Ep76 2025 Wrap: The Forces Reshaping Asia’s Energy Transition

This special year‑end episode of Asia Climate Finance unpacks the three defining themes that shaped the energy transition in 2025. Joseph Jacobelli explores the ratchet effect driving unstoppable momentum, Asia’s emergence as a global rule shaper, and the rise of blended finance models unlocking capital for clean energy. He also highlights major trends from AI‑driven electricity demand to the return of nuclear, nature as infrastructure, and new breakthroughs in hard‑to‑abate sectors. A concise, insight‑rich wrap‑up for anyone tracking climate finance, energy markets, and the transition across Asia Pacific.

HOST, PRODUCTION, ARTWORK: Joseph Jacobelli | MUSIC: Ep76 onward excerpts from Vivaldi’s La Follia, played by Luca Jacobelli.

Transcript

IMPORTANT DISCLAIMER: THIS AUTOMATICALLY GENERATED TRANSCRIPT IS PROVIDED FOR CONVENIENCE ONLY AND IS NOT THE OFFICIAL OR COMPLETE RECORD OF THE PROCEEDINGS. THE ORIGINAL AUDIO/VIDEO RECORDING REMAINS THE SOLE AUTHORITATIVE RECORD, AND NO RELIANCE SHOULD BE PLACED ON THIS TRANSCRIPT FOR ANY LEGAL, EVIDENTIARY, OR DECISION‑MAKING PURPOSES.

Ep76 2025 Wrap: The Forces Reshaping Asia’s Energy Transition

Joseph Jacobelli: Here's something that might surprise you. Whilst politicians argue about climate policy, the energy transition has become unstoppable, not because of targets or treaties, but because of simple physics and economics. In 2025, we watched this shift accelerate in ways that even the most optimistic forecasts didn't necessarily predict.

Asia stopped following rules written elsewhere and started writing its own philanthropic money began unlocking a massive amount of private capital for projects that were considered not bankable, not so long ago. And nuclear power made a comeback that nobody saw coming.

In this short episode, I'm going to walk you through what I think are the three most significant themes that emerged in our conversation this year with CEOs, multilateral backed lenders, and technology pioneers. We'll also touch on everything from uh, AI Gold Rush that's rewriting electricity demand forecasts to why mangroves are now being treated as critical infrastructure. If you've been following the energy transition, what happened in 2025 may reshape how you think about what comes next. 

Narrator: Welcome to Asia Climate Finance, your front row seat to the policies, investments, and actors shaping climate, business and finance across Asia Pacific, the world's fastest growing region for transition investments. Each episode delivers sharp, actionable insights from experts driving decarbonization and green finance from Mumbai to Tokyo. Subscribe now, so others find this essential guide to Asia's Climate economy and please note the disclaimers at the end.

Now over to the host, analyst, investor, and author Joseph Jacobelli.

Joseph Jacobelli: Wherever you are right now. Good morning, good afternoon, or good evening. Welcome to this special year end wrap up of Asia Climate Finance, and happy New Year to you all. As we step into 2026, it really is the perfect moment to look back at what was an extraordinary year from my perspective. Across the 19 episodes last year, we spoke with the people that actually are building the energy transition from the heads of global investment firms to the leaders of multilateral banks, from nuclear technology pioneers to hydrogen innovators.

If 2024 was about laying foundations, 2025 was the year that the train truly left the station. Today I want to explore the three most important overreaching lessons that emerge from those conversations. After that, we'll briefly touched on some other notable themes that are fundamentally reshaping our world, like the AI data centre boom, the Return on Nuclear Energy, and the several others.

My first major takeaway is what we're calling the Ratchet Effect. 

The most powerful theme, running through 2025 has been a fundamental shift in how people think about this transition. It's no longer just a policy driven climate target. It's become an inevitable shift driven by the cold logic of economics and physics. Various guests kept coming back to this idea of a ratchet effect.

Geopolitics might create temporary plateaus. Terrorists might cause short term blips, but the underlying momentum. Is inexorable because the technology themselves is fundamentally superior. Kingsmill Bond from Ember put it brilliantly when he told us that fossil fuel systems are fundamentally less efficient.

Electrotech is roughly three times more efficient because it doesn't waste two thirds of its energy as heat, for example. Now to really understand this concept, we need to think about the difference between stocks and flows. The total stock of cars on the road, or power plants on the grid takes decades to turn over.

That's just the reality of infrastructure, but the flow, the new sales, the new investments, that's already shifted. In 2025, we saw that 90% of investment in the power sector is already going into Electrotech solutions, primarily solar, wind. We've also moved into what Mike Thomas from the Lantau Group describes as Wave Two of the transition.

