic Transition Scenario and Net Zero
Scenario
Economic Transition Scenario Net Zero Scenario
Gigawatts Gigawatts
18 18
16 16
14 14
12 12
10 10
8 8
6 6
4 4
2 2
0 0
2024 2030 2035 2040 2045 2050 2024 2030 2035 2040 2045 2050
2,500
2…
2…
2…
2…
2…
2…
2…

China India Japan South

-2,500Korea Indonesia Vietnam

Source: BloombergNEF

Greater electrification under the NZS sees power demand in Asia Pacific reach 45,619TWh in
2050, a tripling from 2023 levels, and 1.6 times higher than under the ETS. This increases the
challenge of reducing power sector emissions in the region and requires countries to tap on more
available hydro resources than under the ETS. The lower land-use intensity for hydro power

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 Asia Pacific’s Energy Transition Outlook
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generation can also help countries such as South Korea, Japan, and Indonesia circumvent land
constraint challenges associated with solar and wind projects and increase their share of
renewable energy in their respective power mix.

Figure 34: Land-use intensity of electricity production

Square kilometers per terawatt-hour per year
Biomass 590
Onshore wind 120
Utility-scale PV 20
Natural gas 19
Solar CSP 13
Coal 10
Hydro dam 6.5
Geothermal 0.45
Nuclear 0.07

Source: Lovering J et al (2022), BloombergNEF. Note: Includes total of generation and extraction
site areas. PV is solar photovoltaic. CSP refers to concentrated solar power.

Under the NZS, Asia Pacific sees 249GW of additional hydro capacity from 2024 to 2050, more
Figure 35: Vietnam’s than double the new build under the ETS. Under the net-zero pathway, China sees its hydro
planned hydro capacity capacity growing 19% (71GW) to reach 448GW in 2050 with new capacity added annually. This
addition between 2023 and contrasts with the economics-led pathway where no new hydro capacity is expected post-2034 as
2030 by region the technology is edged out by more cost-competitive renewables. India sees 55GW of hydro
capacity addition over the next three decades under the NTS, just 11% (or 5.6GW) higher than
under the base case.

Indonesia adds 30GW of hydro capacity between 2024 and 2050 under the NZS, 20% more than
the 25GW in the ETS. Under the NZS, Vietnam adds 24GW of hydro capacity between 2024 and
2050, more than 3.5 times the 6.5GW in the ETS. Hydro plays an important role in balancing
regional power supply and demand in Vietnam’s northern region, which has abundant hydro
resources and is where power demand growth is expected to be the strongest. The north has also
relatively weaker solar and wind resources compared to other regions, affecting the cost-
competitiveness of projects there.

Under the NZS, hydro plays a much larger role even in countries that see little to no hydro
additions under the ETS. Notably, Japan adds 11GW of hydro capacity over 2024 and 2050
under the net zero pathway compared to just 0.1GW under the ETS. Similarly, Malaysia,
Thailand, and the Philippines (grouped under ‘Other Southeast Asia’ in this report) adds
21.4GW of hydro capacity under the NZS compared to just 1.9GW under the economics-led
Source: Implementation Plan pathways. However, South Korea bucks the trend and sees hydro playing a negligible role under
for Power Development Plan both scenarios. Under the NZS, only just 1.5GW of hydro capacity is added in South Korea
VIII, Power Development Plan between 2024 and 2050.
VIII, BloombergNEF.
Geothermal
Geothermal is a highly country-specific solution, limited by geological characteristics. In Asia
Pacific, most of the geothermal potential and hence capacity addition under both the ETS and
NZS is limited to Indonesia. Like hydro, geothermal development requires both ambition and
support from the government.

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Geothermal has been a focus of the Indonesian government as a non-intermittent generation

source that holds the potential to green the country’s power system without too much disruption to
grid operations. The country currently has 2.6GW of operational geothermal capacity as of 2023,
the second-largest in the world after the US at 4GW. Under the ETS, 15.6GW of geothermal
capacity is added in Indonesia between 2024 and 2050, rising to 19.5GW under the NZS.

Despite the country’s experience in the technology and the involvement of state-owned
enterprises in project development, geothermal projects in Indonesia often experience delays and
fall behind the government’s target. Geothermal projects bear high early-stage development and
exploration risks. which can deter private investors.

Indonesia also regulates the power purchase agreement tariffs that project developers could
potentially negotiate. Frequent changes to this regulation in the past damped investor confidence
for these long-term projects. The tariff levels have also been deemed too low for projects to be
economically feasible. Risk-sharing facilities such as that being explored by the Philippines with
the Asian Development Bank could help to de-risk resource exploration and encourage
investments in the sector.

Figure 36: Annual geothermal capacity addition in selected Asia Pacific markets, Economic Transition Scenario and Net
Zero Scenario
Economic Transition Scenario Net Zero Scenario
Gigawatts Gigawatts
1.4 1.4

1.2 1.2

1.0 1.0

0.8 0.8

0.6 0.6

0.4 0.4
0.2 0.2
0.0 0.0
2024 2030 2035 2040 2045 2050 2024 2030 2035 2040 2045 2050
2,500
2…
2…
2…
2…
2…
2…
2…

China India Japan South

-2,500Korea Indonesia Vietnam

Source: BloombergNEF

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Next-generation geothermal technologies

Geothermal power is a firm, clean energy source that has played a marginal role in global
power systems to date. Traditionally, geothermal developments are largely confined to
hydrothermal sites – shallower resources with high temperatures, naturally occurring water,
and sufficient rock permeability. In these systems, a fluid absorbs energy as it flows through
hot rocks. However, these easily accessible resources are highly constrained, with most
located near volcanoes.
Next-generation geothermal technologies such as enhanced geothermal systems (EGS) and
advanced geothermal systems (AGS) are gaining traction, led by developments in the US.
These technologies aim to unlock sites where there is a lack of water and permeability for
nature exploitation.

• EGS relies on artificial permeability by fracturing rocks to create a man-made

reservoir. This unlocks sites with hot rocks but lack natural permeability.

• In AGS, a closed-loop system consisting of long section of sealed pipes is drilled into
the rock, through which a fluid circulates and is heated.
Geothermal technology illustration

Source: BloombergNEF, ClearPath. Note: EGS is enhanced geothermal system. AGS is

advanced geothermal system.
While interest in geothermal is seeing a resurgence globally, the new-generation technologies
are still in early-stage development and face affordability, financing, and technical scalability
challenges. The potential role of these emerging geothermal technologies in Asia Pacific is
dependent on global technological advancements.

Nuclear
As net-zero ambitions increase, the idea that nuclear energy can contribute to decarbonization is
becoming more widely accepted. Some 25 nations pledged to triple nuclear capacity by 2050 at
the COP28 summit in Dubai last year. Indeed, expansion is the trend: several countries are either
building reactors for the first time or are planning to do so.

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Nuclear power capacity expansion is concentrated in Asia Pacific

Today, the nuclear fleet is more or less evenly distributed across Asia Pacific; the Americas; and
Europe, the Middle East and North Africa. Each of the three regions is home to 107-116GW of
capacity in 2023, with another 45GW in the rest of the world. However, electricity demand growth
and full-power sector decarbonization means that nuclear capacity expands most in the region in
the NZS. Some 559GW, or 65%, of the 856GW nuclear capacity added between 2024 and 2050
are concentrated in Asia Pacific.

Figure 37: Cumulative nuclear power capacity additions by region, Net Zero Scenario

Gigawatts
900
800
700
600
500 ROW

400 AMER

300 EMEA

200 APAC

100
0
2024 2030 2035 2040 2045 2050

Source: BloombergNEF. Note: ROW is rest of the world. AMER is the Americas. EMEA is
Europe, the Middle East and Africa. APAC is Asia Pacific. Includes conventional nuclear and
small modular reactor capacity.

Figure 38: Installed nuclear capacity in selected Asia Pacific markets, Economic Transition Scenario and Net Zero
Scenario
Economic Transition Scenario Net Zero Scenario
Gigawatts Gigawatts
600 600

500 500

400 400

300 300

200 200

100 100

0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
China India Japan 2,500
South
-2,500Korea Indonesia Vietnam
2…
2…
2…
2…
2…
2…
2…

Source: BloombergNEF

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• The momentum behind China’s current nuclear capacity expansion continues in both
scenarios. China overtakes the US as the largest market for nuclear, with the size of the fleet
growing from 57GW in 2023 to 173GW in the ETS and 324GW in the NZS by 2050. Only 5%
of the installed nuclear capacity in China by mid-century is made up by small modular
reactors (SMRs), due primarily to higher costs. Nuclear makes up 9% of China’s generation
in the ETS and 11% in the NZS in 2050, up from 5% in 2023.
• India’s more than fivefold increase in electricity demand under a net-zero pathway would
require 122GW of nuclear capacity by 2050 compared with the 7GW fleet operating today, or
35GW in the ETS. Only 2% of the fleet is made up of SMRs in 2050 in the NZS. The
technology’s share of India’s generation mix increases from 5% in the ETS to 9% in the NZS
by 2050, compared to just 3% in 2023.
• Japan’s installed nuclear capacity falls from 12GW in 2023 to 9GW in the ETS as nuclear
transitions to assume more of a backup role for cheaper renewables. In the NZS, nuclear
capacity increases to 22GW by mid-century. SMRs only provide 0.6GW of the 22GW of
nuclear capacity in the NZS by 2050. Nuclear makes up around 7% and 9% of Japan’s
generation mix in the ETS and NZS by 2050, respectively, compared to 8% in 2023.
• Like in Japan, South Korea’s nuclear fleet declines from 25GW in 2023 to 15GW in the ETS
and 18GW in the NZS in favor of cheaper renewables. SMRs make up just 0.8GW of total
capacity by mid-century in the NZS. Nuclear makes up around 15% of South Korea’s
generation in both scenarios by 2050, down from 29% in 2023.
• Southeast Asian countries (Indonesia, Malaysia, Thailand, and Vietnam), emerge as new
entrants in nuclear in the NZS, thanks to rapid growth in electricity demand. Collectively,
these countries install 87GW by 2050, from having none today.
• In the NZS, nuclear first enters the power system in Indonesia and Vietnam in 2034.
Installed capacity of nuclear in the NZS growth to 16GW and 17GW by 2050 in Indonesia and
Vietnam, respectively. In Indonesia, only 0.2GW of the total nuclear installed capacity by mid-
century is SMR technology. In Vietnam, all the nuclear build is made up of conventional
nuclear technology. Nuclear makes up around 7% of the generation mix in both Indonesia
and Vietnam by 2050 in the NZS.

Small modular reactors play a marginal role due to high costs

Small modular nuclear reactors, or SMRs, power plants made up of several sub-300MW reactor
units, are a promising technology due to their modularity and anticipated quicker construction time
relative to conventional nuclear plants. However, first-of-kind projects have struggled in North
America, and it is unclear whether these new reactor projects will experience delays and cost
overruns typical of conventional nuclear plant construction in Europe and the US.

For first-of-a-kind projects, capital expenditure on a per-MW basis can be a factor of 2 to 3.5 times
that of large-scale conventional nuclear plants (Figure 39). Future costs for SMR power plants are
therefore dependent on the ability to mass-produce small-reactor units in factories. Mass
production will require a large market to absorb these units. Given the high first-of-a-kind costs,
subsidy support is vital to kick-start the industry this decade and to deploy the tens of gigawatts in
the subsequent years, providing scale to the manufacturing base.

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Figure 39: Capital expenditure trajectory for small modular reactors

$ million/megawatt (real 2023)

35
Commercialization: Industrialization: Series production
More reactors per
30
plant

25

20

15

10 Conventional
nuclear cost range

0
2025 2030 2035 2040 2045 2050
Operation year
Source: BloombergNEF. Note: Early capex estimates are based on company estimates for
current first-of-a-kind demonstration projects. Estimates for nth-of-a-kind reactors are based on
company statements, plus BNEF’s interpretation of contingencies. In the absence of any
completed projects, all estimates are based on company targets and subject to uncertainty.

Nuclear fusion offers the potential of 24/7 clean electricity without radioactive waste

While fission – the process current nuclear power plants rely on – involves splitting atoms of
heavy elements to produce energy, fusion involves bringing together lighter elements such as
two different isotopes of hydrogen, typically deuterium and tritium to release energy in the same
manner as the sun. Deuterium is common and can be extracted from seawater. Tritium is rare
but can be created in fusion reactors. Fusing these together creates helium and in the process
releases a huge amount of energy.

The advantage of fusion over fission is the potential to generate significantly higher volumes of
clean energy without the challenges of radioactive waste. A fusion reactor would also need very
limited amount of deuterium and tritium.

However, fusion is incredibly difficult because the particles do not naturally want to fuse together
and capturing the energy is challenging because the energy, though vast, fades almost instantly.
Until recently, nuclear fusion research and development had been mainly the domain of national
labs, with the largest effort to-date being the International Thermonuclear Experimental Reactor
(ITER) in Southern France supported by 35 nations.

Over the last decade, private sector efforts in support of fusion have increased significantly.
BNEF tracks more than 45 private sector companies presently pursuing fusion. Private sector
investment in fusion jumped to more than $2.5 billion in 2021 up from approximately $300 million
in both 2019 and 2020. Some fusion startups have also signed power purchase agreements with
potential customers: in 2023, Helion signed an agreement with Microsoft for a 50MW fusion
power plant set to start generating electricity by 2028. General Fusion has an even more

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 Asia Pacific’s Energy Transition Outlook
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ambitious timeline, aiming for “scientific breakeven” by 2026. While other startups such as
Helical Fusion aims for “steady-state fusion reactor up and generating electricity within the next
10 years.” Fusion experiments thus far have succeeded in generating net positive energy for
relatively short bursts of time. If by the mid-2030s, current efforts succeed in developing a
reactor design capable of providing continuous net positive energy generation, then it is possible
for fusion technology to have an impact on emission reductions required by mid-century.

As fusion technology remains unproven, BNEF’s New Energy Outlook modeling does not
consider its utilization.

3.4. Energy storage

Power system flexibility rises in importance as renewable penetration grows. Short-term duration
energy storage such as batteries provide crucial supply-side flexibility that supports wind and
solar as the main drivers of power sector decarbonization in the ETS and NZS. Longer-duration
storage technologies, like pumped hydro, also play a crucial balancing role in some markets, but
are often more expensive to build and can be subject to significant cost overruns and delays.
Today, pumped hydro projects are driven largely by government ambitions and plans, such as in
South Korea, China, and Vietnam.

Batteries
Advances in battery technology and economies of scale from the rise in EV adoption is driving
down lithium-ion battery costs, making it increasingly economic to install for power applications.
Asia Pacific’s battery storage assets are concentrated in China, which accounts for 75% of the
region’s installed battery storage capacity. A growing number of provincial governments in China
are mandating the co-location of energy storage assets with renewable energy plants in response
to the central government’s 2025 installed battery storage capacity target of 40GW. Australia
(2.2GW), Japan (3.5GW), and South Korea (3.1GW) collectively account for 24% of the region’s
battery storage assets as of 2023.

In contrast, in several highly regulated power markets, such as in Indonesia and Vietnam, the lack
of a regulatory framework to allow for the participation of battery storage assets in the power
market has held back installations. As of 2023, both markets have a negligible amount of battery
storage capacity.

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Table 7: Installed battery storage capacity in selected Asia Pacific markets by scenario – 2023 versus 2050

Economic Transition Scenario Net Zero Scenario

Gigawatts 2023 2050 Multiplier versus 2050 Multiplier versus
2023 2023
China 27.1 905.2 x33.4 860.1 x31.8
India 0.2 375.5 x2,465.1 636.0 x4,175.5
Indonesia 0.0 109.9 x10,175.5 226.1 x20,932.2
Japan 3.5 31.6 x9 48.1 x13.7
South Korea 3.1 16.6 x5.4 21.7 x7.1
Vietnam 0.0 88.1 x5,762.6 124.4 x8,134.4
Asia Pacific 36.3 1,760.8 x48.5 2,226.8 x61.3
Source: BloombergNEF. Note: ‘Other Southeast Asia’ includes Malaysia, Thailand and the Philippines. Refer to Appendix A for the
full list of geographies included under ‘Other Asia Pacific.’ Utility-scale batteries are assumed to be four-hours in duration. Small-
scale batteries are assumed to be approximately 2.5 hours in duration.

Under both the ETS and NZS, all Asia Pacific markets see a large scale-up of battery storage
assets to provide the required power system flexibility as renewable penetration increases. In
countries with a wholesale power market such as Australia, growing price volatility stemming from
the higher volume of solar generation in the day is increasing arbitrage opportunities for battery
assets, improving their economics.
• China sees a dramatic increase in deployed battery storage capacity out to 2040 in both
scenarios. Between 2024 and 2040, installed capacity increases 34-fold under the ETS and
48-fold under the NZS to hit 923GW and 1,289GW, respectively. After 2040, China’s battery
capacity hovers between 900GW and 920GW under the ETS. In the NZS, installed battery
capacity declines slightly as renewables begin to get saturated and demand becomes more
flexible to land at 860GW in 2050. Under both scenarios, utility-scale batteries account for
about 82-83% of total battery capacity.
• India sees momentum for battery storage deployment pick up significantly in the 2030s to
reach 183GW in the ETS and 322GW in the NZS by 2040. By 2050, battery build grows to
375GW in the ETS and 636GW in the NZS. Utility-scale batteries make up 80% of the total
capacity by 2050 in the ETS and 88% in the NZS. Unlike China, India does not see installed
battery capacity peak before 2050.
• Indonesia sees a much slower uptake of battery storage compared to its peers in the region.
Installed battery capacity grows from a negligible level to 29GW by 2040 and 110GW by 2050
under the ETS. Under the NZS, buildout accelerates to provide backup support for
renewables, reaching 78GW by 2040, before almost tripling again to 226GW by mid-century.
Utility-scale systems dominate battery deployments in Indonesia under both scenarios,
making up 85% of total capacity by 2050 in the ETS and 93% in the NZS.

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Figure 40: Battery storage installed in key Asia Pacific markets, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Gigawatts Gigawatts
2,500 2,500

2,000 2,000

1,500 1,500

1,000 1,000

500 500

0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
China India Japan 2,500
South
-2,500Korea
2…
2…
2…
2…
2…
2…
2…

Indonesia Vietnam

Source: BloombergNEF. Note: Utility-scale batteries are assumed to be four-hours in duration. Small-scale batteries are assumed
to be approximately 2.5 hours in duration.

• Like Indonesia, Vietnam’s installed battery capacity today is negligible. However, deployment
occurs at a faster pace compared to Indonesia. By 2030, battery capacity hits 12GW in the
ETS and 17GW in the NZS. By 2040, installed capacity grows by more than 3.5-fold to 64GW
in the NZS – double the total in the ETS as supply-side flexibility requirement scales in line
with increasing renewable penetration. Between 2041 and 2050, installed battery capacity
again nearly doubles under the NZS to land at 124GW in 2050.
• Under the ETS, Japan’s deployment of batteries triples to 10GW by 2030 and 32GW by
2050 from its current installed base of 3.5GW. Under the NZS, battery deployment over the
next seven years increases ninefold to hit 31GW by 2030 – the total size of Japan’s 2050
battery storage portfolio under the ETS. Like China, Japan’s battery storage capacity peaks in
2040 at 57GW under the NZS before declining 15% to 48GW by 2050 driven by the
retirements of assets. Small-scale batteries dominate deployments across both scenarios in
Japan, making up 79% of the total capacity installed in the ETS by 2050 and 52% in the NZS,
due to the relatively higher penetration of small-scale PV in both scenarios compared to other
Asia Pacific markets due to land constraints.
• Battery uptake in South Korea under the ETS is slow before 2030, increasing by just 1GW
out to 2030 from the current base of 3GW in 2023. Post-2036, deployment accelerates to
reach 17GW by mid-century. The uptake trajectory is vastly different under the NZS. Between
now and 2030, the country’s battery storage capacity grows 3.5-fold to 10GW by 2030, then
more than doubles by 2050 to hit 22GW. Existing dispatchable capacity in the form of
nuclear, for example, reduces the need for batteries to support renewables growth in South
Korea under both scenarios, thus limiting uptake. The main driver of battery deployment
differs between the scenarios. In the ETS, small-scale batteries account for 58% of South
Korea’s battery build by 2050. In the NZS, utility-scale energy storage systems form a larger
share, making up 56% of total battery buildout by mid-century.