If Wave One was about grabbing the low hanging fruit of straightforward solar and wind installations, Wave Two is about system level integration of batteries and ancillary services. We're seeing the rise of what people call solar hybrid systems, combining hyperscale solar with massive battery storage.

These are moving from providing intermittent power to delivering packaged power, and these hybrids are now competing directly against imported liquefied natural gas and thermal coal as semi base load energy. In the Philippines, for example, projects like Terra Solar have demonstrated that solar plus storage can now provide firm power from seven in the morning until nine at night.

That's directly challenging the traditional role of gas fired power generation. .

The physics of this shift also completely redefines energy security. If you import fossil fuels, you're essentially renting your energy every single day. If the supply cuts you off, the lights go out. But as Kingsmill bond pointed out, if you buy a solar panel, you've bought your energy in the next. 30 years.

This transition from a fuel intensive system to a capital intensive system means that once the infrastructure is built, the marginal cost of energy is near zero and completely predictable for decades. What we've also learned is that we can achieve 70 or 80% wind and solar penetration with the technology we already have. The ceiling of what's possible is rising faster than we're actually deploying the technology. For example, in cities like Hyderabad in India, solar plus batteries could provide 75% of firm power by 2030 at a competitive price point. This isn't just about green anymore. It's about being the most efficient and cost effective economy on the planet.

Now, my second major takeaway is Asia, as a rule shaper and not a rule taker. For a long time, the narrative was, uh, that Asia followed standards set in Europe and North America. In 2025, that narrative shifted. Asia is now positioning itself as what we're calling a rule shaper. Think about the numbers. Asia accounts for half of the world's population, half of its energy consumption, and more than half of global emissions.

Because the region hosts the world's largest pipeline of energy transition projects, the standards being developed here are becoming the global norm. Ha Do at KPMG made this point beautifully. She said Asia will be positioned to become a rule shaper rather than a rule taker. And whatever is adapted in Asia will become a kind of global norm. Of course we're not talking about right now, but it is the beginning of a trend which will accelerate over the next few years, I'm confident. A prime example is the ASEAN taxonomy. That's the association of Southeast Asian Nations framework for sustainable finance, rather than simply copying the EU's approach. ASEAN members created a unique, pragmatic framework that includes a coal phase out pathway. This made-in-Asia solution reflects the reality of emerging markets that are heavily dependent on coal, whilst still providing a rigorous, credible path towards net zero.

Similarly, the ASEAN Power Grid is moving from technical planning into active power trading across borders, inspired by the success in the Greater Mekong sub region grid. This is absolutely critical because decentralized energy solutions are vital for the archipelagos of Indonesia and the Philippines.

Asia is also where the technological scaling is actually happening. When a company like Jinko Solar, for example, ships close to a hundred gigawatts of panels a year, around 40 times more than top manufacturers produced two decades ago, it effectively sets the global cost curve for energy. At least solar energy.

We're seeing the same scaling logic possibly to be applied to TRISO fuel. That's a special type of nuclear fuel for small modular reactors and what people are calling the Lego Block Modularization of green hydrogen projects.

Crucially, the regulatory landscape is converging. Asian jurisdictions are aligning with ISSB standards. That's the International Sustainability Standards Board for Climate Disclosure. But they're doing so with local adaptations.

Singapore, for example, has become one of the earliest adopters of mandatory ISSB aligned reporting, while Japan is creating local standards that remain fully interoperable with global frameworks. This shift towards rule shaping is also visible in carbon markets. mechanisms like the joint crediting mechanism or JCM and Article six pilot projects like the uh, Thailand Switzerland agreement.

Asia is leading the way in creating high integrity cross border carbon trading as global capital allocators diversify their portfolios to avoid policy uncertainty in North America, Asia, with its established supply chains and pragmatic regulatory environments has become the primary beneficiary of these diversification flows. 

The third and last major take away from me is the rise of what we're calling the five Ps.

So our third major lesson is that the financing gap is being bridged by sophisticated new models. For example, we've moved beyond simple public-private partnerships into the era of public-private philanthropic partnership or what some people call the five Ps. Throughout 2025, we explored how capital is being stacked to de-risk projects that were previously considered non bankable. Woochong Um at the Global Energy Alliance for People and Planet, or G-E-A-P-P provided what I think was the year's best metaphor. 

The alliance is like a tugboat helping large tankers, the existing development players, navigate risky landscapes. Philanthropic capital is the magic ingredient here. Unlike commercial banks, philanthropic funds can tolerate what's called first loss positions by taking on the initial risk. They crowd in the massive tankers of the multilateral development banks or MDBs and private institutional investors. We saw this working in in Delhi India where philanthropic support helped prove the case for battery storage in crowded urban substations. Once the model was de-risked, it attracted millions in private and MDB funding. A powerful recent example is how some transition funds now use catalytic capital to change the risk return profile of emerging market deals.