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Pumped hydro
Pumped hydro storage provides flexibility on longer timeframes than batteries, making them a key
enabler to net zero, but their deployment is limited compared to battery storage. This is because
of the technology’s high capital costs and long construction lead times, with projects often
suffering from cost blowouts and development delays. For example, in Australia, the federal
government’s flagship Snowy 2.0 pumped hydro project was initially mooted to cost A$2 billion
($1.33 billion) and come online in 2024. It is now estimated to cost in the region of A$12 billion
and expected to be commissioned in 2029. The suitability of pumped hydro can also vary greatly
based on location – limiting uptake to specific geographies in our modeling.

Total installed pumped hydro capacity is fairly consistent across both scenarios in Asia Pacific,
driven largely by each country’s current project pipelines and government targets. While some
countries have the resources to expand beyond the current pipelines, further expansion is often
constrained by economic competitiveness and ecological concerns.
• China’s pumped hydro capacity is identical in both scenarios, driven by the current project
pipeline established by the government. Capacity increases from 58GW in 2023 to 314GW by
2035 and then stabilizes at that level.
• In India, clean power project developers like Greenko and Adani have made big bets on
pumped hydro storage3 and the federal government has also identified storage potential of
176GW across the country. In the ETS, capacity increases to 59GW by 2040 from 5GW
today. It rises nearly 30-fold in the NZS, with over 135GW installed.
• In Indonesia, Vietnam, Japan, and South Korea, uptake of pumped hydro is relatively
limited and identical across both scenarios. In Indonesia and Vietnam, pumped hydro first
enters the power system in 2025 and 2029, respectively. By 2050, Indonesia installs 4.2GW
of pumped hydro, and Vietnam installs 3.6GW. In Japan, pumped hydro capacity increases
just 9% to 30GW over 2023-2050. Uptake is fairly limited in South Korea, increasing from
4.7GW in 2023 to 6.5GW by 2050.

Figure 41: Pumped hydro installed in key Asia Pacific markets, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Gigawatts Gigawatts
600 600

500 500

400 400

300 300

200 200

100 100

0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
2,500
2…
2…
2…
2…
2…
2…
2…

China India Japan South

-2,500Korea Indonesia Vietnam

Source: BloombergNEF. Note: Pumped hydro assets are assumed to be six-hours in duration.

3
For more, see Big Bets on Pumped Hydro Storage for India Decarbonization (web | terminal).

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Most long-duration energy storage technologies are still nascent and too costly
The need for long-duration energy storage, or LDES, is rising as renewable energy generation
grows to address intermittency over longer periods. BNEF defines LDES as technologies that
target durations of at least six hours.
BNEF’s inaugural LDES cost survey, published in May 2024, covers a wide variety of storage
technologies – electrochemical, thermal, and mechanical. Compared to lithium-ion batteries,
most are still nascent and expensive. Duration, project size, and location all affect costs.
Gravity energy storage has the highest average capital cost at $643 per kilowatt-hour, whereas
thermal energy storage and compressed air storage are the least expensive technologies, at
$232/kWh and $293/kWh, respectively.
A key feature of a good LDES technology is that energy-related and power-related costs are
substantially decoupled, so the energy storage duration can be scaled up cheaply.
Compressed air energy storage and thermal energy storage have the lowest energy-related
costs, making them better positioned for long-duration applications. Flow batteries, especially
those based on vanadium, may only be able to aim for mid-duration (for example, up to 12
hours) storage applications due to their high energy-related costs.
Beyond capital expenditure, LDES technologies differ significantly in performance
characteristics that impact lifetime costs and suitability for applications. They typically feature a
long cycling life and low degradation compared to lithium-ion batteries, though many
companies do not have years of operational data. Drawbacks include low roundtrip efficiency
and low energy density, which makes their siting less flexible.
Ongoing advances in technology and deployment experience will improve the feasibility and
performance of these storage options for long-duration applications. Favorable policies may be
essential to drive early adoption and accelerate their commercialization.
Generally, BNEF does not expect LDES technologies to attain the same rate of cost reduction
as lithium-ion batteries. They are unlikely to replicate the economies of scale seen for lithium-
ion batteries, which have been aided by massive EV demand.
Fully installed energy storage system capital costs by technology

Source: BloombergNEF. Note: Values shown in real 2023 dollar terms. Costs for projects
delivered between 2018 and 2024 and durations between one and 20 hours. For novel
pumped hydro, storage costs for projects delivered between 2018 and 2030. Lithium-ion
battery costs for a four-hour duration system in 2023.

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3.5. Power grids

Net-zero power grid investment happens in two waves
The shift to renewable energy and the electrification of road transport, buildings and industry
necessitates a concurrent overhaul of the power grid. Global annual power grid investment in both
the base-case ETS and the NZS rises, reaching two to three times historical annual investment,
which has hovered around $300 billion between 2020 and 2023.

Across Asia Pacific, grid investment in the NZS accelerates through this decade, with annual
spending growing 2.3 times to about $370 billion by 2030. This represents a compound annual
growth rate of 15% in investment needed to stay on track for net zero between 2024 and 2030
(Figure 43). From 2030, the growth rate slows, peaking at $380 billion in 2041.

The spending profile to 2050 is characterized by two discrete cycles of investment. The first
wave of investment, between 2024 to 2035, is driven by a rapid buildout of renewables. Solar and
wind assets are often sited based on land and resource availability, but these sites frequently lack
grid access or are far from densely populated centers, necessitating investment for grid buildout.
A second wave of investment from 2035 to 2050 is driven by economic growth and new demand
sources – such as EVs and hydrogen electrolyzers – rather than power generation.

Cumulative capital expenditure on grids in Asia Pacific by 2050 is $8.9 trillion in the NZS – 1.6
Figure 42: Cumulative grid times as much as the 5.7 trillion invested in the ETS (Figure 42). The ETS shows a more modest
investment in Asia Pacific rise in grid investment this decade, reaching only $221 billion per year by 2030 or a 5%
2024-2050, Economic compound annual growth rate. Investment in the ETS continues to rise through to 2050,
Transition Scenario and Net eventually reaching $252 billion per year.
Zero Scenario

$ trillion (real 2023) Figure 43: Asia Pacific’s annual power grid investment outlook, Economic Transition
8.9 Scenario and Net Zero Scenario

$ billion (real 2023)

5.7 4.9 450 ETS
400 NZS
3.3
350
4.0
2.4 300
250
ETS NZS
Distribution Transmission 200

Source: BloombergNEF. 150

Note: ETS is Economic 100
Transition Scenario, NZS is
50
Net Zero Scenario.
0
2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Source: BloombergNEF. Note: ETS stands for Economic Transition Scenario, NZS is Net Zero
Scenario.

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A larger power grid is required to support the energy transition

The length of China’s grid reaches 18.3 million kilometers by 2050 in the ETS, up 40% from 13.1
million kilometers in 2024, after a cumulative investment of around $3.0 trillion. In the NZS,
China’s grid length reaches 21.2 million kilometers by mid-century, or about 16% more than in the
ETS. This comes at a cumulative cost of $4.3 trillion, around 42% higher than in the ETS. Annual
grid investment averages at $160 billion in the NZS, peaking in 2030 at $244 billion – more than
double the investment in 2024.

India’s grid expands from around 9.8 million kilometers today to 13.9 million kilometers by 2050
in the ETS – a 42% increase – at a cost of around $870 billion. To reach net zero by 2050, India’s
grid length reaches 17.4 million kilometers, around 26% more than in the ETS. Total grid
investment in the NZS is $1.6 trillion over 2024-2050 – an 84% premium over the ETS driven by
almost a tripling in spending on new connections and a doubling in grid reinforcements to
accommodate the acceleration in renewable energy uptake and demand growth. India’s annual
grid investment in the NZS peaks in 2050 at $93 billion. Unlike most other markets, India’s grid
investment is not split into two discrete waves. The twin transitions of renewable energy
integration and electrification of demand play out more coincidentally in India, resulting in a single
larger and more prolonged cycle of grid investment.

In our base case, Japan sees its grid expand 24% from under 1.5 million kilometers in 2024 to
1.9 million kilometers by 2050 at a cost of around $370 billion. This increases 62% to $600 billion
in the NZS as the length of the grid increases to almost 2.2 million kilometers by mid-century –
14% longer than in the ETS. Japan experiences two discrete waves of grid investment, in line with
the global trend. In the first wave, annual investment peaks in 2027 at around $26.6 billion. The
second wave of grid investment between 2035 and 2050 hits a record high of $27.2 billion in
2037.

Figure 44: Length of power grid in selected Asia Pacific markets, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Million kilometers Million kilometers
50 50
45 45
40 40
35 35
30 30
25 25
20 20
15 15
10 10
5 5
0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
2,500Korea
2…
2…
2…
2…
2…
2…
2…

China India Japan South

-2,500 Indonesia Vietnam

Source: BloombergNEF

South Korea’s grid length increases 31% from 649,770 kilometers in 2024 to 852,510 kilometers
in 2050 under the ETS at a cost of around $160 billion. Grid investment over 2024-2050 rises
81% under the NZS to around $290 billion as the grid expands to cover over 1 million kilometers
by mid-century – around 19% longer than in the ETS. In the first wave, investment peaks in 2028

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at $15 billion, over 2.6 times greater than investment in 2024. In the second wave, investment hits
the highest point in 2041 at around $13 billion.

In the ETS, Indonesia’s grid increases 58% from 1.09 million kilometers to 1.73 million kilometers
over 2024-2050 at a cost of $250 billion. In the NZS, the grid stands at more than 2.2 million
kilometers by mid-century – 28% longer than in the ETS. Cumulative grid investment increases to
$408 billion in the NZS, which is 62% more than in the base case. Indonesia’s grid investment
profile in the NZS resembles that of India; rather than two distinct waves, the country undergoes a
single, prolonged grid investment cycle that peaks in 2043 at around $240 billion – nearly seven
times more than in 2024.

In the base case, the length of Vietnam’s grid expands 74% from 610,711 kilometers to more
than 1 million kilometers over 2024-2050 at a cost of nearly $170 billion. In the climate scenario,
the grid expands by a further 31% to nearly 1.4 million kilometers by mid-century, more than
double its length in 2024, at a cost of $300 billion. Annual grid investment in Vietnam peaks in
2040 at $207 billion under the NZS, almost six times more than investment in 2024.

Interest in inter-regional electricity links, particularly in Southeast Asia, is

rising but challenges remain
BNEF’s modeling does not consider new interconnection between countries aside from those
already constructed. Building interconnections across regions like Southeast Asia could enable
markets with more limited local renewable resource potential, for example Malaysia and
Singapore, to access areas with higher renewable resource potential, such as Laos and Vietnam.
While an Association of Southeast Asian Nations (ASEAN) integrated power grid has been
considered for decades, limited progress has been made until very recently.

Inter-regional interconnection to connect populous island nations to clean energy capacity sited in
larger landmasses is an alternative decarbonization pathway, not modeled in our New Energy
Outlook, that would encourage the more efficient use of land for renewable development. This is
pertinent for markets in Asia Pacific and interest is growing in Southeast Asia (Figure 45).

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Figure 45: Proposed number of grid interconnections across Southeast Asia as of 2023

Source: BloombergNEF. Note: Only new announcements and projects with development progress
in 2023 are included. The numbers denote the different transmission projects announced and
starting construction in the region. Vietnam-Laos transmission line started construction in 2023.
Lines that are not numbered are from project number 1.

Notable recent announcements include the Brunei Darussalam-Indonesia-Malaysia-Philippines

Power Integration Project (BIMP-PIP) inaugurated during Indonesia’s 2023 ASEAN chairmanship
to develop regional electricity trading among the countries involved. Singapore’s Energy Market
Authority has also granted conditional approvals for 4.2GW of clean electricity imports – 1.2GW
from Vietnam, 2GW from Indonesia and 1GW from Cambodia – to meet its goal of importing up to
6GW of clean electricity by 2035.

In September 2024, Singapore and Indonesia announced an additional 1.4GW of clean electricity
export projects from Indonesia to Singapore. Malaysia is also exploring the possibility of exporting
1GW of clean power to Singapore through an undersea cable by 2032. Vietnam has started
construction of a 500-kilovolt transmission line to connect to a 600MW wind power project in
Laos, with an expected commissioning in October 2024.

While these projects are promising, much still needs to be done to set up both the regulatory
framework and the physical infrastructure required for an integrated ASEAN power grid.

Grid digitalization could enable more clean power on existing

infrastructure
Utilities today are predominantly digitalizing grids to move more clean power on existing lines,
ensure that power flows reliably, and integrate distributed energy resources (DERs). In Europe,
digitalization is primarily an enabler of a flexible grid that can help balance supply and demand,
supporting faster decarbonization. Utilities are deploying DER management systems (Derms) and
demand response (DR) to monitor and optimize the use of DERs and provide flexibility services.

In the US, digitalization primarily targets resiliency, to ensure outages can be prevented, detected
and restored in a timelier manner. Utilities are also using new technologies to avoid outages due
to climate risks, such as wildfires and floods. For example, Iberdrola and Woza Labs partnered to

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develop digital solutions, such as satellite image analytics, to predict climate risks and potential
grid damage.

Figure 46: Global cumulative capital expenditure on power grid digitalization by region
over 2023-2050, Net Zero Scenario

$ trillion
2.5

2.0

Rest of the world

1.5 US
Europe
1.0 Other Asia Pacific
India
China
0.5

0.0
2023 2030 2040 2050

Source: BloombergNEF. Note: Excludes smart meters.

Asia Pacific spends the most on grid digitalization by 2050

China accounts for the largest share of total digitalization capex between 2023 and 2050, at 28%
or $625 billion. It has the largest national capacity of solar, wind and battery storage in 2050 in
BNEF’s NZS, and significant grid investment is needed to support this.

China has already shown substantial effort in grid digitalization. State Grid Corp. of China, one of
the country’s two major utilities, makes most of the software in-house. For example, the utility in
January 2023 developed a digital three-dimensional model of its grid in Jiangsu province, using
satellite imagery and artificial intelligence (AI). This includes 100,000 kilometers of overhead
transmission lines and 280,000 towers.

Globally, most large utilities are adopting predictive maintenance, automating grid operations, and
using drones for grid inspections. Europe is more active in digitalization than most Asia Pacific
and US peers, which are piloting projects or inactive in some areas. However, we expect that Asia
Pacific and the US will catch up as utilities grow in-house digital staff and co-develop
technologies. For example, US-based utility Duke Energy and industrial player Honeywell
International began jointly deploying DERs and virtual power plants (VPPs) to boost resilience
against extreme weather among low- and middle-income homes in 2022. The US accounts for
21% of global digital spending over 2023-2030 in the NZS, versus Europe’s 22% (Figure 46).

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Sensors and software help maximize grid use

The real-time conditions of power equipment in the field are a blind spot for many utilities,
particularly on the quickly growing distribution grid. Implementing software-based grid
solutions, such as smart sensors and dynamic line ratings (DLRs), can increase visibility and
offer new opportunities.
The main purpose of a DLR is to calculate the real-time rating of a power system element
(such as a transmission line or transformer) using site specific conditions (for example,
equipment temperature, air temperature and wind speed). These systems can provide an
increase in equipment capacity if the real-time conditions are less severe than the conservative
conditions assumed when calculating a static equipment rating. Utilities can then safely
increase power line capacity to connect more renewables, more efficiently balance supply and
demand to reduce congestion and improve resiliency by reducing outage response time.
Utilities across the world are increasingly turning to this solution. The Italian transmission
operator, Terna, began implementing DLRs in 2013 as a stopgap measure for network
upgrades. Uruguay’s utility, Nacional de Usinas y Trasmisiones Eléctricas (UTE), reduced
renewable curtailment with DLRs by increasing power flow during periods of high demand.
South Korea’s utility Korea Electric Power Corp. (Kepco) deployed DLRs on susceptible power
lines that were causing outages.
Policymakers have been quick to recognize the benefits of smart grid sensors, which have led
to regulation in several countries. The US Federal Energy Regulatory Commission (FERC)
released a notice in February 2022 to identify ways to support DLR implementation – over 15
US utilities already use DLRs including Duke Energy, Xcel Energy and Arizona Public Service.
In Vietnam, the World Bank partnered with the National Power Transmission Coordinator
(NPT) in 2016 to identify regulatory parameters for deploying a dynamic rating initiative.

3.6. Hydrogen
Hydrogen, both direct and indirect consumption, becomes an important decarbonization vector in
hard-to-abate sectors, such as shipping, steel, and aviation. However, hydrogen is not a silver
bullet and is less competitive where low-carbon alternatives already exist or are emerging, due to
its high costs. This includes the power sector, buildings, and the road transport sector.
Electrification remains the most affordable decarbonization option where possible.

The buildout of the region’s hydrogen production infrastructure in Asia Pacific needs to focus on
electrolysis. Today, almost all ammonia and hydrogen produced is fossil-fuel based (typically
referred to as gray hydrogen4) which offers no emissions reduction benefits. This necessitates the
scale-up of renewable energy alongside hydrogen production to ensure sufficient affordable and
clean power.

Hydrogen demand
Today, 59% of Asia Pacific’s hydrogen is consumed as a feedstock for ammonia and methanol
production, followed by 37% used by oil refiners for hydrotreating and hydrocracking crude oil.
About 5% of the region’s demand is used in iron oxide reduction.

4
Gray hydrogen is produced via steam reforming of methane or gasification of coal without CCS – the most
common method today that releases large volumes of carbon emissions.

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Hydrogen demand quintuples to 2050 under the NZS, growing from about 41 million metric tons
(Mt) in 2024 to 211Mt by mid-century. Most hydrogen demand growth happens after 2030 due to
the expected timing of cost reductions and the period needed to commercialize technologies like
hydrogen-compatible gas turbines, boilers, and direct reduction furnaces.

The largest source of hydrogen demand in Asia Pacific is China, which accounts for over 40% of
the region’s consumption by 2050 in the NZS. China also benefits from having the lowest
levelized cost of producing green hydrogen in the region by 2030 (Figure 47), in part due to lower
costs of Chinese alkaline electrolyzers compared to other varieties.

Figure 47: Asia Pacific hydrogen demand by sector and application, Net Zero Scenario
Power
Million metric tons of hydrogen
250 Other sectors
Energy industry own use
Aviation (SAF)
200
Aviation (direct use)
NZS Shipping
150 Road
Other industry
Aluminum
100
Steel
Iron and steel (reducing agent)
ETS
50 Oil refining (by-product)
Oil refining
0 Methanol (chemicals)
2000 2010 2020 2030 2040 2050 Ammonia (fertilizer and chemicals)
Source: BloombergNEF. Note: Energy industry own use includes energy consumed to produce
final energy carriers from primary energy carriers and energy industry own use. SAF is
sustainable aviation fuel. Assumes gravimetric energy density of 140 megajoules per kilogram for
hydrogen.

The sectors that rely most on hydrogen in 2050 under the NZS are those that are hardest to
electrify, either because of the lack of commercially available electric processes, for example, in
primary steel production, or because of the low gravimetric energy density of batteries, which
limits their use in EVs over long distances in aviation, shipping and trucking (Figure 48). Wherever
electrification is possible, it will be easier and cheaper. We therefore expect little or no demand
from heating for commercial and residential buildings, rail transport, passenger road transport,
petrochemicals, and cement production. Hydrogen plays a limited role in heavy road transport but
has effectively been eliminated from our passenger vehicle outlook.

In shipping, hydrogen’s high gravimetric energy density compared to batteries and ability to be
produced at scale make it a key solution to decarbonize maritime trade. It fulfills 74% of the
sector’s energy demand in 2050.

Similarly, in aviation, the fuel’s high volumetric energy density makes aircraft fueled by pure
hydrogen a suitable alternative for short- and medium-distance travel. However, its volumetric
energy density is lower than kerosene, suggesting that aircraft may need to reduce cabin space
or redesign to install hydrogen tanks to fly the same distance as a fossil fuel counterpart.

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Liquid hydrogen is likely to be the only option for large passenger planes, such as regional
turboprops and narrowbody aircraft. This poses various technical challenges around storage
tanks, thermal management, and the fuel supply system, as hydrogen must be in a cryogenic
state to be liquid. Hydrogen supply chains, including liquefaction, transportation and refueling, are
required at or near many airports, as well.

On the other hand, aircraft fueled by sustainable aviation fuel (SAF) made with clean hydrogen
can be used for longer distances. Electric airplanes, which can help decarbonize commuter
routes, face challenges due to battery size and weight. In SAF, hydrogen is either used for
cracking biogenic kerosene or as a feedstock for synthetic fuels.

Using hydrogen as a process fuel in iron oxide reduction can be an economic alternative to blast
furnaces with carbon capture and storage (CCS) in economies where fossil fuels are relatively
expensive, such as in China. In Asia Pacific, the share of hydrogen reaches 40% in steel making
in 2050. That compares with 8% electricity use, which is mostly used in secondary production and
in arc furnaces.

Figure 48: Final energy consumption in Asia Pacific by fuel, Economic Transition Scenario and Net Zero Scenario, 2050
Economic Transition Scenario Net Zero Scenario
Fuel share in 2050 Fuel share in 2050
Shipping Shipping
Steel Steel
Aviation Aviation
Coal
Road Road
Gas Hydrogen
Aluminum Aluminum
Other industry Oil Other industry Electricity

Other sectors Hydrogen Other sectors CCS

Rail Electricity Rail Bioenergy
Buildings Bioenergy Buildings Other
Chemicals Other Chemicals
Cement Cement
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%

Source: BloombergNEF. Note: Refers to direct uses of hydrogen only. Bioenergy refers to solid, liquid and gaseous fuels. Does not
include use of hydrogen in sustainable aviation fuels (captured under ‘bioenergy’), for example as input in e-fuels or for fuel
processing. CCS is carbon capture and storage.

We continue to expect hydrogen to play a limited role as a fuel for road vehicles due to the
greater cost-competitiveness of battery EVs both in the passenger and most of the trucking
segment. In 2050, hydrogen meets just 14% of final energy use in the sector.
The role of hydrogen in its
traditional end-uses Following further evidence from real-world trials, we no longer consider hydrogen an economic
declines in the Net Zero option for decarbonizing rail transport or as a substitute for natural gas in heating buildings.

Scenario Based on our modeling, hydrogen plays a minor role as a fuel in a decarbonized power sector.
While it is a viable backup technology and can bridge longer gaps in intermittent renewable
energy generation that batteries may struggle to fill, our high-resolution hourly power sector
modeling shows fossil fuel plants with CCS and other low-carbon technology are cheaper to
operate in most cases. Across Asia Pacific, hydrogen demand in the power sector grows to 9Mt in
2050, or 4% of total demand in that year under the NZS.

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Figure 49: Hydrogen power generation capacity of selected Figure 50: Hydrogen power capacity factors of selected Asia
Asia Pacific markets, Net Zero Scenario Pacific markets, Net Zero Scenario
Gigawatts Capacity factor
500 10%

400 8%

300 6%

200 4%

100 2%

0 0%
2025 2030 2035 2040 2045 2050 2030 2035 2040 2045 2050
China India Japan and South Korea Australia Southeast Asia

Source: BloombergNEF Source: BloombergNEF

Demand for hydrogen increases across Asia Pacific

Hydrogen demand in China increases 45% from 25Mt in 2024 to 36Mt by 2050 in the ETS, but
almost quadruples to 88Mt under the NZS over the same period. Iron and steel production is the
single largest user of hydrogen by 2050 in China under the NZS, accounting for 29% of total
demand. Aviation uses 14Mt of hydrogen in China by mid-century, representing 15% of the NZS
total. Total hydrogen demand in shipping reaches 7Mt in China under the NZS, making up 8% of
the fuel’s NZS demand by mid-century.

The use of hydrogen in incumbent sources of demand declines as use of nitrogen fertilizers and
refined oil products falls. Demand for hydrogen in nitrogen fertilizer in China peaks at 13Mt in
2030 before falling to 5Mt by 2050. Ammonia-based fertilizers emit nitrous oxide (N2O) after
application, a gas with a global warming potential 273 times that of CO2. Demand for hydrogen in
oil refining peaks at 8Mt in 2024, falling to 3Mt in 2050 under the NZS. However, increased
demand for chemicals and plastics drives up hydrogen demand in the methanol sector to 10Mt by
2050, up from 5Mt in 2024.

In India, demand for hydrogen more than doubles under the ETS from 6Mt in 2024 to 15Mt by
2050. Under the NZS, demand increases nearly 11 times to 64Mt by mid-century. Iron and steel
production makes up over 80% of demand under the NZS in India, rising to 48Mt by 2050 in the
NZS. Hydrogen for aviation makes up 8% of demand and 5% is accounted for by the power
sector. Incumbent sources of hydrogen demand, such as for ammonia-based fertilizers and oil
refining, see their share of the fuel’s demand decline from 18% and 45% in 2024 to just 2% and
1% by 2050, respectively.

China and India account for the largest share of hydrogen demand in the NZS, with 23% and 16%
of the global total respectively. China and India are regions with strong industrial demand,
particularly from steel.

In Japan, hydrogen demand grows from 2Mt today to 3Mt by 2050 in the ETS but more than
triples to 8Mt by mid-century in the NZS. Iron and steel production makes up 2Mt, or 31% of
hydrogen demand, in the NZS by 2050. In the transportation sectors, aviation accounts for 16% of
demand while road and shipping each carve out 13% of hydrogen consumption in the NZS by

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2050. The share of demand from ammonia-based fertilizers falls from 26% to 3% over 2024 to
2050, while hydrogen for oil refining also falls from 53% to 3% over the same period.

Figure 51: Hydrogen demand in selected Asia Pacific markets, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Million metric tons of hydrogen Million metric tons of hydrogen
200 200
180 180
160 160
140 140
120 120
100 100
80 80
60 60
40 40
20 20
0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050

China India Japan 2,500

South
-2,500Korea Indonesia Vietnam
2…
2…
2…
2…
2…
2…
2…

Source: BloombergNEF

Hydrogen demand in Vietnam grows from low levels today to reach 5Mt by 2050 in the ETS and
8Mt in the NZS. Iron and steel production makes up nearly three-quarters of hydrogen demand in
the NZS by mid-century. Aviation accounts for another 11%, while road transport makes up 8% of
demand by 2050.

Indonesia’s demand for hydrogen also grows from low levels in 2024 to reach 1Mt by 2050 in the
ETS and 6Mt in the NZS. Unlike other peers in Asia Pacific, the single largest source for hydrogen
demand in Indonesia under the NZS is the aviation sector, which accounts for 33% of demand by
mid-century. Road transport and steel production make up 18% and 16% of hydrogen demand in
the NZS by 2050, respectively. Energy industry own use, which is energy consumed to produce
final energy carriers from primary energy carriers, accounts for 12% of demand by 2050.

Demand for hydrogen in South Korea rises from 2Mt in 2024 to 3Mt in 2050 in the ETS and 6Mt
in the NZS. Methanol for chemicals accounts for the largest share hydrogen demand in the NZS
by 2050 with 24%, followed by 17% used by shipping. Aviation constitutes 14% and road
transport 7% of hydrogen demand. Energy industry own use makes up 15% of South Korea’s
hydrogen use by 2050 in the NZS.

Hydrogen production
Today, about 81% of hydrogen production in Asia Pacific is ‘gray’ hydrogen produced from
unabated fossil fuels. By 2050, thanks to the falling costs of renewables and electrolyzers, low-
carbon hydrogen produced via electrolysis becomes the dominant pathway in the NZS, meeting
95% of demand in Asia Pacific, or 201Mt. New electrolyzers drive significant increases in power
demand, with resulting capacity build. All hydrogen in our modeling is assumed to be produced
and consumed domestically.

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Table 8: Hydrogen classification by production process

Hydrogen type Description

Gray hydrogen Produced from unabated fossil fuels. Natural gas is usually converted to
hydrogen using steam methane reforming, while coal and oil involve
gasification.
Blue hydrogen Produced from fossil fuels paired with carbon capture and storage. We
assume the CCS sequesters up to 90% of emissions.
Green hydrogen Electrolysis of water (H2O) produces hydrogen (H2) and oxygen (O2) with the
injection of a direct electric current into an electrolyzer. Considered ‘green’ or
carbon-neutral when using low-carbon sources of electricity, such as
renewables. Accounting methodologies for electricity use vary by country.
Endogenous Also referred to as by-product hydrogen, this is endogenously produced as
hydrogen by-product in some chemical processes.
Source: BloombergNEF

Figure 52: Hydrogen consumption by type of production, Figure 53: Cumulative electrolyzer capacity by region, Net
Net Zero Scenario Zero Scenario

Million metric tons of H2 (140MJ/kg) Gigawatts Southeast Asia

250 2,000

200 Australia
1,500
Electrolysis
150
Blue Japan and
1,000 South Korea
100 Gray
Endogenous India
500
50

0 0 China
2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050
Source: BloombergNEF. Note: Assumes gravimetric energy Source: BloombergNEF
density of 140 megajoules per kilogram for hydrogen.

Gray hydrogen is phased out by 2050 in the NZS. Fossil fuel-based hydrogen production with
CCS, also referred to as blue hydrogen, plays a small role as our country-by-country modeling
suggests green hydrogen is cheaper than blue in most places most of the time. Blue hydrogen
production occurs mostly in markets with domestic fossil-fuel resources and strong CCS policies.
In 2050, blue hydrogen accounts for 2% of supply from Asia Pacific.

Seasonality and implications for storage

Unlike natural gas storage, the need for which is mainly driven by demand fluctuations, demand
for hydrogen storage is driven by variations in supply. This is because hydrogen production can
be highly seasonal by 2050 as most is made by electrolysis using intermittent renewable energy.
On the other hand, hydrogen demand remains largely flat throughout the year as the sectors that
use it most – steel, ammonia, oil refining and transport – require a steady input of hydrogen.

Storage is thus needed to ensure security of supply at any hour of the year, regardless of how
much is being produced and when. Hydrogen storage needs therefore depend on the source of
power generation for electrolyzers and the type of demand, which both vary by market.

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Our demand modeling suggests most markets require a minimum storage capacity of 7-22% of
their annual hydrogen demand, depending on production patterns. To add redundancy and
ensure security of supply, we assume a safety factor of two, meaning storage capacity needs to
be twice the required minimum. This results in a storage capacity range of 14-45% of annual
demand. The global median is 25%, the equivalent of 94 days of global storage.

For this report, we assume that hydrogen storage uses either salt or rock caverns with monthly
cycling capabilities, depending on the respective market.

Economics of hydrogen delivery

Green hydrogen costs fall significantly in the NZS, making hydrogen competitive against other
low-carbon options in the sectors mentioned earlier. BNEF’s 2023 Hydrogen Levelized Cost
Update (web | terminal) projects the levelized cost of hydrogen produced from dedicated onshore
wind or solar (off-grid solution) to fall by an average of 85% globally by 2050. In the ETS, we
assume a slower rate of cost decline after 2030, with electrolysis capex staying flat but renewable
energy generation costs continuing to fall.

The cost decline in ‘green’ hydrogen is driven by cost reductions for electrolyzers and the
renewable electricity used to power them. In 2050, BNEF projects the average cost of production
to be around $1.06 per kilogram, varying based on the type of electrolyzer used and source of
renewable electricity.

What about rising electrolyzer cost?

Inputs for the New Energy Outlook 2024 are based on BNEF’s 2023 Hydrogen Levelized Cost
Update (web | terminal). Since then, BNEF has published an updated electrolyzer capex
survey in early 2024 that suggests capex may in fact be higher than previously estimated. See
Electrolyzer Price Survey 2024: Rising Costs, Glitchy Tech (web | terminal) for details. BNEF
will produce a new capex forecast reflecting this update.

Based on our 2023 cost estimates, the levelized cost of hydrogen from a new green facility by
2030 is cheaper than a new blue hydrogen facility using natural gas in most countries, assuming
alkaline electrolyzers are used (Figure 54). Following a least-cost approach, most hydrogen
production is based on electrolysis.

However, the need for transmission grid buildout due to electrification, local renewables resource
constraints, and the need to site hydrogen production close to the point of use (for example, as
feedstock in industrial processes) means that 100% electrolysis-based production may not be
practical.

Instead, we expect that some countries meet as much as 8% of their total hydrogen needs over
2025-2050 via blue hydrogen from natural gas with CCS. The global average share for ‘blue’
hydrogen production over 2025-2050 is 3%, while 69% is produced from electrolysis (green
hydrogen) and 20% is gray hydrogen, produced from unabated natural gas. The volume of blue
hydrogen deployed depends on natural gas prices and the cost and availability of suitable CCS
infrastructure. The lower the gas price, the larger the share of blue hydrogen could be, and vice
versa.

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Figure 54: Range of levelized hydrogen costs for selected markets by production method, 2030
$/kg (real 2022)
Renewable H2
4.5
'Blue' H2 from natural gas with CCS
'Gray’ H2 from natural gas without CCS
4.0

3.5
Newly-built 'gray’ H 2
plant
3.0

2.5

2.0

1.5

1.0 Marginal cost of

producing 'gray’ H 2
0.5

0.0
Argentina

Netherlands

Malaysia
Turkey
China

France

South Africa

US
UK
Sweden
Chile

UAE

Poland

Vietnam
Japan
Spain

Australia

Italy
Colombia

South Korea
Philippines
Germany
Canada

Indonesia
Brazil

Mexico
India

Thailand
Source: BloombergNEF. Note: For more details, see 2023 Hydrogen Levelized Cost Update (web | terminal). Renewable H2 shows
hydrogen produced with wind and solar electricity via proton exchange membrane (PEM) electrolyzers (top of range) and alkaline
electrolyzers (bottom of range). Blue H2 is produced using steam methane reforming of natural gas (top of range) and autothermal
reforming of natural gas (bottom of range), both with 95% CO2 capture rate. Hydrogen costs consider domestic production and
excludes subsidies. CCS is carbon capture and storage.

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3.7. Carbon capture and storage

For Asia Pacific’s fossil-fuel dominated energy mix, acceleration of CCS technology maturation
and deployment over the next decade is critical. While high costs limit the technology to a nearly
negligible role under the ETS, CCS deployment needs to scale under the NZS to enable the steep
emissions reduction the region needs to see starting immediately, especially for the power sector.

Asia Pacific dominates CCS deployment in the NZS

Two-thirds of emissions captured by CCS in our NZS originate in the Asia Pacific region (APAC),
predominantly in China and India. Roughly 22.4 billion metric tons of carbon dioxide (GtCO2) is
being captured from industrial processes in APAC. Given the prevalence of industry in the region,
this figure is greater than the respective 19.1GtCO2 and 20.1GtCO2 of all emissions captured in
Europe, Middle East, Africa (EMEA) and the Americas (AMER).

Emissions captured from industrial processes are significant, but CCS abatement in the power
sector is three times larger. The expansive coal fleet fitted with CCS in APAC, particularly in India
and China, means that this is the largest point source of emissions across the region, totaling
58.2GtCO2 captured. In comparison to APAC, natural gas is the dominant fuel used for power
generation with CCS in EMEA and AMER, and makes up the largest point source in these
regions.

Figure 55: Annual carbon dioxide emissions sequestered by carbon capture and storage, by application and region, Net
Zero Scenario
Asia Pacific Europe, Middle East Americas
and North Africa
Billion metric tons of CO2 Billion metric tons of CO2 Billion metric tons of CO2
6 6 6
5 5 5
4 4 4
3 3 3
2 2 2
1 1 1
0 0 0
2025 2030 2040 2050 2025 2030 2040 2050 2025 2030 2040 2050

Industry Energy industry Hydrogen Coal Gas

Source: BloombergNEF. Note: Includes applications in industry, power and hydrogen production. Gas and coal use in power sector.

Failing to scale CCS will derail a Paris Agreement-aligned energy

transition
In our NZS, CCS has a much larger role – but this will only materialize if the industry can step up
and deliver the cost reductions expected. The NZS sees CCS playing a high-value low-volume
role as clean backup power capacity for extended periods of low renewable energy generation
output. The provision of firm backup allows renewables to scale to the full potential and deliver
urgently needed carbon reductions in the next 10 years – the period in which rapid cost cuts count
the most. While this is a significant challenge for a solution that is still in early ramp-up stages,

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CCS is still relatively more mature than alternative sources of dispatchable clean capacity such as
hydrogen or bioenergy.

In the NZS, CCS and carbon removals5 are responsible for 45% (106GtCO2) of incremental
emissions abated in Asia Pacific between 2024 and 2050, compared with the base case. This
makes it one of the key technologies needed to reach net zero.

Figure 56: Asia Pacific’s emissions trajectory and impact of captured emissions

Billion metric tons of CO2

20

18

16

14
ETS (2.6C)
12

10

6
Emissions avoided by CCS
4
and carbon removal
2

0 NZS (1.75C)
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Source: BloombergNEF. Note: ETS is Economic Transition Scenario. NZS is Net Zero Scenario.
Shaded area includes emissions captured from point sources and stored, as well as carbon
removals needed to offset incomplete capture processes, assumed to be only 90% complete. No
other carbon removals included.

• China’s CCS deployment scales up toward the end of this decade to reach 1,452 million tons
of CO2 (MtCO2) from none today, driven by the need to decarbonize its fossil-fuel dominated
power system and limited alternative low-carbon solution. The volume of captured carbon
declines slightly between 2031 and 2034 as unabated fossil fuel generation falls. CCS plays a
large emissions abatement role in hard-to-abate sectors such as steel and aluminum in the
2030s. By 2050, CCS abates 2,387MtCO2 per year in China.
• India sees CCS deployment scale from 2027 to reach 388MtCO2 by 2030, driven by power
sector emissions reduction needs. From 2035, CCS plays a larger role in the steel industry.
By 2050, total carbon emissions abated by CCS totals 1,376MtCO2, almost half of which
comes from the steel sector and 43% from the power sector.
• Unlike China and India, Japan’s steel sector kickstarts CCS deployment in the country from
2025. CCS use in the power sector scales rapidly from 2027. Annual carbon emissions

5
Includes the carbon removals needed to offset incomplete capture from point-source carbon capture
processes, which are up to 90% complete. CCS is responsible for 14% of cumulative emissions
abatement between 2024 and 2050, against a ‘no transition’ scenario in which there are no further efforts
to decarbonize.