In these structures, a public or philanthropic investor agrees to take a capped return. Any profit above that cap, flows to other private investors lifting their upside without increasing their downside risk. That kind of design can turn marginally bankable projects in markets like, uh, Vietnam, Indonesia, and the Philippines into serious opportunities for global institutional capital. It is exactly the sort of approach platforms managed by firms like Brookfield are increasingly using across emerging markets.

This is not about charity. It is about what people in the industry call additionality as our guest from Brookfield stressed, additionality means leaving the system you invest in clearly better. Then when you found it, which in practice means actually building new assets. It is about adding new capacity, not just buying existing plants for someone else.

You can see that logic in the Ayana platform in India. An initial commitment of AHA around uh, a hundred million dollars helped launch the business, which has since grown into a multi gigawatt portfolio and mobilized over $1 billion into new clean energy projects. The message from British International Investment and other DFI that's development finance institutions was consistent.

There's no shortage of global capital. The challenge in 2025 was creating what they call a linear and predictable deal flow of bankable projects. The solution has been these blended structures using debt guarantees and aggregation platforms that allow private investors to participate in emerging markets with confidence.

Now beyond those three major themes, five other trends left a lasting mark on our series this year. 

One is the AI and Data Centre Gold Rush. Artificial intelligence was the unexpected engine of electricity demand in 2025, or at least something that hit the, uh, the headlines. Data centres are now being proposing massive hyperscale blocks of 50 to a hundred megawatts or more. This has created what industry insiders call a Dark Art of demand forecasting because these centres can be built much faster than the power plants needed to feed them. This is driving a massive boom in cooling technologies. An onsite power generation, including renewed interest in small modular reactors, SMRs, to provide clean 24 7 power for the AI infrastructure stack.

A second notable trend is nature as critical infrastructure. A, a fascinating shift from the Asian infrastructure Investment Bank. A IB was the concept of what they call planetary health, where finally starting to treat nature, things like mangroves and wetlands, not just as scenery, but as critical infrastructure.

These natural systems provide flood protection and carbon capture more cost effectively than concrete and steel MDBs are now applying what's called extended cost benefit analysis that includes natural capital. As one guest noted, healthy people need a healthy planet. Investing in nature is now seen as a core economic imperative for human health and climate resilience.

A third theme or trend is how to abate sector breakthroughs. We took a deep dive into shipping and aviation. Sectors once thought impossible to clean up in 2025, we heard how the maritime industry is shifting to biofuel blends like B24 derived from used cooking oil, with sales surging over 600% in some regions. In aviation, the alcohol-to-jet technology pathway is moving towards final investment decisions for commercial scale plants. In Australia, for example, these are no longer pilot tests. They're becoming a new infrastructure asset class. 

The fourth trend is the return of nuclear, which I kind of mentioned earlier as well. Nuclear energy came back into the conversation in a very serious way. The focus has shifted to small model reactors using, for example, technologies like TRISO fuel. TRISO Fuel consists of millimetre sized particles, coated in protective layers that keep radioactive material stable, even at 1300 degrees Celsius, making it effectively meltdown proof. We heard predictions that once four or five proven designs are in circulation, we could see a massive deployment boom, perhaps after 2032, proving the missing link for green industrial zones. 

And the last notable trend is the China strategy and supply chain resilience. It became clear that anyone in the energy transition without what people are calling a China strategy has a problem. China continues to dominate the manufacturing of Solar, of Wind, and now electrolyzers and batteries. While many countries are trying to build onshore supply chains, the reality is that China's ability to scale has brought costs down for the entire world. The debate in 2025 was less about whether we should use Chinese technology and more about how to manage that dependency whilst benefiting from the massive economies of scale.

So as we close out this 2025 wrap special, I want to thank all guests for their time and incredible insights. The energy transition is a marathon, not a sprint, but the progress we've documented in 2025 shows that the pace is solely but surely accelerating. The ratchet effect is turning. Asia is shaping the rules and blended finance is finally unlocking the capital needed for a just transition.

We've got some incredible episodes lined up for 2026 where we'll dive deeper into, uh, a great variety of areas as usual. These include more on alternative fuels, grid modernization, AI applications, and many other themes. 

Thank you for listening. Thank you for your feedback and thank you for being part of the community. Until next time, this has been Asia Climate Finance, episode 76. Have a wonderful, healthy, and productive New year. 

Narrator: Please note that the Asia Climate Finance Podcast is provided for educational purposes only and does not constitute investment advice.

Any information discussed should not be relied upon for making investment decisions. Listeners should always seek advice from a suitably qualified and authorized investment professional. The views and opinions expressed by guests of their own and do not necessarily reflect the views of their current or former employers or of the podcast host or producers.