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 Asia Pacific’s Energy Transition Outlook
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captured by CCS totals 120MtCO2 in 2030 and peaks in 2035 at 262MtCO2, before declining
slightly to 191MtCO2 in 2050 as fossil fuel use in the power sector falls.
• Similar to Japan, South Korea’s first CCS deployment happens in the steel sector but the
power sector quickly becomes the largest source of emissions captured by CCS. By 2030,
CCS captures 115MtCO2 per year, 95% of which is from the power sector. Captured
emissions peaks at 320MtCO2 in early 2040s before falling to nearly 40% to 200MtCO2 by
2050 in line with increasing renewable penetration in the country’s power system.
• CCS plays an important role in abating emissions from Indonesia’s coal-dominated power
system. By 2030, CCS abates 142MtCO2 of emissions, 96% of which comes from the power
sector. The volume of carbon emissions captured by CCS peaks in 2038 at 304MtCO2 before
declining to 230MtCO2 in 2050 as the use of fossil-fuels, in particular coal, in the power
sector falls.
• Vietnam’s CCS capacity starts to scale from late 2020s to reach 52MtCO2 sequestered per
year, 86% from the power sector and 12% from the steel sector. From mid 2030s, the country
sees CCS deployment in the cement sector as an emissions abatement solution. CCS
capacity grows steadily out to 2050 even as power sector emissions fall, driven by growing
emissions from industries.

Figure 57: Carbon dioxide sequestered by carbon capture and storage in selected Asia
Pacific markets, Net Zero Scenario

Billion metric tons of CO2

5.0
4.5
4.0
3.5
Vietnam
3.0 Indonesia
2.5 South Korea
2.0 Japan
1.5 India
1.0 China
0.5
0.0
2020 2025 2030 2035 2040 2045 2050

Source: BloombergNEF

Applications in power and industry

CCS has broad applications in industry, hydrogen production and the power sector.

Across Asia Pacific, CCS is responsible for 34% of energy emissions abated in steel production,
32% in the cement sector, 25% in aluminum production and 22% in chemicals processing
between 2024 and 2050, against a ‘no transition’ scenario in which there are no further efforts to
decarbonize. For ‘blue’ hydrogen production, CCS is fitted to steam methane reformers and auto-
thermal reformers, which account for 2% of total hydrogen production in 2050.

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The annual rate of emissions captured in the NZS grows from very low levels today to 2.5GtCO2
in 2030, 4.8GtCO2 in 2040 and 5.4GtCO2 by 2050 (Figure 59). Cumulatively, a total volume of
around 95GtCO2 is captured in 2024-2050 – 10 times larger than direct power sector emissions
from Asia Pacific in 2023. While CCS is an important abatement technology in hard-to-abate
sectors, most emissions in absolute terms (75%) are captured in the power sector. This is
followed by 15% of emissions originating from steel manufacturing, 4% from cement production,
and the rest in other industrial sectors and hydrogen production.

Figure 58: Share of carbon capture and storage in total Figure 59: Annual carbon dioxide emissions sequestered by
emissions abatement in Asia Pacific, 2024-2050, Net Zero carbon capture and storage in Asia Pacific, by sector, Net
Scenario Zero Scenario

Billion metric tons of CO2

Steel 34%
6 Hydrogen
Cement 32%
5 Power
Aluminum 25%
4 Energy industry
Chemicals 22% Other industry
3
Power 16% Chemicals
2
Other industry 5% Cement
1
All sectors 15% Aluminum
0 Steel
0% 20% 40% 60% 80% 100% 2020 2025 2030 2035 2040 2045 2050
CCS Bioenergy
Hydrogen Electrification
Energy efficiency Clean power
Carbon removals
Source: BloombergNEF. Note: Shows cumulative emissions Source: BloombergNEF
abatement compared with a ‘no transition’ scenario for energy
emissions only; process emissions are not included. Aluminum is
primarily recycling and alumina. CCS is carbon capture and
storage.

Across Asia Pacific, CCS yields the greatest emissions reductions when it captures CO2 from
Figure 60: Carbon capture coal-based processes, such as in coal-fired power plants or industrial furnaces (Figure 60). This is
and storage by fuel, 2024- because coal has the highest emissions intensity of fossil fuels, releasing around 69% more CO2
2050, Net Zero Scenario per unit of energy than natural gas. In the NZS, more than 80% of Asia Pacific’s total cumulative
1% emissions are captured in processes combusting coal, 16% from gas and just 1% in oil.
16
%

83
%
Coal Gas Oil
Source: BloombergNEF.
Note: Includes applications in
industry, power, and
hydrogen production.

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3.8. Electric vehicles

Direct electrification via batteries is the most efficient, cost-effective, and commercially viable
route to fully decarbonizing road transport. Fuel-cell vehicles play a role in some hard-to-electrify
long-haul trucking applications, but are not prominent in the larger passenger vehicle market.
Biofuels play a limited role in road transport, due to often offering a less economic option for
decarbonization than electrification along with need to prioritize limited feedstocks for other
transport sectors, such as aviation. Synthetic fuels do not arrive at scale in time or at a price point
needed to have a material impact on road transport.

BNEF’s Electric Vehicle Outlook

Road transport modeling in the New Energy Outlook 2024 incorporates and builds on country
and sector results from the Electric Vehicle Outlook 2023 (web | terminal). The report is
BNEF’s annual publication looking at how electrification, shared mobility, demographic shifts
autonomous driving and other factors will impact road transport in the coming decades.
BNEF published a 2024 update for the Electric Vehicle Outlook in June 2024 (web | terminal).

Batteries and EVs have taken center stage in new discussions on industrial policy, with countries
competing to attract investments and build new clusters of high-value manufacturing. Meanwhile,
regulators and grid operators are looking at ways to ensure EVs benefit the power system.

Electrification is not the only vector of change. Shared mobility, vehicle connectivity and,
eventually, autonomous vehicles are set to reshape automotive and freight markets around the
world. Urbanization also continues its steady march, leading to increased concerns around
vehicle congestion and urban air quality.

Battery-electric vehicles dominate passenger and commercial road

transport
Despite a relative slowdown in EV sales growth against some forecasts over the last six months,
there is still strong momentum behind battery cars. With 4.4 million units sold globally in the fourth
quarter, and 13.7 million in 2023, EVs made up 18% of total passenger vehicle sales in the world
last year.

EVs account for 44% of global passenger vehicle sales by 2030 and 75% by 2040 in our ETS.
After increasing rapidly from 2022 to 2035, EV sales growth slows slightly in the late 2030s in the
main markets like Europe, China, and the US as they begin to saturate. Although public charging
infrastructure is growing at pace globally, it still presents a potential barrier to electrifying the last
10-20% of the market in many countries.

While EV sales exhibit a traditional ‘S-curve’ for adoption, each country and region start on this
trajectory at different times due to variations in household income and other factors. The varied
start time and slowdown points between countries mean that the global average appears more
linear than any individual country. Despite rapid EV adoption, less than 50% of the global
passenger vehicle fleet is electric by 2040 in our base case.

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Figure 61: Historical and forecast electric vehicle sales Figure 62: Electric vehicle share of new passenger vehicle
sales
Million electric vehicles EV share of new passenger vehicles sales
20 40%
18 16.7
16 13.7 30%
14
12 10.4
10 20%
8 6.5
6
3.2 10%
4 2.0 2.2
2 0.5 0.7 1.1
0 0%
2015 2020 2023 '24e 1234123412341234123412341234
2017 2018 2019 2020 2021 2022 2023
China Europe North America China Europe
Japan North America
South Korea Japan Rest of World South Korea Global
Source: BloombergNEF, MarkLines, vehicle registration Source: BloombergNEF, MarkLines, vehicle registration
agencies, JATO Dynamics. Note: Electric vehicle sales include agencies, JATO Dynamics. Note: Electric vehicle sales include
battery-electric vehicle and plug-in hybrid vehicle sales. Europe battery-electric vehicle and plug-in hybrid vehicle sales. Europe
data includes EU27 countries plus Norway, Switzerland, Iceland data includes EU27 countries plus Norway, Switzerland, Iceland
and the UK. China data excludes low-speed EV sales and and the UK. China data excludes low-speed EV sales and
commercial vehicles. Data as of March 2024. commercial vehicles. Data as of March 2024.

A major driver for the spread of EVs are advances in battery technology. BNEF research shows
battery pack prices have come down from a temporary increase in 2022 and are again back in
line with the implied long-term experience curve. We now expect average pack prices to fall below
$100/kWh by 2027. The $100/kWh threshold is often referenced as the point where EVs reach
price parity with internal combustion engine (ICE) vehicles, though price parity varies significantly
by vehicle segment and region.

At the time of writing, there are discussions of very low battery prices coming out of China, with
Chinese battery manufacturer CATL announcing that it expects to be able to sell battery cells
under $60/kWh this year. BNEF investigates how sustainable these prices are and how that
affects the future trajectory in the 2024 Electric Vehicle Outlook.

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 Asia Pacific’s Energy Transition Outlook
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Figure 63: Lithium-ion battery pack price, learning curve and demand outlook

$/kilowatt-hour (real 2023) Cumulative demand (gigawatt-hours)

1,400 50,000

1,200
2035 implied 40,000
1,000 price: $64/kWh
Stationary storage
2030 implied
800 price: $80/kWh 30,000 Two- and three-wheelers
2027 implied E-buses
600 price: $96/kWh
20,000 Commercial vehicles
400 Passenger EVs
2023 price:
$139/kWh 10,000 Observed prices
200

0 0
2010 2015 2020 2025 2030 2035

Source: BloombergNEF

Scenarios in the New Energy Outlook for Asia Pacific

Despite significant advances in electrification, vehicle fleets (including passenger and commercial
vehicles, buses, and two- and three-wheelers) in Asia Pacific do not reach net zero by 2050 in our
base case. The zero-emission vehicle (ZEV) share of the fleet in Asia Pacific reaches 80% in our
ETS by 2050, up from 19% in 2020. Fuel-cell vehicles do not play any meaningful role in the
passenger vehicle market in either scenario.

Figure 64: Asia Pacific vehicle fleet split by drivetrain, Economic Transition Scenario and
Net Zero Scenario

100%
Electric
75%
Internal
combustion
50% engine ETS
NZS

25%

0%
2020 2030 2040 2050

Source: BloombergNEF. Note: NZS is Net Zero Scenario, ETS is Economic Transition Scenario.
Electric vehicles include battery-electric vehicles and a small number of plug-in hybrid vehicles.
Internal combustion engine vehicles include traditional hybrids. Net Zero Scenario based on New
Energy Outlook 2024, which shows a 1.75C-equivalent pathway as opposed to 2.0C-equivalent
pathway in Electric Vehicle Outlook 2023.

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In the NZS, the ZEV share of Asia Pacific’s vehicle fleet reaches 99% by 2050. ICE vehicle sales
Figure 65: Electric vehicle fall almost 70% over 2024-2030. By 2030, EVs make up 44% of the fleet, up from about 23% in
fleet by segment in Asia 2024. To stay on track for net zero, EVs need to reach 99% of new vehicle sales by 2040.
Pacific, Net Zero Scenario The two- and three-wheeler segments dominate uptake of EVs across Asia Pacific in both our
Billion vehicles scenarios. In the Net Zero Scenario, uptake of two- and three-wheeler EVs increases from a
1.4 2023 relatively established base of 338 million vehicles in 2024 to 1,300 million by 2050 across Asia
1.2 Pacific (Figure 65). By comparison, uptake across all other segments rises from 36 million to 823
1.0 million over the same period. Two- and three-wheelers make up 61% of the region’s total EV fleet
0.8 by 2050 in our NZS, compared to 22% in Europe, the Middle East and North Africa, and 19% in
0.6
the Americas.
0.4
0.2 What about hydrogen fuel-cell vehicles?
0.0
We have removed fuel-cell vehicles (FCVs) from our passenger vehicle outlook due to very low
2015
2020
2025
2030
2035
2040
2045
2050

volumes of sales, little consumer interest, high geographic concentration, limited model
Passenger vehicles
availability and a lack of commitment to high-volume manufacturing from automakers.
Commercial vehicles Passenger FCVs continue to face three major challenges: First, there are currently no other
Two- and three-wheelers mass-market applications for fuel-cell systems that could support scale for cost reductions.
Source: BloombergNEF Second, there is limited existing hydrogen refueling infrastructure, and the price of hydrogen at
the pump remains significantly more expensive than other fuels. Third, the value proposition of
FCVs for consumers is getting weaker, as battery EV technology continues to improve and
scale.
Demand for hydrogen at the pump depends on the uptake of heavy-duty fuel cell trucks and,
to a lesser degree, buses. Hydrogen trucks are just under 4.5% of the global fleet by 2050 and
they are almost exclusively medium- and heavy-duty vehicles, rather than lighter vans. Even
within these segments, adoption varies depending on use case and consists of vehicles used
in regional and long-haul duty cycles.
The main reason for the limited adoption of hydrogen trucks in other applications is the
existence of suitable and economically viable battery trucks. About half of the total truck fleet is
used in urban duty cycles. Deployment of electric trucks has already started in these use
cases, while companies work out the challenges related to charging infrastructure. Such early
adoption tends to limit the long-term addressable market for hydrogen vehicles.
Even though battery trucks and their corresponding charging infrastructure for long-haul duty
cycles start to emerge, these vehicles have yet to be used in any appreciable volume. We
believe that hydrogen trucks can capture market share in these applications. However, the
outlook is more uncertain than for battery trucks, with high-volume series production across the
industry still years away and challenges in expanding the suitable refueling network.

China’s early progress toward greater EV adoption makes it an outlier compared to its peers in
Asia Pacific. In the base case, China’s total EV fleet increases from a relatively established base
of 357 million vehicles to 845 million over 2024-2050. During this period, the fleet of ICE vehicles
falls sharply from 467 million to 43 million. In the NZS, the EV fleet is only 5% larger at 887 million
vehicles by 2050, but ICE vehicles are completely phased out.

In India, the size of the EV fleet increases from 8 million vehicles to 461 million vehicles over
2024-2050, making up 78% of the country’s fleet by mid-century. The share of ICE vehicles drops
from 98% in 2024 to 78%, or 133 million vehicles, by 2050. In the NZS, the size of the EV fleet is
27% larger at 587 million vehicles by 2050, making up 99% of the entire fleet.

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 Asia Pacific’s Energy Transition Outlook
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EV uptake in Japan increases from around 930,000 vehicles to 49 million vehicles over 2024-
2050, or 66% of the total fleet. ICE vehicles make up the remaining 34%, or 25 million vehicles,
by mid-century, falling from 89 million in 2024. In the NZS, the size of the EV fleet is around 50%
larger at 74 million vehicles, making up 99% of the fleet as early as 2048. The remaining 1% is
largely made up of heavy-duty fuel-cell trucks and buses.

South Korea’s uptake of EVs increases from just under 1.1 million vehicles to 20 million during
2024-2050 in the base case, already making up 83% of the fleet. ICE vehicles’ share of the
country’s fleet slips from 96% to just 16%, or 4 million vehicles, over the same period. In the NZS,
the size of the EV fleet increases 19% to 23 million by mid-century, achieving a 99% share by
2046. Like Japan, around 1% is accounted for by hydrogen fuel-cell trucks and buses.

Indonesia’s EV uptake grows from just over 2 million in 2024 to 81 million by 2050 in our ETS,
making up 62% of the country’s fleet. Fossil fuels make up the remaining 38%, but the size of the
fleet declines from 91 million to 49 million over the same period. The size of the EV by mid-
century in the NZS grows to 128 million – 59% larger than in the ETS. Just over 1% of the total
fleet by 2050 is made up of vehicles powered by bioenergy, with the rest accounted for by EVs.

In Vietnam, EV uptake increases from around 620,000 vehicles to 42 million by 2050, which
equates to around 62% of the total fleet. The ICE vehicle fleet falls from 28 million to 26 million
over the same period, but this represents a decline from 99% of the total fleet to 38%. In the NZS,
the EV fleet grows to 67 million vehicles by 2050 – 61% larger than in the ETS and equal to 100%
of the entire vehicle fleet as all other types are phased out.

Figure 66: Size of vehicle fleet in selected Asia Pacific markets by drivetrain, Net Zero Scenario
Internal combustion engine vehicles Electric vehicles
Million vehicles Million vehicles
2,000 2,000
1,800 1,800
1,600 1,600
1,400 1,400
1,200 1,200
1,000 1,000
800 800
600 600
400 400
200 200
0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
2,500Korea
2…
2…
2…
2…
2…
2…
2…

China India Japan South

-2,500 Indonesia Vietnam
Source: BloombergNEF

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3.9. Sustainable aviation fuels and clean aviation

Aviation is a hard-to-abate sector and must use all possible technology options to achieve net-
zero by 2050, as no single pathway can decarbonize the sector on its own.

Sustainable aviation fuel (SAF) – an umbrella term for drop-in jet fuels made from non-petroleum
feedstocks – is one of the few technologies with the potential to help decarbonize aviation, and
the only feasible option in the near term. While demand for passenger and freight aviation is
rising, the uptake of SAF is hampered by high costs, limited feedstock availability and insufficient
policy incentives. Our base-case scenario sees a SAF share of only 3% of 9.9 exajoules (EJ) of
final energy use in 2050 across Asia Pacific, with the remaining 97% fossil jet fuel.

In the NZS, the mass deployment of next-generation engines and novel airframes leads to an
overall lower final energy demand of 7.1EJ in 2050 in Asia Pacific, 28% lower than in the ETS.
Hydrogen-fueled aircraft contribute 32% of final energy use. In our global modeling, we assume
turboprops or smaller aircraft powered by battery-electric or fuel cells are able to enter the market
in 2030. The use of electricity in final energy demand is negligible though, as this pathway only
decarbonizes small planes flying routes of a few hundred kilometers. Hydrogen-fueled
narrowbodies enter the market in about 2035 and could fly up to 4,000 kilometers.

Despite these innovations, some 68% of the final energy demand in 2050 across Asia Pacific in
our climate scenario is met by SAF. It remains the sole option to decarbonize flights of widebody
aircraft and other aircraft that cannot use electric or hydrogen propulsion.

Figure 67: Final energy use for aviation by source in Asia Pacific, Economic Transition Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Exajoules Exajoules
12 2023 12 2023

10 10
Hydrogen
8 SAF 8
Electricity
6 6 SAF
Oil
4 4 Oil

2 2

0 0
2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050
Source: BloombergNEF. Note: SAF refers to sustainable aviation fuels, including hydroprocessed esters and fatty acids (HEFA),
alcohol-to-jet, and e-fuels. Hydrogen refers to direct use.

Under the ETS, some 17MtCO2 per year of carbon emissions are abated in 2050, equivalent to
2% less emissions over 2024-2050 than in a ‘no transition’ scenario in which there are no further
climate actions.

In the NZS, aviation meets its sectoral carbon budget through a combination of aircraft fleet
renewals using more fuel-efficient engines and novel airframes (‘energy efficiency’ in Figure 68),
hydrogen-fueled aircraft (‘hydrogen’), and SAF. Compared to a ‘no transition’ scenario, SAFs
contribute 57% to abatement, followed by energy efficiency measures (30%) and hydrogen
(13%).

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 Asia Pacific’s Energy Transition Outlook
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Figure 68: Carbon dioxide emissions abatement in aviation in Asia Pacific by type/technology, Economic Transition
Scenario and Net Zero Scenario
Economic Transition Scenario Net Zero Scenario
Million metric tons of carbon dioxide Million metric tons of carbon dioxide

800 2023 800 2023

700 700
No transition No transition
600 600
500 500
ETS
400 400
300 300
200 200
NZS
100 100
0 0
2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050

1,000
Energy efficiency Electrification
0 SAF Hydrogen Oil
2…
2…
2…
Source: BloombergNEF. Note: The ‘no transition’ scenario is a hypothetical counterfactual that models no further improvement in
decarbonization and energy efficiency. In power and transport, it assumes that the future fuel mix does not evolve from 2023.
‘Energy efficiency’ includes demand-side efficiency gains and more recycling in industry. SAF is sustainable aviation fuel.

Sustainable aviation fuel

SAF is produced mostly from renewable biomass and waste resources today, and has a lower
carbon footprint compared with conventional jet fuel. SAF supply is currently extremely limited,
with just a handful of producers globally, but the industry continues to show promise.

The number of offtake agreements between airlines and producers developing facilities has
surged since 2021 as airlines demonstrate their commitment to the fuel, with over 100
agreements at different stages of commitment as of March 2024. BNEF has also tracked a flurry
of new projects announced to boost production capacity. But significant hurdles remain, including
high costs and competition for resources with renewable diesel, a road transport biofuel.

Apart from cost, the most pressing issue for producing SAF at the scale required is the lack of
diversification in production pathways, which limits the potential pool of feedstocks. If
unaddressed, this could lead to substantial bottlenecks and cause the aviation industry to fall
short of its ambitious goals.
SAF can be produced from a variety of feedstocks, via several technology pathways. In our long-
term scenarios we consider the three main technologies that have reached, or are closest to,
commercialization.
• Hydroprocessed esters and fatty acids (HEFA) is the dominant technology – practically all
SAF produced today is via the HEFA pathway. In the process, lipid feedstocks, such as
vegetable oils or used cooking oils, are deoxygenated and hydroprocessed to produce
hydrocarbon molecules. These molecules then go through a refining process to separate
them into different products like diesel and jet fuel. HEFA is by far the most commercialized
pathway, largely due to the fact that the process closely mirrors oil refining, so the technology

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and infrastructure is already established at scale. Oil refiners consequently dominate the
space. They own over 90% of current production capacity, mostly in the form of oil refineries.

that have been converted to produce biofuels instead of refining crude oil. Much like in
Figure 69: Planned traditional oil refining, product yields can be flexed to a degree, in accordance with the
sustainable aviation fuels producers’ preference and commercial considerations. Currently, most capacity is focused on
capacity by pathway producing renewable diesel for road transport due to historically healthier margins and
Billion gallons per year stronger policy support. However, as demand and policy support for SAF increase, so too are
7 anticipated yields at planned projects over the next five years.
6 • Alcohol-to-jet (ATJ) converts alcohols like ethanol or iso-butanol to a mix of hydrocarbons.
5 Ethanol or iso-butanol is typically produced via fermentation of sugar and starch crops such
as sugarcane and corn, and increasingly other biomass feedstock types such as waste
4
biomass like corn stover, bagasse, and sorghum. The alcohol then goes through dehydration,
3
oligomerization and hydroprocessing to produce hydrocarbons, including diesel and jet fuel.
2 Only one commercial-scale ATJ facility is currently operational, LanzaJet’s Freedom Pines
1 plant in Georgia, US, but several more are under development.
0 • E-fuel, also known as power-to-liquid fuel, is a synthetic fuel made from captured carbon
2020 2025 2030
dioxide and hydrogen using renewable electricity. These fuels are considered to have high
Other
Power-to-liquids potential as an alternative aviation fuel, as they do not rely on biogenic feedstocks and can
Alcohol-to-jet have extremely low or even neutral lifecycle carbon emissions. However, these are still at an
Hydroprocessing early stage of development, and proof of their commercial effectiveness has yet to be seen at
scale. Costs are extremely high – BNEF estimates e-kerosene to cost five to nine times more
Source: BloombergNEF. Note: than fossil jet fuel today, and it is likely to remain relatively expensive compared to other SAF
For more, see Global pathways.
Renewable Fuel Projects The role of SAF in Asia Pacific’s aviation (included under ‘bioenergy’ in our energy balances)
Tracker (web | terminal). Data varies substantially across our two scenarios. In the ETS, it makes up just 3% of total energy
as of February 2024. demand from aviation by 2050 – up from less than 1% in 2024. Our NZS, on the other hand, sees
SAF rising to 68% of the sector’s energy demand by 2050. In energy terms, this equates to an 18-
fold increase in SAF requirements across Asia Pacific in the NZS compared to the ETS.

Figure 70: Demand for sustainable aviation fuels in selected Asia Pacific markets, Economic Transition Scenario and Net
Zero Scenario
Economic Transition Scenario Net Zero Scenario
Million gallons Million gallons
200 4,000

150 3,000

100 2,000

50 1,000

0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
2,500
2…
2…
2…
2…
2…
2…
2…

China India Japan South

-2,500Korea Indonesia Vietnam

Source: BloombergNEF

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Section 4. Barriers, opportunities, and the way

forward
Asia Pacific markets are marching forward on the energy transition, but
progress varies across the markets. The window for achieving net zero by 2050
is rapidly closing. Governments need to back their climate commitments with
actionable policies, and accelerate decarbonization efforts in the next decade,
starting immediately, or risk missing climate goals.

4.1. Accelerating deployment of mature climate solutions

Achieving net zero by 2050 is reliant on emerging technologies, but the urgency of global
decarbonization now means governments and corporates will need to act by leveraging on
commercially available, low-carbon technologies as much as possible. These mature
technologies are already scaling today, and without any new policy implementations will continue
to see economic-driven deployment out to 2050 – but not at the pace required to reach net zero
(Table 9). To stay on a Paris-aligned trajectory, more will be needed from government, regulators,
investors, corporates, and technology providers to bridge the gap.

BNEF’s NetZero Pathfinders

BNEF’s Delivering Net Zero: A Framework for Policymakers is a handbook for
governments to design and implement decarbonization strategies. It aims to serve as a
fundamental resource for key stakeholders by outlining the policy actions needed to reach net
zero. The public NetZero Pathfinders web platform displays a library of the most effective
policies to date. These policies, known as best practices, can be replicated in other markets to
accelerate progress to net zero.
To help governments navigate potential policy paths to net zero, the Pathfinders actions are split
into four pillars:
1. Accelerate deployment of mature climate solutions
2. Support development of new climate solutions
3. Phase out carbon-intensive activities
4. Create appropriate climate transition governance structures
See https://www.netzeropathfinders.com for more.

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Table 9: Opportunities to accelerate deployment of mature climate solutions

Technology Economic Net Zero Key challenge to Possible solutions

(units) Transition Scenario, 2050 keep on track for
Scenario, 2050 (Multiplier net zero
(Multiplier versus versus 2023)
2023)
Solar 6,781 11,676 Rapid scaling • Binding phase-out targets for unabated
(gigawatts) (x6.9) (x11.8) fossil fuel power plants
Wind 2,970 5,847 Rapid scaling • Regulatory and market reforms to
(GW) (x5.5) (x10.9) unlock renewable opportunities
• Easing potential grid bottlenecks
• Minimizing site acquisition hurdles
through land allocation for renewable
project development
• Clear, long-term procurement programs

Battery storage capacity 1,761 2,227 Rapid scaling • Standalone or hybrid auctions
(GW) (x48.5) (x61.3) • Power market reforms to allow for
participation of batteries in ancillary
service, energy, and capacity markets

Passenger electric 515 671 Rapid scaling • Stringent fuel-economy or tailpipe

vehicle fleet (x22.2) (x28.9) emissions standards
(million vehicles)
• Mandate electrification of business
fleets
• Subsidies and/or tax incentives to ease
purchase barriers
• Developing sufficient charging
infrastructure
• Introduce and legislate a complete
phase-out date for sales of new internal
combustion engines

Power grid 44,036 53,101 Socio-political • Minimizing site acquisition hurdles by

(thousand kilometers) (x1.4) (x1.7) acceptance facilitating easement rights
• Regulatory reforms to spur greater
private investments and open access to
larger pool of capital

Source: BloombergNEF

4.1.1. Phase out unabated thermal power generation, especially coal

A low-carbon power system will be the foundation of a net-zero energy sector, comprising 75% of
the region’s energy consumption by 2050 (Figure 71). Clean power alone could abate 50% of
Asia Pacific’s cumulative emissions between 2024 and 2050. Reducing emissions from the
region’s power sectors needs to be of utmost priority. It is also one that can be actioned
immediately with a fast scaling of low-carbon technologies and swift end to financing of new
unabated fossil fuel plants. In the NZS, the share of generation from solar and wind increases

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from 19% to 73% over 2024-2050 in the NZS. The relative economic competitiveness of these
technologies translates into a significant scale up under the ETS too, reaching 64% of the region’s
output by mid-century (Section 3.2).

Figure 71: Asia Pacific energy consumption by macro sector, Net Zero Scenario
2023 2030 2040 2050
1%
1% 2%
5% 6% 8% 9%
6% 4% 3%
5%
14% 13% 5%
12%
46%
288,697PJ 291,376PJ 49% 14%
298,307PJ 320,116PJ
8%
9%
66%
75%
20% 19%

Power Industry Buildings Transport Other Non-energy use

Source: BloombergNEF. Note: PJ is petajoules. ‘Non-energy use’ is non-combusted fuel consumption; consumed mostly in industry
(chemicals).

Further addition of unabated fossil fuel generation capacity, in particular coal, is incompatible with
a net zero by 2050 goal, according to the NZS (Figure 72). Limiting thermal power capacity
expansion, and the introduction of carbon capture technology for new and existing plants, will be
critical in all Asia Pacific markets, to set the region on track for net zero.

China is the world’s largest investor in the energy transition, however its growing coal power plant
fleet is one of the major impediments to the world getting on track for meeting the Paris
Agreement goal. While China has already taken positive steps to reduce emissions from coal
power plants by phasing out older, higher-emitting plants as well as requiring more flexibility from
newer plants to be able to run at lower load factors, it will need stronger measures to achieve the
retirement of over 330GW of existing coal power plants required by the Net Zero Scenario. India,
Japan, South Korea, and Southeast Asia also face a similar need to accelerate the closure of coal
assets. Nearly 1.7TW of coal capacity is retired across Asia Pacific over 2024-2050 in the NZS –
more than three times as much as in the ETS (Section 3.1).

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Figure 72: Asia Pacific gross cumulative fossil-fuel generation capacity addition and
retirement by time period

Gigawatts
1,500

1,000

500

-500

-1,000

-1,500
2024-2030 2031-2040 2041-2050 2024-2030 2031-2040 2041-2050
Economic Transition Scenario Net Zero Scenario
Coal Coal with CCS CCGT CCGT with CCS Gas peaker Gas peaker with CCS
Source: BloombergNEF. Note: Negative values represent capacity retirements. CCS is carbon
capture and storage. CCGT is combined-cycle gas turbine.

While Japanese and Korean utilities are considering reducing emissions from existing coal power
plants by co-firing coal with cleaner fuels such as ammonia or biomass, their current strategies
are not set to deliver the scale of emission reduction required. Countries in the region need to set
binding targets for phase-out of unabated coal power plants. To alleviate the burden on existing
power plant owners, in the short term, these markets can consider introducing incentives for
“brown to green” transition of existing coal assets via reverse auctions partially backed by state
funding. Japan’s sovereign-backed green transition bonds, along with its low-carbon power
capacity auction, are good examples of such approaches although the current lax design of these
programs is not sufficient to deliver the emission reductions required. As discussed later,
voluntary carbon offsets can also provide an additional revenue source for early retirement of
existing coal power plants.

Power market reforms to allow for appropriate market price signals to guide investments
The lack of a competitive wholesale power market in several key Asia Pacific markets, such as in
Indonesia and Vietnam, means there is a lack of appropriate pricing signals to incentivize closure
of uneconomic coal generators. Terminating a planned power project in Indonesia and Vietnam
operating on a single buyer model, whereby one entity, typically the state-owned utility, procures
all electricity supply, is also legally and financially challenging. This is reflected in the results of
our ETS: by 2050, unabated coal still accounts for 33% of Indonesia’s generation, compared with
22% in India, 22% in Japan and South Korea, and 9% in China.

It is imperative that power purchase agreements signed today do not cause a long-term lock-in of
less economic and carbon-intensive technologies. Historically, to attract the required financing
and investments for power projects, many coal generators were offered decades-long contracts
often accompanied by revenue protecting clauses such as a take-or-pay clause. Many of the
agreements have little agility built in for early termination without financial penalties, effectively
binding the offtakers to the contracts, which schemes such as the JETP and Asian Development
Bank’s Energy Transition Mechanism are trying to address. This contrasts with power markets

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such as Australia’s, where coal and gas generators are exposed to daily market price signals and
are already experiencing a squeeze on their dispatch hours, edged out by cheaper renewable
assets.

Timely evaluation of planned thermal plants in national power plans

It is critical to perform timely reviews on the feasibility of pipeline fossil-fuel generation projects.
Prompt cancellation of projects that are no longer economically viable or compliant with the
country’s climate targets will help to reduce the magnitude of the energy transition challenges.

As international financing turns away from carbon-intensive projects, pipeline thermal power
projects yet to secure financing will find it increasingly challenging to do so. Delays in planned
coal and gas power plants due to financing challenges in Vietnam have led to power supply
shortages. This prompted the country to shift its focus toward solar and wind projects, and to
implement a review process and a deadline to achieve financial closure for pipeline coal projects.
Projects that fail to secure financing by the designated deadline will also be canceled. Introducing
such designated deadline for projects could be a consideration for Indonesia. This enhances
energy security and allows the country to choose the most economical options to meet growing
power demand.

4.1.2. Accelerate the buildout of renewable power

Progress on clean power deployment varies significantly across the region. Several Asia Pacific
markets including China and India have been global leaders in the deployment of solar and wind
capacity in the last 10 years, driven by ambitious national renewable targets backed by concrete
actions and enabling development frameworks to see it through.

Figure 73: Top 10 global solar cumulative installed capacity Figure 74: Top 10 global wind cumulative installed capacity
additions by market, 2014-2023 additions by market, 2014-2023

Gigawatts Gigawatts
Mainland China 668 Mainland China 346
US 158 US 87
India 89 Germany 32
Japan 66 Brazil 23
Brazil 48 India 21
Germany 45 UK 18
Australia 30 France 13
Spain 28 Sweden 11
South Korea 26 Australia 8
Netherlands 24 Turkey 8

Source: BloombergNEF. Note: Dotted-filled bars indicate Asia Source: BloombergNEF. Note: Dotted-filled bars indicate Asia
Pacific markets. Pacific markets.

Indonesia would benefit from regulatory and market reforms to help unlock renewable
project opportunities
In contrast to leading markets like China and India, Indonesia added less than a gigawatt of solar
(including both utility-scale and small-scale systems) from 2014 to 2023, hindered by an
overcapacity of coal plants in the country’s main grid systems that leave little space for additional

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generation capacity. Frequent changes to regulations on renewable development and tariffs, and
the lack of transparency in the market add to the challenges. A small renewable power
procurement appetite from the state-utility, Perusahaan Listrik Negara (PLN), coupled with a lack
of alternative routes to market for renewable projects, limits project opportunities. To overcome
obstacles impeding clean power deployment, Indonesia should consider:
• Leveling the playing field for renewable power: Existing regulations hinder uptake of
renewable energy generation technologies. Current power purchase tariff regulations force
clean energy to compete with subsidized coal power. To unlock more renewable
opportunities, it is imperative to re-evaluate both direct and indirect subsidies for fossil fuel
plants. This allows different generation technologies to compete on an economic basis which
can help to reduce overall supply cost over time. Moreover, opening access to PLN’s
networks for power wheeling could potentially boost corporate clean power procurement and
remove the financial burden of supporting new clean power projects from the government and
PLN.
• Enhancing transparency through clear renewables procurement programs: Auctions
have been effective in driving renewable capacity addition globally. From 2004 and 2022,
over 1 terawatt of renewable energy capacity has been awarded, with China accounting for
more than half of total capacity (Figure 75). Indonesia currently carries out tenders to procure
power capacity, primarily through state-owned utility Perusahaan Listrik Negara (PLN). The
current power procurement process is opaque, limiting competition and price discovery. This
increases costs to the public purse. Greater policy stability and transparency would help
attract investment: for instance, a clearly defined long-term renewable procurement program
could encourage growth of a local solar manufacturing and deployment value chain.
Standardized power purchase contracts would also help.

Figure 75: Completed auction Figure 76: Annual auctioned and announced renewables capacity, by technology
capacity by market

Gigawatts
12%
400 342
2%
3% 300
3% 223 240
4% 1,016 51%
gigawatts 200
115 110
7% 90 103
70 54
100 38
9 6 6 11 11 17
16%
0
2010 2015 2020 2024 Announced
China India volume
Germany Netherlands Solar PV Solar thermal
Brazil France Onshore wind Offshore wind
UK Japan Biomass and waste Hydro
Australia Others Mixed auction/other Storage/renewables plus storage
Source: BloombergNEF. Note: Figures Source: BloombergNEF. Note: Uses plant-level data for auctions where support is
are cumulative over 2004-2022. Uses awarded for generation. The growth in auctioned solar photovoltaic (PV) capacity in 2022
plant-level data for auctions where compared to previous years is partially due to improved data availability for Chinese
support is awarded for generation. auctions in 2022. Data as of 3Q 2024.
Numbers are rounded to the nearest
whole value for addition purposes. Data
as of 3Q 2024.

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Assisting project developers to navigate site acquisition challenges

Difficulties in land acquisition can impede efforts to deploy more renewable energy projects
across the Asia Pacific markets. Utility-scale renewable projects, in particular solar and wind,
require large contiguous land areas. Aside from finding large parcels of land in areas with viable
resources and access to grid interconnection, project developers may also have to compete with
agriculture and industrial businesses. Increased renewable capacity deployment can also raise
competition and in turn prices of suitable parcels of land.

Figure 77: Regional land demand of peak renewables and saturation levels in key Asia Pacific markets, Net Zero Scenario

Square kilometers Saturation of land suitable for wind Saturation of land suitable for PV
Wind PV
China 781,526 24% 1%

India 340,289 20% 2%

Vietnam 42,787 65% 9%

Indonesia 37,957
47% 1%

Japan 34,366
56% 8%

South
Korea 22,524 129% 14%

Source: BloombergNEF. Note: Wind is onshore wind. PV is solar photovoltaic. Saturation is the land required (demand) as a
proportion of the land that has been identified as suitable (supply), for the respective technology. Suitable land constraints account
for land characteristics and resource availability, but not for proximity to existing grids, infrastructure, or local labor availabilsity. See
full methodology in Appendix E.

BNEF’s modeling of land use suggests that, theoretically, apart from availability of suitable land
for wind capacity deployment in South Korea, all other key Asia Pacific markets have enough
suitable land for renewables deployment required under the NZS. But there could be pinch points.
Our geospatial analysis shows that land supply is tightest in South Korea under the NZS, where
wind installations could require 29% more land than is deemed suitable. South Korea, Vietnam
and Japan are also the most land-constrained countries for solar deployment out of the six key
Asia Pacific markets discussed. The available land in these regions is constrained due to large
areas of protected land, as well as challenging terrain.

Where the suitable land for deployment is exhausted, these countries may need to find ways to
increase energy yields per hectare through technological innovation, or strategically invest in
alternative technologies that are more expensive today but less land-intensive in the future, such
as offshore wind, geothermal or nuclear.

Where land is available, project developers could also face acquisition barriers that governments
could assist in easing.

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• India’s industry players polled by BNEF scored land acquisition as the biggest hurdle to
accelerating India’s clean power transition. Land ownership in India is fragmented and land
titles can be unclear. Project developers also face differing land acquisition rules and
procedures by state. Digitizing land records, promoting uniformity in acquisition rules and
aggregation of land by state agencies would help de-risk and accelerate project development.

Figure 78: Barriers to accelerating India’s clean power transition

Source: BloombergNEF. Note: Shows results of poll conducted at the BNEF Summit New Delhi
on September 5, 2024 with 78 responses.

• Similarly, Japan has a lot of land with unknown ownership. The area of such land (based on
the registry) accounts for 20% of the land sample, according to a survey conducted by the
Ministry of Land, Infrastructure, Transport, and Tourism in 2016. With Japan’s economy and
demographic shift, this amount could keep rising in the future. Effective management of such
land by Japan’s government could increase access to land for renewable energy deployment.
In 2022, Japan revamped its land policy, extending the use of land with unknown ownership
to 20 years from 10 years for public purposes.
• In South Korea, many municipal governments have their own geographic restrictions on
solar project development (e.g. distance from public roads, residential area, etc.).
Standardizing such regulations and providing clear guidelines by which legal claims can be
made will reduce conflicts with local communities.
• Offshore wind projects in Vietnam face a lack of regulations around sea use permit and
seabed leasing regulations and process, and the construction and operation of submarine
cables. The country is currently developing a national marine spatial plan which could offer
developers clarity around the rights to seabed. Clear seabed allocation for offshore wind
development would also lower uncertainty around site selection for developers.

Governments can help to address site acquisition hurdles

Land or site, and grid access are two of the largest development risks for renewable project
investors. Some markets, such as India and Australia, have turned to solar parks or renewable
energy zones, providing land, grid connection and basic infrastructure (roads and water
supply). This helps to de-risk projects for independent power producers and can spur
renewable energy deployment.
As the best sites with the highest-quality renewable energy resources and nearby grid access
are utilized, the challenge of finding suitable sites for new renewable energy projects increases
and can hold back capacity deployment. Governments can help to mitigate this barrier through:

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• Providing a national registry on suitable land and ownership

• Streamlining permit approval processes. This can be achieved through a government

‘one-stop shop’ for all permitting and connection applications

• As much as feasible, standardizing land-use regulations and guidelines on a national level

• Offering available and suitable government-owned land through reverse tenders.

• Coordinating and facilitating grid infrastructure development and basic civil works for
suitable sites, including acquiring required necessary land rights

4.1.3. Expand and upgrade power grids and systems

As renewable penetration on a grid increases, markets are experiencing grid capacity constraints,
grid connection permitting bottlenecks and high curtailment rates from a lack of adequate flexible
capacity in the grid. Addressing these issues early on and as part of auction designs can prevent
delays resulting from infrastructure bottlenecks. In the ETS, Asia Pacific markets commit around
$5.7 trillion toward grid investment over 2024-2050. Greater renewable buildout in the NZS
requires 56% more grid investment – or $8.9 trillion – over the same period (Section 3.5).
• China has been building transmission networks including high-voltage direct current (HVDC)
lines at an unprecedented rate. However, the combination of technologies used and current
power market regulations have limited renewables from increasing their utilization of such
grid infrastructures. More work is needed to ensure China’s national and local grids can boost
– not hinder – renewable uptake.
• In Japan and India, demand centers can be quite far from regions with high renewable
resources. Hence, ensuring sufficient transmission grid capacity, including inter-regional
infrastructures, are key to enabling higher uptake of renewables. Improved transparency
around grid connections processes, timelines, and costs would also enable the significant
scale-up of renewable capacity required for the countries’ net-zero goals.
• In Indonesia and Vietnam, where the state-owned utilities retain a monopoly in the
transmission and distribution segments, reforms to enable private grid investments can
increase access to the required capital and accelerate necessary grid infrastructure
upgrades.

4.1.4. Augment power system flexibility

All regional governments, regulators, and power system operators need to prioritize flexibility –
from both the supply and demand side – to enable higher renewable generation shares.
Inadequate power system flexibility can result in high levels of renewable curtailment or sub-
optimal dispatch of resources. Total energy storage capacity deployment (batteries and pumped
hydro) in the NZS across Asia Pacific increases from 170GW in 2024 to 2.7TW by 2050,
compared with 2.2TW in the ETS (Section 3.4).

Indonesia and Vietnam’s power market regulations currently do not allow for the participation of
storage assets. Both countries’ power sector plans also favor pumped hydro developments and
present limited opportunities for battery storage assets. Implementing frameworks for the
participation of all types of flexible assets in Vietnam’s and Indonesia’s power systems could help
these countries leverage economic dispatchable generation sources. This could also ease any
curtailment challenges and enhance grid flexibility for the integration of variable renewable energy
sources. This includes the use of controllable load assets such as virtual power plants, demand

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response and interruptible load schemes, which can increase the stability of the grid and better
align both countries’ demand profiles with the generation profiles of renewable energy plants.

To facilitate storage capacity deployment, some Asia Pacific markets have employed energy
storage capacity auctions, regulations, or auction designs to shift the responsibility of firming
variable renewable generation onto the power producers. Notably, India is pioneering a series of
complex renewable energy auctions, where projects need to combine multiple technologies to
reduce the intermittency of output, increase capacity factors and move closer to firm, dispatchable
clean power. This model could be emulated by other countries in the region. As of March 2024,
India has called for 31 complex auctions which can be broadly classified into four categories.

Table 10: India’s renewable auction designs

Parameter Hybrid Peak power Round-the-clock Load-matching

Technologies Wind, solar Wind, solar and energy storage. The latter is mandated in some projects and
deployment will happen in almost all projects to meet supply conditions.
Sizing Minimum capacity No restrictions on sizing of wind and solar components. Some tenders mandate
of each source minimum size of storage required, and storage must be charged using renewable
must be 33% of power.
total capacity
Key supply conditions Annual capacity Specify energy dispatch or Specify minimum Projects may be called
factor (CF) of 30% availability for four to six peak availability and capacity on to meet
hours daily factor on annual or representative hourly
monthly basis demand profile for 25
years
Third-party power Not allowed or Specify energy dispatch or availability for four to six peak hours daily
transactions needed
Source: BloombergNEF, tender documents. Note: Table shows typical tender terms, each tender has small variations.

4.1.5. Rapidly electrify road transport

Rapid and complete electrification of road transport holds the key to fully eliminating emissions
from the sector. Today, electrification of passenger vehicles is the most accessible option that
governments already can tap into for immediate emissions reduction in the transport sector. Light
electric vans and trucks are already being adopted in several countries but see a slower uptake
compared to passenger vehicles.

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Figure 79: Electric vehicle share of passenger vehicle fleet, Economic Transition Scenario

Leader Catching up Late

100% 100% 100%
China 95%
83%
75% 75% 75% 79%
South India 67%
Korea 63%
50% 50% 50%
Japan
Indonesia /
25% 25% 25% Vietnam*

0% 0% 0%
2020 2030 2040 2050 2020 2030 2040 2050 2020 2030 2040 2050
Source: BloombergNEF. Note: *Trajectories for Indonesia and Vietnam overlap and are represented by the same line in the chart.
Passenger vehicles include buses, cars, trucks, and two- and three-wheelers.

EV uptake differs significantly across countries in the Asia Pacific region, both presently and in
our forecasts. While China gets close to a full phase-out of internal combustion engines in its
passenger vehicle fleet by 2050 under the Economic Transition Scenario, India, Japan, Indonesia
and Vietnam fall short and are not on track to achieving net zero by 2050 unless urgent policy
action is taken today.

To drive increased adoption of EVs across all segments, governments will need to step up and
implement some or all of the measures below:
• Introduce or tighten fuel economy standards and/or tailpipe CO2 emissions standards,
accompanied by effective penalties on failure to comply, to incentivize automakers to
prioritize supply of electric vehicles for the market. The lack of affordable EV models can hold
back uptake, especially in more price-sensitive markets such as India and Southeast Asia.
• Introduce mandates for electrification of business vehicle fleets, including those of
governments and transport operators such as taxis and ride-hailing services. The higher
annual vehicle mileage clocked by business fleets lowers the total cost of ownership and
enhances the economics of EV adoption.
• In markets where the upfront cost disparity between an EV and ICE remains high, direct
purchase subsidies and/or indirect cost subsidies through tax incentives can be considered.
Where constraints around direct financial subsidies exist, governments can consider
implementing a CO2 emissions-based tax on ICEs to improve the relative economics of EVs.
• As the cost of batteries and correspondingly EVs fall, the role of financial incentives in driving
uptake declines. Instead, governments should also focus on the whole ecosystem, such as
ensuring sufficient charging infrastructure to support a larger EV fleet. This is critical in
densely populated markets with many without access to a private home charger.
Policymakers can introduce a charging infrastructure target at a level sufficient to meet the
country’s charging demand and a uniform charging standard. To ensure timely deployment of
chargers, authorities can organize tenders for the installation and operation of charging
infrastructure. Governments can also leverage building codes and standards to mandate the
installation of EV chargers in new buildings.
• Impose regulations around battery warranties and repairs to alleviate concerns around
depreciation and maintenance costs for EV adopters.

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• Many countries are moving to onshore battery supply chain and manufacturing jobs in the
name of job creation and energy security. The use of punitive trade policies must be done
and designed carefully to ensure its effectiveness in scaling up the domestic industry. Failure
to do so could severely limit the supply of affordable EVs in a market and slow the energy
transition in the sector.
• Introduce and legislate a complete phase-out date for sales of new internal combustion
engines. This conveys a clear and firm national transport decarbonization plan to automakers
active in the market and allows them the necessary runway to ramp up supply of low-carbon
vehicles.

The decarbonization role of transportation modal shifts

As governments target higher EV adoption in their respective markets, a push to reduce overall
demand for vehicle usage and ownership also aids in decarbonizing the sector through the
lowering of total energy demand. Higher-density zoning in urban areas, active transport options
such as cycling and walking and the necessary supporting infrastructure, and investment in
mass public transit all have an important role to play.

4.2. Supporting the development of emerging climate

solutions
Achieving net zero by 2050 relies on a few developing technologies for which associated
infrastructure and global supply chains are yet to scale up significantly and cost curves are still
emerging. The urgency of global decarbonization means governments and corporates need to
intensify efforts to ready and commercialize these technologies for deployment at scale within the
next 10 years. The gap between the deployment of emerging technologies under the ETS
compared to the NZS is far greater than that of mature solutions. This means more effort and
innovation will be required to develop and deploy these technologies to stay on a Paris-aligned
pathway.

4.2.1. Fund pilot projects for clean dispatchable firm power capacity
While solar, wind, and batteries will form the bulk of power capacity under the Net Zero Scenario,
a fully decarbonized power system will also need clean dispatchable firm power. Governments
across the region should consider funding pilot projects during this decade specifically for new
technologies such as CCS for thermal power plants, next generation geothermal and nuclear as
well as LDES.

4.2.2. Introduce policy support for hydrogen across the value chain
Hydrogen is an important decarbonization vector for high-heat industrial sectors. Globally, 53
markets had a hydrogen strategy by March 15, 2024, and 30 were preparing one. This includes
all six markets discussed in this report – China, India, Japan, South Korea, Indonesia and
Vietnam. However, clean hydrogen today comes with a higher price compared to the coal and
gas it aims to displace and would require some form of policy support and/or subsidies. The lack
of any new policy incentives to support clean hydrogen production in the ETS sees gray hydrogen
still make up over 70% of the fuel’s consumption by 2050, with the rest coming in the form of
endogenous hydrogen. By contrast, the application of a carbon constraint in our NZS sees 95% of
hydrogen being produced via green electrolysis by 2050 (Section 3.6).

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Table 11: BNEF’s policy signposts, progress by region

Policy signpost Americas (AMER) Asia Pacific (APAC) Europe, Middle East
and Africa (EMEA)
Hydrogen strategies Most major markets Most major markets Most major markets
and targets have a H2 strategy; have a H2 strategy; have a H2 strategy and
some have targets some have targets targets
Government funding $188 billion in funding $32.5 billion available, More than $140 billion
available, most for H2 an order of magnitude available, more for
producers below AMER, EMEA users than AMER
Enforceable demand No quotas for clean H2 South Korea has EU has the strongest
quotas use in AMER quotas; not all are for H2 quotas; some may
clean H2 be hard to enforce
Carbon prices that bite Missing or insufficient Missing or insufficient EU and UK have CO2
carbon prices in all carbon prices in all prices and plan to limit
AMER markets AMER markets exemptions
H2 midstream US firms are building Chinese firms are Pipeline policy is
development salt caverns, but with planning pipelines, but starting to emerge in
little policy support policy support is low the EU and UK
Source: BloombergNEF. Legend: On a good track, some progress, more effort needed.

Pushing incumbent uses to low-carbon hydrogen

Existing hydrogen uses can drive the initial offtake for low-carbon hydrogen and support the first
wave of low-carbon supply projects. Before hydrogen demand in hard-to-abate sectors scales,
incumbent hydrogen use in the production of ammonia for fertilizers and chemicals, methanol for
plastics and chemicals, and oil refining represent an immediate opportunity.

Policymakers can consider the use of an enforceable clean hydrogen quota to increase hydrogen
demand. Quotas can be designed to increase in line with expected availability of supply and cost-
competitiveness of the molecule, but not too insignificant that it fails to drive up demand. Today,
South Korea is one of two markets with the most certain clean hydrogen demand in the short
term, supported by the country’s quotas for hydrogen use in the power sector. India is also
mulling quotas for clean hydrogen use by existing gray hydrogen users.

Supporting the infrastructure development of cost-competitive low-carbon hydrogen

Tax incentives, subsidies and/or contract for differences (CfD) will play a crucial role in Asia
Pacific in reaching its hydrogen potential. Generous tax credits, like those seen under the US
Inflation Reduction Act (IRA), could significantly reduce the cost of hydrogen production, making it
competitive with its fossil counterparts. The regional governments could look to the IRA and
introduce both a production tax credit mechanism and an investment tax credit covering a share
of the upfront cost for a new clean hydrogen facility.

Midstream infrastructure development is missing as a priority for most policymakers today. A

steady build out of infrastructure is needed to support the region’s hydrogen industry.
Infrastructure in the form of ports, pipelines and storage facilities for hydrogen would be
imperative if key Asia Pacific markets are to scale up production. Building new pipelines to
transport hydrogen will be capital intensive and repurposing existing pipelines might not be
feasible due to the technical properties of the fuel.

Cross-border hydrogen trade discussions among Asia Pacific markets are on the rise. However,
infrastructure to support international hydrogen trade is largely lacking today. Whether a market is

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 Asia Pacific’s Energy Transition Outlook
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looking to export (such as Vietnam) or import (such as Japan and South Korea) hydrogen,
Figure 80: Clean hydrogen policymakers need to ensure that they develop the required infrastructure to support their
offtake by 2030 respective hydrogen ambitions. Industry will also have to build large-scale storage options for
hydrogen for which governments can facilitate by conducting feasibility studies on. The
establishment of hydrogen hubs can allow producers, users, and exporters to work together and
Million metric
tons/year achieve economies of scale from shared infrastructures and expertise.

61 It is imperative that the scale-up of hydrogen production is accompanied by a ramping up of a

market’s renewable power capacity and/or the CCS industry − although almost all hydrogen
produced today is gray, which is not compatible with a net-zero transition. It is necessary to
ensure a holistic ecosystem development to enable low-carbon hydrogen production for tangible
88% emissions reduction benefits.

Supporting the scale-up of new sources of demand for low-carbon hydrogen

Clean hydrogen demand remains low compared to announced supply. By April 1, 2024, only 12%
12% of production capacity planned to come online by 2030 has identified an offtaker (Figure 80). The
April 2024 low offtake rate is holding back supply projects from securing financial closure. Financial support
Total supply for hydrogen today has been focused on production projects. Governments in China, India,
Offtaker not identified Japan, and South Korea had collectively earmarked more than $30 billion for clean hydrogen by
April 30, 2024 (Figure 81). Just 9% ($2.6 billion) is targeted at demand and comes exclusively
Source: BloombergNEF
from Japan and South Korea.

Figure 81: Government support for hydrogen by market and target area

$ billion

Japan 26.9

India 2.2 Cumulative:

Supply: $25.3 billion
Both: $2.3 billion
South Korea 0.7 Demand: $2.6 billion

China 0.5

Source: BloombergNEF. Note: ‘Both’ includes supply, demand and support for hydrogen
midstream (storage and transport). Data as of April 2024.

Focusing on demand-side incentives will be critical for the progression of hydrogen production
facilities. Governments can consider:
• Tax incentives, subsidies and/or contract for differences (CfD) to spur clean hydrogen offtake.
It is imperative to channel financial assistance into sectors where clean hydrogen will be the
most effective decarbonization pathway. Japan’s past hydrogen policies provided generous
subsidies for applications such as fuel cell passenger vehicles, as well as residential fuel cell
co-generation systems. However, there are cheaper and more effective ways to decarbonize
the transport and buildings sectors.
• Introduce clean hydrogen quotas and/or effective carbon prices. Governments could also
provide offtakes to hydrogen producers through state-owned entities.

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• Governments in the region could also look to cross-border collaboration on hydrogen supply
and demand incentives targeting industries with the highest potential for clean hydrogen
offtake. This includes sectors facing pressure from stakeholders to decarbonize such as
steelmakers and automakers.

4.2.3. Catalyze carbon capture and storage adoption through incentives

and regulations
Global CCUS capacity has grown at a 7% compound annual growth rate (CAGR) since 2010.
Growth was initially incentivized by enhanced oil recovery (EOR), particularly in the US, but now
net-zero goals and the subsequent demand for green products are the market’s new driving force.

Investment in the technology is scaling both globally and in Asia Pacific. In 2023, global
investment in carbon capture, transport and storage nearly doubled for the second year in a row,
reaching a record $11.3 billion (Figure 82). However, rapid scale-up of the technology is still
limited by costs, technological, and infrastructure constraints.

Figure 82: Global investment in carbon capture, utilization, Figure 83: Global carbon capture capacity by point source,
transport and storage by region historical and announced (cumulative)

$ billion Million metric tons of CO2 per year

12 11.3 450
1.1 400
10
350
2.8
8 300
5.7 250
6
1.3 200
4 2.9 7.4 150
2.0 2.8 100
2 0.9 0.5
0.7 2.6 0.3 50
0.7 0.8 1.3 1.6
0 0
2018 2019 2020 2021 2022 2023 1Q 2010 2015 2020 2025 2030 2035
2024
EMEA AMER APAC Hydrogen production Power generation
Natural gas processing Oil refining
Cement production Ethanol production
Chemical production DAC
Ammonia production Iron and steel production
Other

Source: BloombergNEF. Note: APAC is Asia Pacific; EMEA is Source: BloombergNEF. Note: DAC is direct air capture.
Europe, the Middle East and Africa; AMER is Americas. Includes
asset finance, corporate research and development to develop
first phases of specific projects, and government research and
development for direct air capture plants and point source
technologies.

Globally, new project announcements have slowed, as investors continue to wait for more clarity
from governments on incentives and regulations in the major markets such as the US, the UK,
and Canada. The CCUS market today is dominated by natural gas processing, using the CO2 for

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EOR (Figure 83). These are the cheapest applications for CO2 capture. However, under the NZS
power generation and hydrogen production will gain significant market share from 2027.

Hydrogen continues its victory lap as the sector to beat in terms of new project announcements,
despite a global slow down. While much of the market has remained quiet, locations with
enforceable quotas to increase low-carbon hydrogen demand, like South Korea and the EU, have
seen some activity6. These quotas could inadvertently increase blue hydrogen capacity in the US
as developers target these markets for offtake. In January of this year, Posco and Adnoc
announced plans to produce blue hydrogen at the Gwangyang terminal in South Korea. The
companies have plans to start supplying clean hydrogen in 2029 to proximal iron and steel
facilities and to other local industrial parks.

Transport and storage bottlenecks plague the industry

CCS holds immense emissions abatement potential in the fossil-fuel dominated energy systems
around Asia Pacific. By 2030, operational and proposed pipeline projects total 47MtCO2 per year
in the six key Asia Pacific markets, with China, Japan and Indonesia leading the pipeline in the
NZS. Uncertainty surrounding policy, financing and transport and storage permitting woes could
however hinder the materialization of these projects.

Figure 84: Cumulative carbon capture, utilization, transport, and storage capacity
proposed by commissioning year and market

Million metric tons of CO2 per year

60

50 47.0
5.0
40
31.3
13.5
30 5.2
20.3 20.3 20.3 20.3
17.9 8.0 7.5
20
9.9
10 16.6 17.7
13.6 13.6 13.6 13.6 13.6
7.5
0
2024 2026 2028 2030 Unknown
China India Indonesia Japan South Korea Vietnam Australia, Japan

Source: BloombergNEF. Note: ‘Unknown’ refers to projects without an announced commissioning

year. ‘Australia, Japan’ reflects a bilateral project. Excludes projects that are canceled or put on
hold.

For CCUS to succeed as a decarbonization solution, transport and storage capacity should ideally
exceed the proposed capture capacity. About 6Mt of combined transport and storage capacity is
proposed to come online by 2030 in the six key Asia Pacific markets, far lower than the 41Mt of
capture capacity proposed to come online by then (Figure 85).

6
The EU quota is for green hydrogen, but US blue hydrogen projects can qualify.

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Figure 85: Proposed carbon capture, transport and storage capacity by segment in key
Asia Pacific markets

Million metric tons of CO2 per year

50
45 6.5
40
35
30
25
20 41.0
15 17.5
10
5
6.0
0
Capture Transport and storage
Source: BloombergNEF. Note: Solid bars show cumulative capacity by 2030 and dotted-filled bars
represent capacity with no announced commissioning year. Chart shows proposed capacities in
China, India, Japan (including bilateral project with Australia), South Korea, Indonesia and
Vietnam.

The region needs more clarity on regulations around CCS activities

Today, Asia Pacific largely lacks CCS-specific regulations governing domestic and cross-border
capture, transport and storage permitting and activities which could slow project developments.
While policy activities in most markets are currently subdued, some markets are showing some
encouraging development such as Japan and Indonesia.

Table 12: Summary of major carbon capture, utilization and storage policy announcements in selected Asia Pacific
markets, December 2023-May 2024

Policy Market Description BNEF take

Carbon market update to Japan Change in Japan’s carbon This could drive companies to seek out international
include carbon offsets market rules to include offsets carbon removal offsets, especially from markets that are
from CO2 removal projects signatories to the Joint Crediting Mechanism, as Japan
including direct air capture and transitions its carbon markets to a compliance market in
bioenergy with carbon capture 2026.
CCS Business Act Japan The act defines the rights for The Act does not currently define any incentives that
storage and drilling, monitoring would be made available to projects. However, the
responsibility and the legislation gives more long-term clarity to investors about
regulations for pipeline Japan’s ambitions and sets the rules in place as the
transportation of CO2 market scales up efforts to deploy the CCUS projects it
has identified across seven different sites.
Indonesia limits CO2 Indonesia Limit international CO2 storage Indonesia is keen to develop storage infrastructure that it
imports to 30% and prioritize domestic aims to monetize by parking emissions from regions
emissions such as Japan, Korea and Singapore. These regulations
allow companies such as Pertamina and Exxon to start
developing projects that can be marketed to emitters in
other Asian markets.
Source: BloombergNEF

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To accelerate CCS developments and ready it for deployment at scale as soon as possible,
policymakers can consider:
• Finalizing the regulations and standards to enable the transport and storage of CO2
domestically or across international borders (such as the London Protocol). Enforce
guidelines to reduce the permitting timelines for these projects.
• Providing funding into research and development and pilot projects in critical sectors
dependent on CCS for emissions abatement.
• Introducing support, through tax incentives and/or CfDs, for CCS projects and infrastructure
to lower upfront development costs. Similar to hydrogen hubs, governments could target
industrial hubs for shared CCS facilities and infrastructure.
• Taking a lead on the exploration of potential onsite and offsite CO2 storage sites in their
respective markets and coordinate investments into the development of feasible sites.

4.2.4. Scale up SAF and clean marine fuel production and usage through
incentives and mandates
As discussed earlier, SAF and clean marine fuels will be critical for the decarbonization of aviation
and shipping. To support the production and usage of SAF and clean marine fuels, governments
will need to consider the following three measures:
• Phase out usage of feedstocks needed for SAF from low-value applications such as biofuels
for passenger vehicles: governments will need to ensure the limited volume of available
feedstocks needed for production of SAF and clean marine fuels are not used by applications
that have alternative cheaper decarbonization options.
• Provide incentives for production and usage of SAF and clean marine fuel: in the short term,
governments will need to provide subsidies to support scaling up of production of SAF and
clean marine fuels and their usage. Governments need to collaborate to support efficient
scaling up of the relevant infrastructure. For example, governments across the APAC region
can designate specific flight routes and shipping lanes to benefit from targeted incentives.
• The governments across the region will need to set long-term targets for phase out of fossil
fuels in favor of SAF and clean marine fuels. APAC regulators can learn from the EU’s
approach.

4.3. Scaling up finance for the energy transition

Reshaping and decarbonizing Asia Pacific’s energy systems will require a substantial scale-up of
capital directed toward low-carbon assets and infrastructure.

4.3.1. Enable access to affordable financing and debt

It is critical to accelerate access to low-cost finance for mature low-carbon technologies, as these
tend to be associated with high capital expenditure. As low-carbon projects have increasingly
come to resemble traditional infrastructure investments rather than risky alternatives, a larger pool
of investment capital has emerged. However, project developers and commercial banks are still
responsible for most clean energy project financing, and the cost to access this capital remains a
limiting factor especially in the current high interest rate environment.

The higher the perceived risks of a project, the greater the unwillingness to finance or more
unfavorable the terms will be. Key concerns for investors include:

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• Mitigating regulatory risks: A lack of continuity in policy support can severely undermine a
project’s economics and investors‘ confidence. Regulatory risks are difficult, if not impossible,
to mitigate. While local partnerships can help to manage challenges such as information
asymmetry, it is ultimately governments that are responsible for developing stable regulatory
frameworks that minimize uncertainties.
• Managing offtaker and curtailment risks: The quality of the offtaker and the extent of
curtailment can directly affect project revenues. For single-buyer electricity retail markets
such as Indonesia and Vietnam, the credit profile of the state utility matters. In India, a history
of delayed or missed payments by state-owned utilities (known as “discoms”) led to a halt in
lending to new projects contracted with them by international banks. For renewable projects,
the extent to which they are insulated from curtailment also matters. Terms viewed favorably
include additional payment security mechanisms, compensation to IPP for grid unavailability,
and financial protection in case of offtaker default and can hence improve the perceived
“bankability” of the projects.
• Strengthening market price signals for decarbonization: This can be achieved through
power market reforms, higher and more stringent carbon pricing mechanisms and/or a long-
term roadmap for the roll-out of carbon tax adjustments.

4.3.2. Leverage development institutions to catalyze private investments

Emerging technologies may see higher barriers to financing due to the uncertainties around
technology performance, supply chains and profitability, and may require greater support from
governments and multilateral institutions at the start.
• Establish priority sectors for lending: Commercial banks may be guided to invest into
certain sectors by each local markets’ central banks. To help banks manage some of the
risks, government or development finance institutions can consider spearheading a risk-
sharing facility or providing some form of guarantee for the loans.
• Development finance can catalyze greater private investments: Development institutions
can help overcome higher financing costs for emerging technologies with concessional
finance instruments – including loans, grants, and guarantees offered below market rate – to
both decrease the cost of capital and improve access with longer repayment times and lower
interest rates for renewables projects. When blended with commercial loans, emerging
technology projects could find it easier to obtain financing deals with more palatable and
financially viable costs.
• Partnerships with foreign banks that are more experienced with the technologies:
Development of emerging technologies are more advanced in certain markets. For example,
the much higher carbon price in Europe has generated many more hydrogen projects and
more offtake there compared to Asia Pacific. Over time, European banks may be more
comfortable with financing such deals compared to their peers in the Asia Pacific region.
Partnerships between domestic and foreign banks for credit lines or syndicated loans can
ease access to capital.

4.3.3. Recalibrate fossil fuel subsidies and carbon pricing policies

Subsidies need to be well-designed
Subsidies and tax incentives are common government interventions to support an emerging
technology. While subsidies have a role in accelerating required decarbonization technologies, it
is imperative to have a well-designed subsidy scheme. Schemes with unclear guidelines, eligibility

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criteria that are too onerous or ones that are set at insufficient levels can fail to achieve the
intended outcomes. On the other hand, subsidy schemes that are too generous and lack a clear
phase out timeline can cause inefficiencies in the sector and over-reliance on government support
in the long run. Subsidies need to be targeted into sectors that need them in the short term, and
should be phased out when financial support for the technology is no longer required.

To the extent possible, governments need to re-evaluate other direct and indirect subsidies that
could distort the playing field for low-carbon technologies or skew market prices and investment
signals. For example, fossil fuel subsidies (both direct and indirect) force low-carbon technologies
to compete against an artificially low price.

Governments also need to recognize the potential of subsidies in limiting capital for low-carbon
technologies. Subsidized or controlled retail power prices in markets such as Indonesia and
Vietnam affect the financial positions of the state-owned utilities and limit their ability to fund the
energy transition.

Higher and more stringent carbon prices required to support decarbonization

A robust carbon pricing instrument can be effective in driving decarbonization and provides a
revenue source for funding the energy transition. This is especially important in hard-to-abate
sectors as low-carbon solutions using hydrogen and CCS technologies won’t be economically
competitive against other alternatives without a high carbon price. Carbon pricing also works well
in other sectors such as power and transport to support low-carbon solutions.

To be effective, a market’s carbon pricing mechanism needs to be sufficiently high and should
cover a significant share of emissions. Today, carbon prices in China, Japan, Indonesia, and
South Korea are too low to drive material changes (Figure 86). In South Korea, an oversupply of
permits and generous free allocation levels at 90% or more have kept carbon prices low.

The regional governments need to act decisively in implementing more stringent carbon pricing
mechanisms to accelerate emerging technologies development and stay on track for net zero.
Laying out the rollout timeline of a proposed carbon pricing mechanism or adjustments in advance
provide a strong signal to businesses on the need for decarbonization. It also provides
businesses with a pathway to make necessary plans.

There are concerns that a carbon price that is too high will diminish the competitiveness of
domestic businesses against counterparts in countries with little to no carbon pricing. To address
this, policymakers can leverage on transitory allowances for emissions-intensive trade-exposed
companies to cover part of their emissions. Such allowances will need to be carefully designed as
too generous a concession could make the carbon price ineffective and negate the incentive for
abatement by companies.

It is increasingly common for carbon pricing schemes to allow participants to use offsets for
compliance. Introducing a cap on the level of emissions that can be offset through international
carbon credits sends a strong signal to local entities that they must reduce emissions from their
operations wherever possible. This avoids an over-reliance on offsets and helps to ensure a
material reduction of domestic emissions.

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Figure 86: Average carbon price and share of greenhouse gas emissions covered by
carbon-pricing policies in G-20 members

Source: Governments, World Bank, BloombergNEF. Note: Only US subnational policies are
included. Prices cover the three months to February 12, 2024. The Canada value shows the price
as of April 1, 2024 (C$80 per metric ton) and Germany and South Africa the price as of January 1,
2024. The European Union Emissions Trading System (EU ETS) share includes ETS I only.
RGGI is the Regional Greenhouse Gas Initiative. Annex I parties refer to the breakdown defined
by the United Nations Framework Convention on Climate Change.

Figure 87: Carbon price projections by region

euros per metric ton of CO2 (real 2022) Europe ETS
160
Excludes free allocation Desirable zone
140
120 Includes free allocation Europe ETS -
ammonia (incl.
100 free allocation)
80
Effect of free California cap-
60 allowances in and-trade
40 the EU Effect of free
allowances in
20 California cap-
California
and-trade -
0 ammonia (incl.
2023 2030 2035 free allocation)
Source: BloombergNEF. Note: Europe ETS - ammonia values assume 2017-2021 average
emissions from the ammonia sector and do not account for any activity level change. Benchmark
values assumed to decline every five-year period by 3%. ETS in this chart refers to emissions
trading system.

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4.3.4. Leverage carbon finance through carbon markets

Voluntary carbon markets can help transfer financial resources from other markets into Asia
Pacific countries and provide financial incentives for emissions reductions in multiple sectors.

The voluntary carbon offset market, where verified emission reduction credits are bought and sold
for sustainability purposes, has increased significantly in interest and activity in the past seven
years. Transaction volume in the offset market has been growing, with latest estimates putting the
offset market’s annual value at $1 billion to $2 billion. Total issuances of carbon supply offsets
equaled around 1.1GtCO2 between 2015 and 2023. Energy generation, mostly from clean energy
projects, made up 36% of this supply while energy demand, mostly from clean cookstoves,
accounted for 6% of supply. Finally, emissions projects have constituted 12% of supply since
2015, mostly through industrial decarbonization and methane combustion projects.

Less attention has been given to carbon markets’ role as a source of capital for the energy
transition in Asia Pacific. 40 million of the carbon offsets retired in 2022 were created in India (38
million) and Indonesia (2 million). In 2022, 21 million credits were retired from China. Purchase of
credits has led to job creation, subsidization of low-carbon activities and co-benefits beyond
decarbonization, such as biodiversity.

Since clean energy technologies such as wind and solar power are increasingly competitive
without further financial support, there is an opportunity to redirect funding from the carbon
markets to finance earlier-stage technologies that have a greater funding need.

Offsets in managed fossil fuel phase-out

In some of the largest coal-power producing countries in the world, including developing
economies like China (1.11TW) and India (0.21TW), carbon offsets can be a valuable tool to
make clean energy cost-competitive and support the phase-out of fossil fuels (Figure 88).
Figure 88: Top coal power
Asset owners can be compensated with carbon credits in response to lowering emissions from
producing countries, 2021
fossil fuel projects gradually over time, with the offsets valued at revenue forfeited per ton of
Terawatts carbon emitted. This strategy could be important in coal-heavy emerging markets like India,
China 1.11 where the economics for building solar and wind are at parity already, but coal plants are not
being retired due to uncertainty in power demand and long-term power purchase agreements.
US 0.23
The Monetary Authority of Singapore (MAS) and McKinsey had explored the use of ‘Transition
India 0.21 Credits’ specifically for the managed phase-out of coal plants.7 MAS subsequently convened the
Japan 0.05 transition credits coalition (TRACTION) to identify system-wide barriers and solutions for transition
credits to be utilized as a credible financing instrument.
South Africa 0.05
The Coal-to-Clean Credit Initiative (CCCI) is an initiative by the Rockefeller Foundation and
Indonesia 0.04 GEAPP supported by RMI South Pole and CPI that aims to pilot transition credits to incentivize a
just transition away from coal-fired power plants. To that end, CCCI is developing a carbon
Source: BloombergNEF
methodology under Verra and exploring partnerships with several emerging economies.
Separately, Gold Standard has created a concept methodology for using avoidance offsets to
phase out coal projects that have been operating for at least three years, and to replace them with
clean energy.

7
‘MAS and McKinsey Explore the Use of High-integrity Carbon Credits to Accelerate and Scale the Early
Retirement of Asia’s Coal-fired Power Plants’, Monetary Authority of Singapore (MAS), September 26,
2023.

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Figure 89: Illustration of offsets in managed phase-out

Source: BloombergNEF

Integrity of carbon markets

While there is a clear business case to use carbon offsets for mechanisms like managed coal
phase-out, several barriers exist to scaling beyond the economics mentioned above. In recent
years, the voluntary carbon markets have come under sharp scrutiny around greenwashing,
quality of supply, and lack of transparency. Improving the integrity of voluntary carbon offset
markets will be critical to scale up their usage in applications such as accelerated coal power
phase-out.

The other challenge revolves around the treatment of carbon abatement in country-level emissions
accounting and National Determined Contributions (NDC). Article 6 of the Paris Agreement states
that parties may collaborate in order to meet their NDCs.

Under Article 6.2, governments can collaborate by trading internationally transferred mitigation
outcomes (ITMOs). ITMOs are carbon offsets with corresponding adjustments, a mechanism to
prevent double-counting of the environmental benefit across different countries. Several
governments such as Singapore, Switzerland, Ghana, Thailand and South Korea, have signed
bilateral agreements to trade ITMOs that count toward their NDCs.

While Article 6.2 is in operation today, Article 6.4 has yet to be operationalized, following a failure
to agree on its rules at COP28. Article 6.4 establishes a global crediting mechanism, which allows
for the generation of carbon offsets that can be used as ITMOs or for other uses that do not
require corresponding adjustments. The Supervisory Body, appointed by countries under the
UNFCCC, is tasked with overseeing the operationalization of the mechanism. The most recent
meeting of the Supervisory Body in October 2024 saw the standards on carbon removals and
methodologies, and guidelines on sustainable development released.

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Appendix A. Geographies
Table 13: Geographies

Markets Details
China Mainland China
India
Japan
South Korea
Indonesia
Vietnam
Australia
Other Southeast Asia Malaysia, Philippines, Thailand
Other Asia Pacific Afghanistan, Bangladesh, Bhutan, Brunei
Darussalam, Myanmar, Cambodia, Cook
Islands, Fiji, French Polynesia, Guam, Hong
Kong, Kazakhstan, Kiribati, North Korea,
Kyrgyzstan, Laos, Macau, Maldives, Marshall
Islands, Mongolia, Nauru, Nepal, New
Caledonia, New Zealand, Niue, Northern
Mariana Islands, Pakistan, Palau, Papua New
Guinea, Samoa, Singapore, Solomon Islands,
Sri Lanka, Taiwan, Tajikistan, Timor-Leste,
Tonga, Turkmenistan, Tuvalu, Uzbekistan,
Vanuatu, Federated States of Micronesia
Source: BloombergNEF

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Appendix B. Emissions constraints in the New

Energy Outlook
The Economic Transition Scenario does not have an emissions constraint. The Net Zero Scenario
constrains global and sectoral emissions to achieve a Paris Agreement-aligned outcome, with
temperature-change results based on Intergovernmental Panel on Climate Change carbon budget
data. We do not use marginal abatement driven by an assumed global carbon price or run our
own climate models.
• A sector-led approach. Carbon budgets are modeled at a sector level and account for
historical emissions trends, projected emissions growth and available abatement options to
ensure an ‘orderly transition’ that avoids step changes, wherever possible, and maintains
economic and social security.
• Skepticism toward unproven future technology solutions. Our modeling relies on
commercially available technologies today, and those that have shown technology readiness
and a conceptual pathway to scale. We prefer technologies that could be globally available,
have wide-ranging applications and pathways. We limit technologies that are unproven or in
early development stages at the time of writing, such as direct air capture.
• Country carbon budgets. These are determined by the sectoral make-up of each country’s
economy, the expected growth in those sectors, and their relative progress under the base-
case ETS. In practice, this means that those countries with growing demand for power, say,
end up with a higher power-sector budget than those with flat or falling demand. Neither
historical ‘responsibility’ nor availability of finance are taken into consideration. Every sector
and country must get to net zero by 2050. There are no exceptions.
• No overshoot. Our scenarios end in 2050 and do not rely on net-negative emissions post-
2050. Over 99% of the emissions reductions are achieved by actual abatement, fuel
switching or carbon capture and storage. Carbon-removal technologies, such as direct air
capture technologies, are only used to address some residual emissions, such as those not
captured by carbon capture and storage technologies.
• No behavioral change. BNEF modeling does not rely on behavioral change, assuming the
same demand trends for useful energy services, such as mobility (air travel, demand for road
transport services), materials (for example, steel and aluminum) and useful services from
energy, in both scenarios.
• Same effort assumption for non-energy emissions. BNEF assumes emissions outside the
energy sector will decline at the same rate as those covered in our analysis. This avoids
making over-optimistic assumptions about hard-to-abate sectors outside the scope of our
analysis, such as land-use and land-use change and forestry (LULUCF).

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Appendix C. Macroeconomic indicators

Figure 90: Macroeconomic indicators of selected Asia Pacific markets

China Japan South Korea

Indexed 2023 = 100 Indexed 2023 = 100 Indexed 2023 = 100
300 300 300

250 250 250

200 200 200

150 150 150

100 100 100

50 50 50

0 0 0
2010 2020 2030 2040 2050 2010 2020 2030 2040 2050 2010 2020 2030 2040 2050

India Indonesia Vietnam

Indexed 2023 = 100 Indexed 2023 = 100 Indexed 2023 = 100
700 700 700

600 600 600

500 500 500

400 400 400

300 300 300

200 200 200

100 100 100

0 0 0
2010 2020 2030 2040 2050 2010 2020 2030 2040 2050 2010 2020 2030 2040 2050
Electricity generation (ETS) Electricity generation (NZS) GDP Population

Source: BloombergNEF. Note: ETS is Economic Transition Scenario, NZS is Net Zero Scenario, GDP is gross domestic product.

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Figure 91: Carbon dioxide emissions intensity of gross domestic product, by market

China Japan South Korea

Kilograms of CO2/$ million GDP Kilograms of CO2/$ million GDP Kilograms of CO2/$ million GDP
2023 2023 2023
1,600 1 250 1 600 1
0.9 0.9 0.9
1,400 500
0.8 200 0.8 0.8
1,200
0.7 0.7 0.7
400
1,000 0.6 150 0.6 0.6
800 0.5 0.5 300 0.5

600 0.4 100 0.4 0.4

200
0.3 0.3 0.3
400
0.2 50 0.2 0.2
100
200 0.1 0.1 0.1
0 0 0 0 0 0
2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050

Vietnam
India Indonesia Vietnam
kg of CO2 per $ million pf GDP
Kilograms of CO2/$ million GDP Kilograms of CO2/$ million GDP
2023 Kilograms of CO2/$ million GDP
2023 800 2023 1
1,200 1 1,000 1 2023
800 1
700 0.9 0.9
0.9 0.9
1,000 0.8
600 0.8 800 0.8 0.8
600 0.7
800 500 0.7 0.7
0.6
0.7
0.6 600 0.6 0.6
400 0.5
600 0.5 0.5 400 0.5
300 0.4 0.4
400 0.4 0.4
400 0.3
200 0.3 0.3 0.3
200 0.2
200 100 0.2 200 0.2
0.1
0.2
0.1 0.1 0.1
0 0
0 0
2000 0 2010 2020 2030 0
2040 0 2050 0
2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050

Economic Transition Scenario Net Zero Scenario

Source: BloombergNEF. Note: Graphs shows CO2 emissions associated with fossil fuel combustion. ETS is Economic Transition
Scenario, NZS is Net Zero Scenario, GDP is gross domestic product.

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Appendix D. Electricity generation by technology

in selected Asia Pacific markets

Figure 92: Electricity generation by technology in selected Asia Pacific markets, Economic Transition Scenario
China Japan South Korea
TWh 2023 TWh 2023 TWh 2023
16,000 1,400 800
14,000 1,200 700
12,000 600
1,000
10,000 500
800
8,000 400
600
6,000 300
400
4,000 200
2,000 200 100
0 0 0
'00 '23 '50 '00 '23 '50 '00 '23 '50

India Indonesia Vietnam

TWh 2023 TWh 2023 TWh 2023
6,000 1,200 1,000

5,000 1,000
800

4,000
TWh 800
2023 600
2,000
3,000 600
1,500 400
2,000 400
1,000
200
1,000 200
500

0 0 0 0
'00 '23'00 '50 '00 '23 '23 '50 '00 '23 '50 '50
Coal Coal with CCS CCGT CCGT with CCS Gas peaker
Gas peaker with CCS Oil Hydrogen Nuclear Small modular nuclear
Bioenergy Hydro Geothermal Utility-scale PV Small-scale PV
Onshore wind Offshore wind Other
Source: BloombergNEF. Note: TWh is terawatt-hours. ‘Other renewables’ comprise all other non-combustible renewable energy,
including hydro, bioenergy, geothermal and solar thermal.

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Figure 93: Electricity generation by technology in selected Asia Pacific markets, Net Zero Scenario
China Japan South Korea

TWh 2023 TWh 2023 TWh 2023

25,000 1,800 1,200
1,600
1,000
20,000 1,400
1,200 800
15,000
1,000
600
800
10,000
600 400

5,000 400
200
200
0 0 0
'00 '23 '50 '00 '23 '50 '00 '23 '50
India Indonesia Vietnam
TWh 2023 TWh 2023 TWh 2023
12,000 2,500 1,800
1,600
10,000
2,000 1,400
8,000
TWh 1,200
1,500 2023
2,000 1,000
6,000
1,500 800
1,000
4,000 600
1,000
500 400
2,000
500 200
0 0 0 0
'00 '23'00 '50 '00 '23 '23 '50 '00 '23 '50 '50
Coal Coal with CCS CCGT CCGT with CCS Gas peaker
Gas peaker with CCS Oil Hydrogen Nuclear Small modular nuclear
Bioenergy Hydro Geothermal Utility-scale PV Small-scale PV
Onshore wind Offshore wind Other
Source: BloombergNEF. Note: TWh is terawatt-hours. ‘Other renewables’ comprise all other non-combustible renewable energy,
including hydro, bioenergy, geothermal and solar thermal.

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Appendix E. Land use modeling methodology

BNEF’s analysis of land use compares supply and demand as a post-modeling analysis of our
scenarios. We analyze demand from a select group of end-use sectors.

Table 14: End-use sectors covered in land use analysis

Sector Description
Renewable energy Utility-scale solar
Onshore wind assets
Extractive Mining sector demands on land
Food and feed Crops and animal protein to feed a growing global population
Biomass for new materials Crops to produce novel, sustainable materials
Biomass for energy Feedstocks for biomass or biofuels for industry, buildings, power and
transport
Carbon dioxide removals Direct air capture
Source: BloombergNEF

The demand for each of these sectors was converted to a land area using our own estimation of
square kilometer per unit of demand, the definitions of which are detailed further below. This was
then compared with the supply of land suitable to accommodate each sector in turn.

Determining land suitability

Overview
Geographic information system (GIS) software was used to determine the supply of land suitable
for each of the given end-use sectors. The suitability criteria used to determine the areas are
detailed in each of the sections below.

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Figure 94: Overview of land use methodology

Source: BloombergNEF

Clean power
Spatial analysis was carried out using GIS software and Python to determine the amount of land
suitable for the deployment of solar and onshore wind using publicly available data.

First, suitability criteria were used to provide an accurate picture of available land based on existing
literature – the list of constraints is indicative but not exhaustive. Appropriate data files were sourced
to allow the area of each country to be constrained by the defined criteria.

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Table 15: Data sources for land supply analysis

Dataset Type Resolution Data products Source

Administrative Vector - World country polygons World Bank8
boundaries level 0 polygon
Global Human Raster 1 square Built-up surfaces for residential and non- European Commission’s Joint
Settlement Layer kilometer residential uses, Morphological Settlement Research Centre9
(GHSL Data Package (km2) Zones (MSZ), Degree of Urbanization, GHS-
2023) Land
Global Agro-Ecological Raster 1km2 Theme 1 - Land and Water Resources, Theme UN Food and Agriculture
Zones v4 (GAEZ) 3 - Agro-climatic Potential Yield, Theme 4 - Organization and International
Suitability and Attainable Yield, Theme 5 - Institute for Applied Systems
Actual Yields and Production Analysis. Global Agro-Ecological
Zones version 4 (GAEZ v4)
Global Wind Atlas 3.3 Raster 1km2 Wind speed, power density at 50, 100, and 150 Global Wind Atlas 3.310,11
meters
Global Solar Atlas 2.0 Raster 1km2 Direct normal irradiation, global horizontal Global Solar Atlas12
irradiation
Source: BloombergNEF

Land demand for clean power installations and suitability constraints were modeled at a country
level for Tier 113 countries, at a resolution of one square kilometer.

As a first step, Tier 1 country administrative boundary shapefiles were converted to vector files of
1 square-kilometer resolution, which represent the base layer of our analysis. Constraints were
extracted and matched at the same resolution and sampled for all the unique points of each
gridded polygon. We chose appropriate projection systems for each region and optimized raster
files for further processing.

Once the data files were manipulated and converted, unique raster values were sampled for all
points accounted in each region and raster calculations were performed to calculate the area of
overlapping suitability among the imported layers. Counts of each raster value and other statistics
were then extracted into CSV files for further manipulation and analysis in Python. Table 16 lists
the criteria and assumptions considered for each technology.

8
The World Bank Data Catalog - Official Boundaries v2, 2023.
9
European Commission, GHSL Data Package 2023, Publications Office of the European Union,
Luxembourg, 2023, doi:10.2760/098587, JRC133256.
10
Neil N. Davis, et al., The Global Wind Atlas: A high-resolution dataset of climatologies and associated
web-based application; Bulletin of the American Meteorological Society, Volume 104: Issue 8, Pages
E1507-E1525, August 2023, DOI: https://doi.org/10.1175/BAMS-D-21-0075.
11
Wind speed and density data obtained from the Global Wind Atlas version 3.3, a free, web-based
application developed, owned and operated by the Technical University of Denmark (DTU). The Global
Wind Atlas version 3.3 is released in partnership with the World Bank Group, utilizing data provided by
Vortex, using funding provided by the Energy Sector Management Assistance Program (ESMAP). For
additional information, see https://globalwindatlas.info.
12
Solar irradiance obtained from the “Global Solar Atlas 2.0, a free, web-based application developed and
operated by Solargis s.r.o. on behalf of the World Bank Group, utilizing Solargis data, with funding
provided by the Energy Sector Management Assistance Program (ESMAP). For additional information,
see https://globalsolaratlas.info.
13
Tier 1 markets include China, Japan, South Korea, India, Indonesia, Vietnam, Australia, Germany,
France, the UK, the US and Brazil.

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Table 16: List of constraints applied to determine suitable land, by technology

Constraint Excluded Buffer zone (meters)

Social/political
Human settlements
Urban/large settlements 1,000
Dense, semi-dense towns, 1,000
suburban or peri-urban areas
Infrastructure
Roadways 500
Airports 5,000
Railways 1,000
Industrial areas 1,000
Mining sites 5,000
Physical
Slope ≥17% -
Elevation ≥4,000 meters -
Water Bodies
Lakes 200
Rivers 200
Coasts 200
Wetlands 200
Conservation
Protected fauna flora habitat/biodiversity
Habitats 1,000
Birds areas 1,000
Biospheres 1,000
Wilderness 1,000
Protected Areas
Landscapes 1,000
Reserves 1,000
Forests/parks 1,000
Monuments 1,000
Technical/economic
Resource
Wind speed ≤6 meter per second -
Solar irradiance ≤1,000 kilowatt- -
hour per square
meter
Source: BloombergNEF. Note: refers to both solar and wind, blue indicates wind only, yellow
indicates solar only.

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Crops
The UN Food and Agriculture Organization provides detailed crop models through its Global
Agro-Ecological Zones models (GAEZ v4), including Theme 3 (Agro-climatic Potential Yield) and
Theme 4 (Suitability and Attainable Yield)
• The Theme 3, Agro-climatic Potential Yield14, data product provides crop-specific information
about potential biomass and yield, and related crop cycle attributes, calculated using an eco-
physiological crop growth model and spatially detailed climate characteristics (radiation,
temperature and precipitation) during different crop development stages. Growth cycle
attributes include the day of crop emergence (in other words, the start of the crop cycle), the
duration of the crop cycle from emergence to full maturity, crop-specific actual
evapotranspiration, accumulated temperature sums and water deficits/net irrigation
requirements during the crop growth cycle. The results of their comprehensive bottom-up
analysis account for temperature limitations and moisture constraints that are affecting crop
growth and development, and include yield-reducing effects due to potential pests, diseases
and weeds, as well as climate related workability.
• Theme 4, Suitability and Attainable Yield15, presents the results of the final step in the GAEZ
crop suitability and productivity assessment, combining agro-climatic potential yields with the
results of soil and terrain evaluations. The outcome of this is a gridded geospatial map where
each grid cell of the resource inventory determines the respective make-up of land units in
terms of soil types and slope classes, and applies yield reduction factors due to the
constraints induced by soil limitations and prevailing terrain-slope conditions. Find more in the
UN FAO’s model documentation guide16.

We analyzed the land suitability data for 20 major crops or crop groupings under rain-fed
conditions and assumed high input/advance management for historical climatic conditions (1981-
2010, CRUTS32). Where data is not available, we have assumed crop proxies with similar
characteristics. Land suitability results for each crop are classified in six distinct classes; in our
analysis, suitable land for crops includes ‘very suitable’ and ‘suitable’ land.

Table 17: Crops included in land use analysis and Global Agro-Ecological Zones proxies

Land cover Global Agro-Ecological Zones crop proxy

Barley Barley
Canola Rapeseed
Cassava Cassava
Cotton Cotton
Horticulture Rapeseed
Maize Maize
Oil palm Oil palm
Other cereals and grains Wheat
Other fiber Rubber

14
FAO and IIASA. Global Agro-Ecological Zones version 4 (GAEZ v4) – Theme 3.
15
FAO and IIASA. Global Agro Ecological Zones version 4 (GAEZ v4) – Theme 4.
16
Fischer, G.,et al., Global Agro-Ecological Zones v4 – Model documentation, 2021, Rome, FAO.
https://doi.org/10.4060/cb4744en.

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Land cover Global Agro-Ecological Zones crop proxy

Other legume Phaseolus beans
Other oil seeds and oil crops Sunflower
Palm oil Palm oil
Rice Rice
Root vegetables Cassava
Soybean Soybean
Special use Tea
Sugarcane Sugarcane
Temperate tree crops Citrus
Tropical tree crops Coffee
Wheat Wheat
Source: United Nations Food and Agriculture Organization’s Global Agro-Ecological Zones model
(GAEZ v4), BloombergNEF.

Table 18: Land suitability classes for crops

Land suitability class Description/farm economics

Very suitable land (80-100% of Prime land offering the best conditions for economic crop
maximum attainable yield) production
Suitable land (60-80%) Good land for economic crop production
Moderately suitable land (40-60%) Moderate land with substantial climate and/or soil/terrain
constraints, requiring high product prices for profitability
Marginally suitable land (20-40%) Commercial production not viable; land could be used for
subsistence production when no other land is available
Very marginally suitable (<20%) Economic production not feasible
Not suitable Production not possible
Source: United Nations Food and Agriculture Organization’s Global Agro-Ecological Zones model
(GAEZ v4), BloombergNEF. Note: BNEF considers the sum of ‘very suitable’ and ‘suitable’ for the
purposes of our analysis.

Critical minerals
We identified current mining areas using data from Global-scale mining polygons (Version 2). The
dataset contains 44,929 polygon features (vectorized data and shapefiles), covering 101,583
square kilometers of land (around the size of South Korea) used by the global mining industry,
including large-scale and artisanal and small-scale mining. The data cover all ground features
related to mining – in other words, open cuts, tailing dams, waste rock dumps, water ponds,
processing infrastructure, and other land cover types related to the mining activities of coal and
metal ore extraction.17

Mining spreads across all continents with hot-spot regions – for example, in northern Chile mainly
due to copper extraction, northeastern Australia and East Kalimantan in Indonesia because of

17
Maus, Victor et al. “An update on global mining land use.” Scientific Data vol. 9:1, 433. July 22, 2022,
doi:10.1038/s41597-022-01547-4 (link).

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coal mining (which is out of scope), and in the Amazon rainforest primarily due to small-scale gold
mining.

A summary of the data aggregated by country shows that 52% of the mapped mining area is
concentrated in only six countries: Russia, China, Australia, the US, Indonesia and Brazil. Another
21 countries account for 39%, and the remaining 118 countries add up to only 9% of the total
mapped mining area. These results show that mining areas are highly concentrated in only a few
countries.

On top of the mining geospatial locations, we overlayed exclusion areas derived from Theme 1 of
the FAO’s GAEZ v4 dataset. The dataset identifies land marked by a protection/exclusion status
or with recognized biodiversity value compiled from three up-to-date and authoritative
international datasets: the World Database of Protected Areas, the World Database of Key
Biodiversity Areas and the Global Lakes and Wetlands Database.

As a first step, we identified mining locations that overlap with existing protected areas. This
allowed us to reduce the amount of data under investigation as we assume this mining area to not
be able to expand any further as some constraints have already been breached. Assuming a
minimum 5-kilometer distance or buffer between any mining location and excluded area, we
started constructing buffer rings around existing mining locations – in total five rings with an
incremental 1-kilometer buffer between each one of them.

The process above allowed us to identify and quantify mining areas currently ‘at risk’ but also
potential pressures on areas with high biodiversity values within the context of planning and
reinforcing mine reclamation.

Determining technology footprint

Onshore wind
We used BNEF's onshore wind asset database of existing projects to extract turbine capacities
and rotor diameters for each project. These figures were then used to calculate the per-gigawatt
footprint of each project, which includes the physical footprint and land required for spacing. Both
are a function of turbine size.

We assume turbine spacing follows a rule of 7 rotor diameters in the downwind direction, and 5
rotor diameters crosswind. Each turbine is allocated a 7D by 5D rectangle of space, where ‘D’ is
the rotor diameter of a single wind turbine. As illustrated in Figure 92, as we add more and more
7D by 5D shapes, the outer area becomes a larger ellipse. For example, for a wind farm of 19
turbines, its footprint area (the shape of the ‘flower’) can be approximated using an ellipse with an
area of:

21𝐷 ∗ 12𝐷 ∗ 𝜋

As turbine technology evolves and capacities increase, so does the rotor diameter. Each year we
use a different average wind turbine capacity and hence a different rotor diameter – which is the
main variable for the footprint calculation.

Average footprints of existing wind farms were derived from country-level historical projects
commissioned back in 1980, to arrive at an average global footprint. Projections for future
average rotor diameter and turbine capacity were then used to estimate future per-gigawatt
footprints assuming Class II turbines (designed with mid-sized rotor diameter for average wind
speeds of about 6-8 meters/second).

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Figure 95: Illustrative onshore wind footprint calculation, physical footprint and distance

Source: BloombergNEF

Once the per-gigawatt footprint was derived for all countries and projected out to 2050, it was used
to calculate the total projected land footprint for each country going forward. This was accomplished
by multiplying the current estimated footprint for each country by that country’s annual cumulative
capacity, and then for every year following, multiplying that year’s footprint projection by the gross
capacity additions in that year and adding it to the previous year’s footprint.

Capacity retirements are removed, assuming a 20-year operational lifetime, as land previously
occupied by older wind farms that are decommissioned becomes available for new development.
To calculate that area, we use historical turbine capacities (and rotor diameters) installed in the
past (starting in 1981). Based on this assumption, an area that was occupied by wind farms in 2020
would only become available in 2040.

Utility-scale solar
For solar, a global average assumption was used for the per-gigawatt technology footprint.
Historical and projected BNEF efficiency figures were used to extrapolate yearly increases to
efficiency, which were then used to provide a projected per-gigawatt footprint for solar.

The per-gigawatt footprint estimate was then multiplied by the cumulative capacity projection for
each country in the same year to arrive at a total area estimate for that year. For every subsequent
year, the yearly footprint estimate was multiplied by the additional capacity added during that year,
and the figure was added to the previous year’s total footprint. Similarly, capacity retirements were
subtracted using the same footprint.

Electrolyzers
Electrolyzer plants built today cover about 1,100 square meters per megawatt of capacity, which
we assume shrinks to 500 square meters per megawatt by 2050 as the systems become more
efficient, new technologies scale and sites are optimized. In our analysis, we assume this footprint
includes the stacks, balance of plant, hydrogen purification unit, transformers, site offices, water
supply, substations, oxygen capture unit, air compressors, and hydrogen storage vessels and
racks.

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About us
Contact details

Client enquiries:
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• Email: [email protected]

Albert Cheung Deputy CEO

Ali Izadi-Najafabadi Head of APAC

Leonard Quong Head of APAC Energy Transition and Trade

Caroline Chua Specialist, APAC Energy Transition and Trade

Sahaj Sood Senior Associate, Australia

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